A divorcing couple in California usually has one very big asset – their house. If the house was purchased after the couple was married, the house becomes community property, and its value will affect how the remainder of the couple’s assets are divided. Experienced attorneys often use a qualified real estate appraiser to determine the value of the house for the purpose of determining how other assets will be split.
Understanding how community property is split
Many Californians are aware that their property must be divided equally in a divorce, but they often operate under the misconception that each asset must be split evenly. In fact, California’s community property statute requires the net value of all marital assets to be split equally. Thus, one party may receive the house and the other party may be awarded assets whose total net value equals the net value of the house.
The appraisal process
Regardless of whether a divorcing couple decides to hire one appraiser between them or they each decide to hire their own appraiser, the appraiser’s job is the same: determine the fair market value of the house as of a given date. Most parties will hire an appraiser who abides by the Uniform Standards of Professional Appraisal Practice (USPAP).
The appraiser usually begins the appraisal process by visiting the house and making a physical inspection. The appraiser will note the overall condition of the house, whether it needs maintenance or rehabilitation, and whether it has (or lacks) any unique features such as a fireplace, a swimming pool, a finished rec room, or an in-home theater.
The appraiser then determines which approach to value to use. The simplest approach to value is the cost approach, but where real estate value are escalating the cost approach does not provide an accurate measure of value.
A far better approach is the sales comparison approach. The appraiser selects a number of homes in the area that have recently changed hands. The sale prices are public records, and the appraiser can match those against the house at issue. After adjusting prices to allow for different attributes of the comparable properties, the appraiser reconciles the different prices and determines the market value of the subject property as of the prescribed date.
The appraiser then prepares a written appraisal report that can be used by the parties and by the court to determine the total of the couple’s marital assets.
Anyone wishing more details about the appraisal process may wish to contact an experienced divorce lawyer for information.