A relationship ending in divorce is every couple’s worst nightmare. Aside from the emotional trauma, there’s the practical mess. How will you untangle the deeply intertwined life you built together? It’s one thing to divvy up the furniture, and quite another to divide your largest financial asset: the house.
Unfortunately, taking a saw to split it down the middle won’t do you any favors. There’s only one way to give each spouse their fair share—and that’s by determining its worth.
This isn’t a case where you want to hash out a number and shake on it, leaving your ex-spouse feeling bitter and ready to take you to court.
Top real estate attorneys and agents who specialize in helping divorcing couples will advise you get the house appraised by a licensed appraiser for an iron-clad valuation.
Does your spouse plan to keep the home and you’ll need to collect your half of the equity? Can’t agree on a list price to save your life and it’s got you fuming?
The home appraisal, a third-party, unbiased estimate of your home’s true value, can be the best solution when emotions are flying high.
Decision time: Keep the house or sell it?
First you and your soon-to-be-ex spouse need to figure out what’s going to happen with the home you share.
On the most basic level, there are two options: one person stays and buys out the other, or you sell it and both of you move out.
According to family law attorney Hannah Smet with Wisconsin-based Schwab Legal Group, the majority of the time it’s a buyout situation.
In my experience, usually one person wants to keep the house and the other one agrees to vacate,” Smet said. “The only time I’ve ever seen them not want to keep the house is if neither of them can afford to keep it up on their own or it’s a situation where both people want the house so much and they have to argue about who should get to stay there and why.”
Keeping the house does come with some tricky financial implications. Every asset needs to be split during the divorce, so if someone is staying in the house, they’ll have to come up with a substantial amount of money to facilitate the equity buyout. A buyout usually means the person who will take over the home will need to get a new mortgage—which will be difficult considering the mortgage now needs to be refinanced under just one person.
Because of this, it’s often easiest for the divorcing couple to sell the home, especially if no children are involved.
Beware, though; this option comes with a lot of stress, too. Now, in addition to your divorce, you’ll be tackling showings, negotiations, and closing details. Add an extra layer of complexity if your home requires updating to attract buyers.
“Clients are very interested in knowing what they feel is going to be top dollar for them because they know they have to split assets in most situations,” says Jacki Shafer, a top real estate agent in Louisville, Kentucky. “Unless they have a prenup or postnup agreement, in most states everything is split right down the middle.”
Shafer suggests figuring out if the home will be split 50/50 or by some other ratio prior to listing the house, if possible.
“[Divorcing couples are] going to want to get with their attorney first to find out if they can negotiate property division, because if one spouse or the other has put in a lot more toward the mortgage or maintenance, then they might get a bigger piece of the pie when it’s all said and done,” she said. “Those types of things really need to be settled even before they call the real estate agent.”
Whatever route you choose—refinancing or selling the home—the appraisal will likely play an important role.
Get the house appraised for a fair buyout
If one person decides to stay in the house and can afford to take over the mortgage on their own, it’s time to facilitate the buyout.
Assuming the house was jointly owned 50/50, the owner will have to pay their spouse for their half of the home’s worth.
To avoid any haggling about what that value is, you can get a home appraisal. An appraiser will determine the home’s fair market value, allowing the new owner of the house to pay the person moving out accordingly.
What should you expect to happen during the appraisal process? It’s fairly straightforward.
An appraiser will come into the house and assess the value through measurements, photos, square footage, lot size, and number of rooms.
Nearly all appraisers use the same form during an appraisal, the Uniform Residential Appraisal Report. This form asks specific questions about neighborhood demographics, housing trends in the area, available utilities, measurements and details about the home, property condition, and how the house fits into the surrounding neighborhood.
Once the appraiser leaves, you’ll no doubt be anxious to know the value they’re giving to your home. Fortunately, you shouldn’t have to wait too long. The appraisal report should come back in less than a week.
An appraisal isn’t cheap—it normally costs between $300-$400, but it’s one of the costs you should expect to pay during the course of a divorce that involves joint property.
Selling your home in a divorce? The appraisal can help you price it, too
If you decide to put your home on the market, you’ll need to agree as a divorcing couple on a list price.
