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Using a professional real estate appraiser in a Maryland divorce

On Behalf of | Jan 4, 2023 | Real Estate Law

One of the most stressful issues in any Maryland divorce is dividing marital assets, and the division of marital assets may involve the most stressful of all issues: valuing the family home. Each spouse usually has a strongly held belief about the value of the homestead. Moreover, these opinions are usually reinforced by strong emotional attachments to the home. One of the most effective methods of resolving such a conflict is using a professional real estate appraiser to determine the fair market value of the home.

The first steps in an appraisal

After signing a retainer agreement, an appraiser’s first step is to visit the property that will be the subject of the appraisal (usually called the “Subject”). The appraiser’s goal is to make a complete visual inspection of the interior and exterior of the Subject. The appraiser will carefully measure every room and, to the extent possible, make a photographic record of the inspection. The inspection of the exterior will focus on the need for maintenance, such as roof replacement or repainting.

Choosing an approach to value

Appraisers generally use one of three approaches to estimating fair market value: the replacement cost approach, the income approach and the comparable sales approach. The replacement cost approach is rarely used for residential property because the cost of materials and labor will have increased substantially since the house was built. The income approach, that is, estimating the income that the property will produce, is obviously inappropriate for residences unless they include apartments units. When appraising a home, appraisers most commonly use the comparable sales approach.

Estimating fair market value

The next step in the appraisal process is searching local real estate records to determine the selling price for comparable homes. This information can be obtained from county real estate records. After adjusting each sale for differences with the Subject, the appraiser will apply their knowledge of the local real estate market to determine the fair market value of the Subject.

Using the appraisal

The appraiser’s opinion as to fair market value is included in a written report that contains the data upon which the opinion is based. The report is given to the client and the client’s attorney. If the parties cannot agree between themselves about how to value or divide the house, the report may be given to the other party. Appraisal reports are often used to convince the other party to sell the house to a third party and divide the net proceeds.

Solid legal advice

A knowledgeable divorce attorney can help a person decide how to use the appraisal report and how to divide the net value of the house.