Tuesday, February 23, 2010

Valuation of the Marital Residence

THE MARRIAGE ZONE: What is Your Home Worth?
By
Christopher C. Meyer and Ruth Bolas
 January 2010


Your home is often your biggest financial asset. What your home is actually worth can be a major issue in a divorce case. The following discussion of home valuation methods is not limited to the family law context.

There are several ways of determining the value of your home. There is the “guesstimate” method, too often used by homeowners. This can result in erroneous conclusions due to faulty real estate data. Homeowners are not professional evaluators. Many of the valuation systems available to the public have incorrect data. Two other valuation methods that are often used are appraisals and comparative market analyses (CMAs). An appraisal is performed by a certified professional appraiser. A CMA is performed by a licensed real estate broker.

An appraiser analyzes recent sales of other houses and makes standard adjustments for differences between the sold houses and your house in order to arrive at the value of your house. A CMA involves an analysis of active, pending, and sold listings, original list price, final sold price, days on the market, and seller concessions involved, such as payment of a portion of the buyer’s closing costs.

The valuation method that is best for you may depend on practical matters such as the ultimate use of the evaluation. If a Judge is going to determine the value of your home, an appraisal may be preferable to a CMA. However, there is a trend for more acceptance of CMAs by Judges. A lender will demand an appraisal. Appraisals cost money (starting at around $350). Many real estate professionals offer CMAs for no charge.

The most accurate method will depend upon the evaluator. The results provided by a well-experienced professional appraiser and a similarly experienced real estate broker should be very similar. However, a real estate broker who lives and works in your community may have a better grasp of the market value of your house than an appraiser who does not live or have experience in your community. Similarly, an appraiser who lives and works in your community may be more accurate regarding your home than a real estate broker who lives and works in Fort Collins.

Good luck with your home valuation and remember that both an appraisal and a CMA are vastly superior to a guesstimate. Keep in mind that what your home is worth to you is not necessarily its market value. The market value, whether determined by an appraiser or a realtor, is simply the price your home is likely to sell for in the current market. You should also keep in mind that savvy buyers working with a realtor will almost always get a CMA before they make an offer!

This article is for informational purposes only and does not constitute legal advice about your case.

Chris Meyer is an attorney practicing family law in Northern El Paso County. Chris’ law practice is limited to domestic relations cases. Chris has been practicing law since 1977. He is a former prosecutor and is licensed to practice law in Colorado, Florida, California and Wisconsin. Chris can be contacted at 719-488-9395. Chris’s website (www.cmeyerlaw.com) has additional divorce and family law information and many other articles.

Ruth Bolas is a licensed Real Estate Broker with Keller Williams and is also an attorney. She grew up in the Monument area and serves the Front Range specializing in working with buyers as well as home sales and short sales. Ruth Bolas can be reached at ruthbolas@msn.com or 719-488-3026 or 303-437-6010.