Dividing assets can be one of the most difficult issues in any Michigan divorce, but it can become especially contentious if the couple owns very valuable assets. If some of the assets have been owned by one spouse or the other for a very long time, the value of the assets may be almost entirely subjective, that is, each spouse has his or her own opinion about the asset’s value. One method of resolving such disputes, especially if the asset is real estate, is the use of a professional appraiser. Because homes usually constitute a couple’s largest asset as measured by financial net worth, this post will concentrate on the methods used by professional real estate appraisers to value a couple’s residence.
What is an appraisal?
An appraisal is a formal written opinion as to the value of a particular piece of real estate and any structures on the real estate. The appraisal is a professional opinion of a person trained in appraisal techniques as to the price that a willing seller would accept from a willing buyer.
What happens in an appraisal?
The appraiser’s first step is to visit the piece of property (Subject) to be appraised. The appraiser will make an appointment with the owners to visit the Subject in order to make a visual inspection. The appraiser will measure the entire structure and the size of each of the rooms. The appraiser will also inspect the physical condition of the Subject, making special notes as to whether necessary maintenance tasks have been performed.
Reaching an opinion as to value
The appraiser identifies properties that are comparable to the Subject in size, use and location and that have recently changed hands. The purchase price of these properties (usually called “Comparables”) can be obtained from public land records. The appraiser will next apply a set of professional criteria to compare the likely sale price of the Subject with the sale prices of the Comparables. After adjusting for differences between the Subject and the Comparables, the appraiser will form an opinion as to the Subject’s fair market value. The opinion is then expressed in a written report that enumerates the factors used by the appraiser to determine value. The report is provided to the party that retained the appraiser; the report may also be given to the adverse party and the court.
Is the opinion as to value reliable?
Virtually all professional appraisals in Michigan subscribe to the Uniform Standards of Professional Appraisal Practice (USPAP), which contain ethical and professional standards that are intended to ensure that an appraisal prepared subject to these standards will be as accurate as possible, assuming that the underlying data is accurate. Most experienced divorce attorneys are familiar with the work of appraisers in the local area, and they can make recommendations about reliable and persuasive appraisers.