When a Virginia couple decides to terminate their marriage, they face many troubling issues. Among the most difficult is the division of marital assets. Virginia judges follow the “equitable distribution” rule, under which the judge is directed to divide the couple’s assets in a fair and equitable manner.
Most couples attempt to negotiate a property settlement, especially if the family residence is the couple’s most valuable asset. Wrangling over the value of the residence – or any other jointly owned real estate – can absorb a lot of energy. One of the most efficient methods of resolving this dispute is the retention of a professional real estate appraiser to render a written opinion on the estimated fair market value of the residence.
What does an appraiser do?
The appraiser’s first task after the clients have signed a contract is to visit the property. During this visit, the appraiser will make careful observations about the size of individual rooms and the existence of amenities such as a refurbished kitchen or master suite.
The appraiser will also carefully inspect the physical condition of both the interior and exterior of the home. The appraiser will make careful written notes and may even record the premises on video. Once the visual inspection is completed, the appraiser will evaluate the existing neighborhood to determine if the property is significantly more or less valuable than its neighbors.
Choosing a valuation method
The appraiser provides a professional opinion on the likely fair market value of the subject, assuming a willing seller and willing buyer under current market conditions.
Appraisers have three principal methods of valuing real estate: the sales comparison approach, the replacement cost approach, and the income approach. The replacement cost approach and the income approaches to value are not usually appropriate for residential properties and are rarely used. The sales comparison approach is by far the most common method of ascertaining an opinion as to the value of the subject.
The sales comparison approach
After completing the visual inspection, the appraiser will check public records to ascertain the prices of similar houses that have sold in the past year (these properties are referred to as “comparables”). The appraiser will adjust the values of these houses according to how closely they match the subject.
After further adjusting the values based on personal knowledge of the local real estate market, the appraiser will prepare a written report that states his or her professional opinion on the fair market value of the subject. The report will be given to the client, the client’s attorney, and possibly the judge and the adverse party.
Using the appraised value
The appraiser’s independent opinion may lead the parties to agree on the value of the home and they can then either sell the house to a third party and divide the net proceeds, or one party can purchase the other party’s interest. The appraisal report will, in any event, become an important piece of evidence at trial. Anyone who is wondering about retaining an appraiser may wish to consult an experienced divorce lawyer for a detailed review of how an appraiser’s opinion can affect the parties’ positions on this crucial issue.