When a well-off Connecticut couple decides to end their marriage, the division of their assets is always a principal concern. Connecticut’s proximity to New York City also means that these well-off couples will own large, very valuable homes. Dividing this asset can be difficult because both spouses are likely to have strong emotional ties to the house, and these emotions can affect the spouses’ individual opinions about the value of the home. One of the best ways to reduce conflict and produce an independent opinion of the home’s fair market values is retaining an independent real estate appraiser.
What does an appraiser do?
An appraiser’s principal task is to provide an unbiased opinion of the home’s fair market value assuming both a willing seller and a willing buyer who are well-informed about current market conditions. Virtually all reputable appraisers abide by the rules and ethical requirements of the Uniform Standards of Professional Appraisal Practice (USPAP).
How does an appraiser form an opinion about fair market value?
The appraiser’s first task is to visit the property that is the subject of the appraisal (this property is commonly referred to as the “subject”). The appraisal will make a careful and detailed inspection of both the exterior and interior of the subject. Every room will be carefully measured, and most modern appraisers will make a photographic record of the interior and exterior using digital photographic equipment. The appraiser will note the physical condition of the subject and whether any aspect needs repair work. The appraiser also notes the presence of features that may add value, such as a remodeled condition, a media room or a party room.
After making this inspection, the appraiser will consult local land records to find recent sales that involved similar properties.
Choosing an approach to value
Most appraisers will choose from one of three main approaches to value: the replacement cost approach, the income approach, and the comparable sales approach. The replacement cost approach is rarely used because the cost of labor and materials have probably increased greatly since they built the subject. The income approach is used only for income producing structures, a term which rarely, if ever, applies to a family residence. Eliminating these two approaches to value leaves the comparable (or paired) sales approach, in which the appraiser uses the sale prices gleaned from local land records to determine the likely fair market value of the subject. The appraiser may also use personal knowledge of the local real estate market to adjust the fair market value.
Delivering the opinion as to fair market value
The appraiser will prepare a written report following USPAP guidelines. The report will be given to the party who ordered the appraisal. A copy may also be placed into evidence if a trial is necessary to resolve the issue of value.
Getting the proper legal advice
Whether to order an appraisal is an issue that should be discussed with a party’s attorney. A knowledgeable attorney can also provide guidance on how to use the appraisal report in dealing with the other party.