What’s a house worth in a divorce scenario? Because the family home is, typically, the biggest asset a couple acquires during their marriage a lot of consideration goes into how to value it. The answer, not surprisingly, is that it depends. If the intention is to sell the house then the value is based on the sale price, minus encumbrances, such as a mortgage. Whatever is left over is considered to be part of the net family property.
The Easy Methods
However, if one spouse intends to buy out the other in order to keep the family house then the property needs to be valued. The easiest method is to have both spouses agree to a price. Perhaps they have done some homework to see what houses have sold for in the area or perhaps they have a friend who is a real estate agent who helped them to assess the property. Either way, if both agree then that’s the price.
Real Estate Agents and Appraisers
But what happens if the couple do not agree? There are a few options. If both agree to a method to valuing the home, it’s much easier to find a solution. In my mediations I try to have clients commit to accepting the price before they see it. In other words, if we decide to hire an appraiser, that we both agree on who the appraiser is and that they will accept the price the appraiser feels is the home’s true value. Sometimes couples get a few real estate agent opinions and take the median price as a true value. I do find, however, the my client’s lawyers tend to prefer the appraiser route. In the lawyers due diligence to represent their clients, the appraiser is seen as a neutral third party, with no vested interest in the valuation. In other words, they aren’t fighting for a listing or a good friend of one spouse as some real estate agents can be, which can create bias. Or, at least, a perceived bias.
What if they still do not agree on the price after an appraisal is done? First of all, it is important that both spouses be present during the valuation, if possible. This helps to negate the fact that the selling spouse is pointing out all the wonderful aspects of their castle while the buying spouse is highlighting the inefficiencies of their slum. By the way, most well-seasoned appraisers can see past this and value the home based on it’s own merit. They have experienced many separating spouses and are impervious to such methods of subjective valuation.
Valuation of Last Resort?
What if the couple still do not agree on accepting the appraisal or other such valuation? Couples can go to court and have a judge decide on how to value the home. The judges method, however, may include the forced sale of the home. That’s a method that some couples may not want to take, especially if the need to house children is involved.
More Than Just a Price
Lastly, the value of a home is not just the monetary price that is arrived at for the purpose of dividing the couples net family property. It’s also a home. Studies have shown that women and men see money and wealth differently. Here’s a fellow who tends to agree with my perception Women And Men Value Money Differently It’s typical for the wife to want to keep the family home and that’s not surprising. Women see money as offering a solution such as shelter, a place to create family memories, something she can touch and feel. While men tend to see money more as a status issue. Living in a small apartment with a lofty investment portfolio may be a preference. Of course, individuals do vary in their interests but a large percentage of my mediation couples have the wife wanting to keep the family home. Often times, the husband and father, wants to keep the children in the home that they are accustomed to as well as to live in the same catchment area for school. These issues also affect the ‘price’ of the family home.