Fair Market Value Question
I am going through a divorce. My husband is requesting that the property be appraised. My attorney said that the appraisal is always MUCH higher than you could actually sell the home for. I always thought that the appraisal was to determine what you could sell the home for. :-? In addition, my attorney recommended an appraisal company that is about 40 minutes away in a smaller "more expensive" community. I would like to have an appraiser in the area do the work as they would be more familiar with comps, etc. I just want to be sure I shouldn't doubt my instincts on this.
An appraisal is used to suggest what your home might be worth based upon recent sales of comparable properties. An appraisal does not predict what a ready and able buyer would be willing to pay in an open market.
Instead of paying for an appraisal, you could get a fair approximation of your property's market value by asking three different real estate agents to give you a Comparable Market Analysis. They will do it for free. You should get a number pretty close to the appraised value.
I agree with your instincts about the appraisal service. I also would want my appraiser to be more familiar with my local market. Call your bank's mortgage department. Ask, "If I decide to refinance my personal residence, which appraisal service will you use?" The banks with lending experience know which appraisers in the local market do good work.
[ Edited by DaveT on Date 05/15/2004 ]
Perhaps your attorney wants a high estimate of value to increase your soon-to-be ex's buyout price...or to increase his/her fee (if the fee is predicated upon the amount of marital assets).
Of course, if you want to keep the home and will be paying your Soon-2-B-X, than your attorney's idea will cause you to pay more than your fair share.
I would get another attorney. Why?
Many of our clients (I help run a nonprofit housing counseling organization) come to us from problems that arise from divorce.. the majority of settlement agreements that I've read (and divorce decrees) drafted by divorce lawyers are not forward thinking with respect to the distribution of real estate. While the divorce might be nice and legal, the agreements usually fail to address the future needs of the parties.
My suggestion? Find an attorney (perhaps a divorced woman) whose practice includes both divorce, and real estate.
I'd make a few suggestions, but I'm not an attorney.
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Short Sale Practitioners can't predict, or guarantee results... but can take steps to insure the likelihood for success....[ Edited by TheShortSalePro on Date 05/15/2004 ]
I urge you to get a professional appraisal. Believe me there are plenty of appraisers with both the skills and integrity who will appraise the property at Fair Market Value. It will be worth the money. If the divorce is amical, than you two will split the cost and you should select the appraiser. If the divorce is adversarial, than you certainly need an appraiser who knows how to give court testimony.. To go to trial with a Realtor's CMA versus your husband's credentialed/qualified appraiser is ill advised.
You will know how much gross equity there is in the property. The division of the marital assets will be up to your attorney to look after your best interests. If you don't trust your attorney then get another one. The appraisal is not an issue.
The appraiser you select should be have an SRA professional appraisers designation-look in the yellow pages.
sammyvegas is absolutely right. A CMA, however well done, is just not going to have the credibility of an appraisal. And if you can get an appraiser with an MAI designation, so much the better.