Spouses preparing for divorce have to address many financial issues. They have to separate their property and divide their debts. Often, they may find themselves disagreeing with one another about how to address certain assets, especially those with higher overall value.
The marital home where the spouses live together could be their most valuable shared resource. They may have spent decades accruing equity. That, combined with price appreciation, might mean that they have hundreds of thousands of dollars in home equity to address.
Not only do spouses often disagree about how to share home equity, but they may find themselves fighting over what the home is actually worth. How can spouses properly value a marital home for the purposes of asset division?
By setting a date and securing help
One of the first steps when attempting to value assets with fluctuating fair market values is the selection of a valuation date. Spouses set a date, possibly the date that one filed the initial petition with the courts or when they agreed to separate, as the valuation date for assets.
That date can be important, as changes in market circumstances could lead to fluctuations in property values throughout the divorce process. By setting a specific date, spouses can help make the valuation process more accurate and fair.
From there, they likely need to partner with a real estate professional. It is common practice to hire an appraiser during divorce. Appraisers perform thorough evaluations of the property and comparable sales on the market nearby in recent weeks to determine the current fair market value of the home. In particularly contentious cases, each spouse may secure their own appraisal. They may then settle in the middle of the two values set by the separate appraisals.
There are numerous solutions for dividing home equity. Some couples choose to sell the home where they live together and share the proceeds in a certain way. Other times, one spouse might retain other assets or take on more marital debt to balance out the home equity that they retained during the divorce.
Agreeing on a value for a marital home is the first step in what can be a complex property division process for couples with higher-value marital estates. People often need help navigating the property division process to help ensure that they receive a fair outcome.