Determing the Equity in the Marital Home

In many divorce cases, one of the most valuable assets to be determined and divided is the equity developed in the marital home. For those individuals who have been making years and years of mortgage payments, a substantial amount of equity may have been acquired over time. But even those couples who have not spent a lifetime paying down their mortgage may enjoy the benefit of increased home values in their neighborhood and therefore be in a position to walk away with some much-needed cash.

The housing market can and does have a major impact on the financial outcome of a divorce when a marital home is at play. If the market is down (for example as it was following the economic troubles of the late 2000’s), the marital home is not located in a desirable neighborhood, or it the marital home is in disrepair, there may be little-to-no value in the home as far as a marital asset to be divided. However, when the housing market is as hot as we have seen this year, the value to litigants can be significant.

Whether litigants are working towards settling their case by agreement or preparing for trial, obtaining a reliable valuation of the marital home is often a critical step. In today’s climate of high home sale prices, multiple offers, and bidding wars, having a professional assist litigants in valuing the marital home is of the utmost importance.

There are multiple ways to engage a professional to assist in valuing a home or other piece of real property. One option is to pay a certified real estate appraiser to come to the property, conduct an inspection of the interior and exterior areas, compare the home to prior nearby sales, and opine as to the market value of the property. A near-identical process is undertaken when someone applies for financing to buy a home. Another approach is to find a certified realtor provide a comparative market analysis of the marital home’s value. This time the real estate agent comes to the home, inspects the interior and exterior area, compares the home to prior nearby sales, and estimates the market value of the home.

While critics of the appraisal process are not wrong to point that the ultimate test of market value is not a professional’s opinion but the resulting contract price when the asset is sold, in divorce situations one party often wants to retain the marital home. In these cases, having a high-quality professional assist in calculating the fair market value of the property is often the best assurance that a fair and accurate price is being considered for a potential buy out.