How To Value Your Home During Divorce
Tim: So they’re going to sell. Now they have to come to an agreement on what’s it worth.
We had clients in here couple weeks ago—this was they owned. They had everything settled. The house is actually paid off in cash. So they are in good shape financially.
The issue was what is house worth? So if they’re going to divide it evenly coming to a firm like evaluator.
In this case one party thought the house was worth $50,000 more than the other party.
And they’re looking at comparisons and all that. But what’s the best way to come to an idea? Do they get independent appraisers?
Do they get independent agents to do like of a compared market analysis? This particular client I said, ‘Look, you’re talking about $50,000 whole. It’s really about $25,000 to you, if they’re dividing which they’re like ‘Okay, that’s not that bad.’
If they can meet in the middle, I mean there are lots of options.
Connor: It’s always said there are three values for a home. And it’s like when you’re buying a business there’s three sets of records.
There’s what the owners going to give you to sell it.
Connor: …to show you that it’s awesome. There’s really what it really makes so he knows exactly where he is every month and then it’s going to be the other ones where he shows the IRS which going to be a lot less than his earnings.
With a home evaluation it’s kind of the same thing because you have the agent that’s going to probably try to tell you what you want to hear in order to secure the leasing.
Connor: Unfortunately, that seems to be more a case than the exception. The other value happens to come in where what do you think it’s worth.
And then finally really what it is and what’s it worth. So the way that we do it and I think any good agent would is we have to look at factual properties that have closed Escrow.
And we have to stock those properties up making allowances plus or minus whatever percentage points or real amounts for the different amenities that they’re property might have versus the ones that we’re able to compare it with.
So the other you mentioned was an appraisal? Yes. If it’s a big deal then you could have hire independent appraiser to go out and evaluate the property and establish that value.
So that’s probably the cleanest way because with the agent, now you got to trust them.
Connor: I’m not trying to put us down as an industry but the world view isn’t so good. If that agent comes since both you down and looks at the sold comparable properties comparing Apples to Apples—
Connor: Not gaming in the system having you be able to verify that those are true and indeed the actual comparables within six months within a half an hour radius comparing the same types of property to your property and be able to verify that with an offline or excuse me a non-realtor base source online somewhere else that won’t have any reason to game you.
Connor: …then that’s also another good way.
Tim: It’s interesting because when people are splitting say in this particular case they had the house paid off but now they’re splitting up and they need to cash out.
Tim: So he wants to keep the home. So he just took out a second. He had the financial ability to qualify for that and cash it up.
And the questions that became were what’s it worth? And do we use today’s fair market value? What if the property declines in value a month later or —
Tim: We see this declined in market. And the half is a lot less then do you take the fair market value? Let’s say there’s $100,000 in equity based on the appraised value?
And you just say well $50,000 as half or would you take out that percentage of the sale? There’s a lot of ways that you really can loot this.
Or you can just say you know what, there’s $100,000 in equity if we sold. I mean you can count the commissions and Escrow and title fees and we will let down by 10-15 grand.
Tim: So I think what people need to do is just move on. Don’t fight over the penny, just focus on the meat, not the potatoes if you will.
Connor: And what we talk about kind at the beginning, usually in a lot of cases one of the spouses they don’t want to go. It’s not their ideal scenario to be Divorced.
Connor: So a lot of times that’s where a lot of the renters are going to come in. And they’re hiring you to do service.
They hired me to do a service. My service is to try to balance everything so nobody gets hurt as a result of them wanting to sell this piece of real property.
Ultimately, that’s the goal. Commission aside, success aside all the sellers stuff aside, that protection is important and them having all the facts to be able to make good decisions.