Why are appraisals important and why do you need them to determine house value?

Imagine you are separating from your spouse and you need to determine the value of your home. How do you do this effectively?

I have had numerous clients ask me how they can value their home and what is the best approach. Some decide to contact a few local experts for their opinion and others decide on an appraisal. Which one is better?

Option 1

Ask a couple of different realtors for a Comparative Market Analysis to determine that they think (their opinion) your home is worth. Your lawyers/mediator will need to determine what happens if the values from each respective realtor are different.

Pros

  • Low cost
  • relatively quick

Cons

  • highly speculative
  • holds no value with respect to obtaining a mortgage

These types of analysis can be quick to receive to evaluate your property. However, we have seen that there can be a bias between the realtor and homeowner or an unrealistic value provided. Unfortunately, these types of analysis can’t be used to obtain a mortgage, you will need an appraisal from a third party appraiser who is accredited to obtain mortgage financing.

Option 2

A Matrimonial Appraisal is a professional and independent prepared appraisal that will determine the value of the matrimonial home without bias. This type of appraisal will provide the best property value indication. The appraiser should have a tenure of at least 5 years with a reputable appraiser group that can and will attend court proceedings in the event they need to defend their findings and evaluations.

Pros

  • Accurate
  • The appraised value is an excellent indicator for mortgage financing

Cons

  • There is a cost
  • Can take up to 2 weeks

A Matrimonial Appraisal is the most accurate value we have seen. Although there is a cost to this, it ultimately protects the separating parties against bias or unrealistic values. If one of the separating parties decides to keep the matrimonial home, he or she may need a second appraisal to refinance the home, this appraisal will likely be a similar value to the Matrimonial Appraisal.

Hope you enjoyed reading! Let me know if I can answer any questions and/or if I can assist with your Separation Mortgage financing.