Dividing marital property in a divorce can be one of the most stressful experiences imaginable. Both parties often worry about being cheated by the other spouse in the valuation and division of the couple’s assets. This concern is often more acute for wealthy couples where one or both spouses have brought significant assets to the marriage. One way to ensure fairness or to protect a spouse’s assets in the valuation process is to retain a professional appraiser.
What does an appraiser do?
Professional appraisers are trained to use certain reliable techniques to determine the fair market value of a given asset. Most often, appraisers are called upon to determine the fair market value of the couple’s residence. They are often asked to determine the fair market value of other residential property the couple may own, such as apartment buildings. Once an appraiser reaches a conclusion on the fair market value of a property, the appraiser prepares a report and submits it to the party who ordered it. In most cases, appraisals are ordered by the attorney for one of the parties. The report is usually submitted to the court and, depending upon the court’s rules about disclosing evidence, to the party for the other side.
How does an appraiser determine fair market value?
Appraisers use three different methods to determine fair market value. The first is replacement cost, i.e., the cost, expressed in dollars of replacing the structure. This method is rarely used because the cost of materials is usually significantly lower than the fair market value. For rental properties, such as an apartment building or dwelling, the appraiser may use the income approach to value, i.e. the amount of money that the property is likely to earn over its useful life.
This method has little relevance to determining the value of the family residence. For residences, the appraiser will most likely use the comparable sales method. After carefully inspecting the property to be valued, the appraiser will search the records of sales of similar properties and make note of their sale prices. The appraiser will then adjust the sale prices of these comparable properties for features that are not part of the subject property. After making necessary adjustments, the appraiser will form an opinion about the subject’s fair market value.
Anyone interested in using an appraiser may wish to consult an experienced divorce lawyer for advice on how to choose a qualified appraiser. Most reliable appraisers in Maryland are licensed by the state. Reliable appraisers also are bound by the Uniform Standards of Professional Appraisal Practice.