Most wealthy Colorado residents who are contemplating a divorce view property division as one of the most important – if not the most important – issue that must be resolved during the divorce process. Many couples are able to resolve all issues of property division without the stress and expense of a trial. For those couples that are unable to reach a mutual agreement on the division of their marital assets, retaining an appraiser may be the most effective way to anticipate and settle disputes about the value of various assets.
An experienced appraiser will provide an estimate of fair market value of marital assets. Most appraisers specialize in one or more types of appraisal. Many appraisers specialize in valuing real property. Other appraisers provide an estimate of the value of a family enterprise or the worth of works of art or antiques. These estimates can be used in negotiating a property division or as evidence in court if the couple is unable to agree on the value of their assets. Because valuing real estate is most often the centerpiece of asset division, the methodology used by real estate appraisers deserves a detailed look.
In appraising a piece of real estate, the appraiser first conducts a physical examination of the property. The appraiser examines the size and physical condition of the property and takes note of any significant improvements, such as a swimming pool, attached garages, and custom kitchen. After making the physical inspection the appraiser will use one of three methods of estimating value: replacement cost, income approach, or comparable sales approach.
Because the costs and labor and materials have probably experienced significant inflation after the house was built, this method is rarely used. Most residences are not income producing property, and the appraisal is completed using the comparable sales approach.
In this approach, the appraiser collects sales prices for sales of properties that are comparable to the subject parcel in size, age, location and general quality of design and construction. The appraiser then adjusts each comparable price based upon amenities, deficiencies and other factors that might affect the sale price. This estimate of value is then given to the client and the client’s attorney. If the couple does not agree on how to divide the house, the appraiser usually testifies at trial, and the written appraisal report is introduced into evidence.
Anyone facing a divorce that will involve the division of assets with significant value may wish to consult an experienced divorce attorney about the cost and advantages of retaining one or more experienced appraisers.