Home appraisals can become a battleground at divorce

For many people, a home is the single most valuable asset they own. So it’s not surprising that divorcing couples often fight over the value of that asset.

And the recent crash in real estate prices has only exacerbated this trend. The crash has made the market value of certain types of property more uncertain. And tempers frequently flare if people are told that their home isn’t worth what they once thought it was.

When a couple are married, they usually have a common interest – they both want their home to be worth as much as possible. But when they divorce, their interests might suddenly become very different.

For instance, suppose a couple agree that the wife will get the home and the husband will get other assets of equal value. The husband will then argue that the home is highly valuable, so he should be entitled to a lot of other assets. But the wife will argue that the home is worth much less, so the husband should get much less.

As a result, it can be very difficult to arrive at a figure that makes both sides happy.

The usual solution is to hire an independent real estate appraiser. Much of the time this works fine, but sometimes contentious spouses will each hire their own appraiser. And the spouses might be tempted to try to “steer” the appraiser toward a favored outcome by highlighting certain benefits or drawbacks to the property.

If two appraisers come to different conclusions, sometimes they will recommend a third, neutral appraiser to resolve the difference.

Of course, this can get expensive. This is especially true because some appraisers charge more for divorce-related appraisals, due to the fact that one spouse may have necessary information about the property but be unwilling to cooperate.

There are other complexities, too. For example, suppose a wife owned the home before the marriage, but after the wedding the husband spent a lot of his own money renovating it. A court might decide that the wife is entitled to the original value of the home, the husband is entitled to the increase in value due to the renovation, and the couple should split the value of any appreciation due to market conditions.

That’s a big job for an appraiser. He or she must not only evaluate the property right now, but also figure out what the home was worth at the time of the wedding, which could have been many years ago. In addition, the appraiser must figure out what part of the appreciation is due to the renovation and what part is due to other factors.

Renovations are often accompanied by new furniture. This can also be a source of conflict, because one spouse might have spent a lot of money on new furniture, but the value of the furniture will have sharply decreased – just as the value of a new car rapidly declines as soon as it’s driven off the dealer’s lot.

Yet more issues can arise if the couple plan to sell the home as part of the divorce.

In such a case, the couple will usually want to keep the divorce a secret from any potential buyer. The reason is that buyers are much more likely to make lowball offers if they think the seller is highly motivated due to a divorce or job relocation.

If the couple is splitting the furniture, they could end up showing a home for sale that’s one-half furnished – a sure tipoff that a divorce is occurring.

Even if all the furniture stays and one spouse simply moves out, buyers might still suspect that a divorce is underway. For instance, they might notice a swing set in the backyard but no toys in the child’s room, or a “man cave” downstairs but only women’s clothes in the bedroom closet.

Many couples will hire a company to “stage” the property, which not only makes it look its best but can also disguise their true motivation for selling.