5 Good Insights To A Divorce Appraisal

Divorce appraisals are the most difficult and sensitive of appraisals. Since the marital home is normally one of the most valuable jointly held assets, selecting an appraiser to do this work should never be taken lightly. Appraiser skill sets and experience levels greatly vary.

Divorce Appraisal: The Most Scrutinized Of Appraisals

There are many steps that are taken to arrive at a market valuation and to communicate that information in a manner that is clear and understandable. Choosing an appraiser to handle this very important piece of the dissolution situation should be done with great care. Your attorney may have suggestions for an appraiser to use. If not, google appraisers and visit their websites. If they won’t, or can’t, take the time to create a helpful website, that may reflect on the level of care they might use in the appraisal of your home. Set high standards. Not all appraisers are the same. Appraising for lending (purchases and refinancing) often focuses on which appraiser can complete the task the fastest, and for the lowest fee. Appraising for legal concerns is completely different, as it is much more highly scrutinized and therefore requires a higher skill level. Appraising is part art and part science and takes many years to become proficient at it.

Required: The Utmost Care And Expertise

As in all appraisal reports, the utmost care should be taken in considering factors that influence the value of the property. Knowledge of the local market, including understanding supply and demand, absorption into the market, and pulse within the subject’s sub-market is very important. Equally important is an understanding of buyer preferences in the sub-market of which the property is a part of. For example, if the market expects two full bathrooms but the property has only one, how does that affect the value as well as the marketability of the property? If buyers expect a three-car garage in newer homes, but the subject has only two, does it change the buyer pool altogether? Is the market slowing; is it increasing; are buyers out in droves looking at properties or are they pulling back and waiting? These are just a few of the types of questions appraisers examine as they study the market as it relates to the property being appraised. All of these factors are multiplied in a divorce appraisal.

Einstein And Appraisal Theory?

When we think of an “Appraisal”, we often think of just the communication of an appraisal. The appraisal is actually the act or process of developing that opinion of value. What you, the “intended user” will see is the “Report.” The report is the summary of the appraisal research and analysis (or appraisal review), which is delivered at the completion of the assignment. As a party who is not typically reading appraisal reports on a daily basis, the communication should be addressed in a manner that is clear, understandable and not misleading. This means that jargon or technical terms should be minimized, or if used, explained. Albert Einstein once said that if someone cannot explain something in simple terms, they don’t understand it well enough. It also means that there is no need to provide a mile-high analysis of the nation’s economy, but stick with specifics that relate to the property itself. Of course, it is important to discuss what is happening with the market, but for a single-unit residence, what is happening in California will not be relevant to what is happening in the Denver market areas. Any excessive commentary that is not relevant to the direct analysis of property details is generally referred to as “boilerplate” and experienced appraisers frown upon it. I have seen needless commentary that explains what a digital signature is and why it is acceptable in an appraisal.

Minimum and Maximum Standards

The report should contain enough information that you the client can understand completely how the appraiser arrived at their opinion of value. Sometimes clients may not agree with the conclusion, but it is critical that you understand the logic and reasoning behind it. The national guidelines for appraising are contained in a book referred to as USPAP (Uniform Standards of Professional Appraisal Practice) which states that an appraisal is an opinion of value, and must be credible and not misleading to the reader. For something as important as an appraisal, I think those are incredibly lax standards. Here is an in-depth article in which I greatly expand on what makes an excellent appraisal.

Creating The Appraisal

Appraisers set their own fee schedule and turn time for completing assignments. Considering the time that is involved in properly identifying the scope of work, implementing the research processes, completing the measurement and inspection of the property, and then completing the analysis and results of the findings into a high quality appraisal, will likely take several days or weeks to complete. As a rule of thumb, you can expect to pay somewhere between three and six hours of your attorney’s fee for the appraisal report itself, and an hourly rate for any testimony that is needed in the event of a court or deposition appearance. As the marital home is likely the greatest asset that is jointly owned, it is good to have the peace of mind for a job well done.

Additional Insight

For a bit of insight on how I approach appraisal work, here is more information; https://rickstillman.com/why-choose-us/