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Using a real property appraiser in a California divorce

On Behalf of | Mar 17, 2023 | Property Division

Dividing assets in a California divorce is never an easy or pleasant process. This statement is especially true for high-asset couples who own a large residence in a prosperous neighborhood. If the couple has lived in the home for a substantial period—say, two decades—they will be less likely to agree on the value of the home. Individual spouses will form different opinions about the market value of the residence and will reach different conclusions on the value of the house. One very effective method of resolving these differences is hiring a professional appraiser to provide an independent opinion of the value of the home.

The appraiser’s job

Virtually all professional appraisers in California subscribe to what are known as Uniform Standards of Professional Appraisal Practice (USPAP) rules. These rules provide an industry standard for conducting an appraisal and reaching a reliable opinion abut the fair market value of the property (the property being appraised is usually referred to as “the subject.) The appraiser is charged with providing an unbiased opinion as to the subject’s fair market value, assuming that both buyer and seller are equally informed about market conditions and are equally motivated to consummate a sale of the subject.

What does an appraiser do?

The appraiser’s first task after signing the contract is to make a detailed inspection of the subject. This inspection consisted of an on-site visit during which the appraiser will carefully note the physical aspects of the subject. These include:

  • Lot size
  • Building size
  • Number of rooms
  • Size of individual rooms
  • Physical condition of the interior
  • Physical condition of the exterior
  • Needed items of maintenance, such as a roof or furnace

Most appraisers will make a detailed visual record of their inspection using a digital camera or video equipment.

The appraiser also inspects the surrounding neighborhood to gain an impression of the size and quality of nearby homes.

Approaches to value

Appraisers who follow USPAP procedures will choose one of two approaches to forming an opinion as to value. The “cost approach” entails an estimate of the cost of reconstructing the subject using similar materials and following a similar plan. This approach is rarely used for any structure that is more than a few years old because the cost of materials and labor rise more rapidly than the value of the subject.

The more reliable approach to value is the comparative sales approach. In using this approach, the appraiser gathers information from county records about recent land sales. The appraiser uses their experience to identify properties that are similar to the size, condition and value of the subject. The appraiser then uses this comparison to provide an estimate of the fair market value of the subject.

Getting advice from a knowledgeable attorney

After reaching an estimate of the subject’s fair market value, the appraiser prepares a USPAP appraisal report. This report contains the appraiser’s opinion as to fair market value of the subject and the research and reasoning that led to the conclusion about fair market value. The report is generally given to the client, the client’s attorney and to the opposite party (with the client’s consent).

If the parties do not agree on the conclusions in the report, a copy of the report is introduced as evidence at trial. The report can be used as a negotiating tool if the divorcing couple decides to sell the family home to a third party or as evidence at trial if the value of the home rests in the court’s hands. Any person involved in a dispute about the value of the family home may wish to consult an attorney about how to use the appraisal report to obtain maximum value for the home.