During the course of a normal home sale, your real estate agent performs a comparative market analysis, or CMA, which looks at comparable home sales in your area to provide an estimated value for your home.
Although the CMA is a widely used and highly respected tool for pricing homes, it still might leave too much room for disagreement during a contentious divorce.
In that case, a home appraisal comes into play prior to listing the home.
“When there is a tenuous circumstance between two people and they’re having a difficult time agreeing on life in general, it’s definitely better to get an independent appraisal,” said Arlene Quirk, a top real estate agent in Pike County, Pennsylvania. “This way one party doesn’t feel like a real estate agent is favoring one side or the other.”
Appraisers go through extensive training to develop the expertise required to assess the value of a home and must get a professional license. They also also aren’t representing either spouse but can act as a neutral third party in heightened situations.
Using an upfront appraisal to price your home is not to be confused with the appraisal that happens on behalf of the buyer of the home after a house goes under contract.
To be clear, the original appraisal paid for by the sellers before listing does not negate the need for the buyer’s appraisal later in the transaction. The lender will still require a separate appraisal (covered by the buyers) to make sure they aren’t financing a loan for more than the home is worth.
If the two appraisals don’t line up, that can create another point of contention.
“The appraisal is still one person’s opinion,” Shafer explains. “When you get an appraisal upfront, a lot of times the value is higher than what it might be once the offer comes in and is agreed to. The upfront appraisal, a lot of times, is perfect world. This is what your home will sell for in absolute perfect-world conditions.”
The bank won’t lend the buyers more than the home’s appraised value, regardless of the seller’s appraisal.
“A couple also needs to know what they’re going to do if the [buyer’s] appraisal comes in low,” says Shafer. “Are they going to be willing to split the difference and negotiate with the buyer to not lose the sale?”
If possible, have that conversation with your agent and spouse ahead of time.
Special circumstances: When you can’t even agree on the appraisal
Shafer has seen problems between divorcing couples sprout up from the beginning, when they can’t agree on a real estate agent or an appraiser, not to mention what repairs need to be done, and the list price.
Sometimes, according to Smet, one half of the couple won’t even let the other have their new email address, so everything has to go through the agent or a lawyer.
These situations usually play out in a few different ways:
- The divorcing couple comes to an agreement.
- Each spouse gets a CMA from a different real estate agent, and the lawyer or court decides who to hire for the appraisal.
- Each spouse orders their own appraisal and the court or lawyer takes the average of the two, or decides which one is more representative of the fair market value.
Finding the right professional to perform the home appraisal may be easier than you think, and it’s always best to get a referral. Your real estate agent and attorney should have lists of trusted appraisers available.
How to prepare for the home appraisal
Once you’ve (hopefully without incident) decided on who will perform the appraisal, it’s time to prepare your home for the appraiser to get the best valuation possible.
A home’s surface appearance can influence an appraiser’s opinion one way or another. If you’re the spouse leaving the home and receiving half of the home’s value in the case of a buyout, you want to maximize the appraised value.
To do that, be sure to clean up the house inside and out, and fix any minor repairs that are cheap enough for you to swing among the other costs of your divorce.
Smooth out any peeling paint or rough wood. Consider making cookies and leaving them out—it may be an unbiased opinion, but you never know who may be swayed by the scent of freshly baked desserts. The goal here is to subconsciously sweeten the deal. Make the house look and smell great in order to get the highest appraisal possible.
Once you know the value, you can split the house fair and square
Pinpointing your home’s value is the first major step in dividing a house during a divorce. A home appraisal performed by a licensed appraiser is your best bet for making sure the house gets split fair and square, so that everyone can move on with their lives.
In the case that the house isn’t 100% paid off, the spouse buying the house outright would likely need get a cash-out refinance.
LegalZoom, an online tech company offering personalized online legal solutions, offers up this example scenario:
“If a husband were to keep the marital home appraised at $300,000, and the mortgage against it is $200,000, he might refinance for $250,000, enough to pay the wife her half of the $100,000 in equity, assuming the court ordered a 50/50 split.”
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