When divorcing couples decide to separate, one of the first questions they face is, "What should we do with the marital home?" Should they sell it, should one partner keep it, and what is its value? Understanding how to assess the value of the marital home and other real estate is crucial in the settlement process.
Determining the Value of Real Property in Divorce:
Appraisal vs. Comparative Market Analysis (CMA): The two most common methods for assessing the value of real estate are obtaining an appraisal from a licensed appraiser or having a real estate professional provide a Comparative Market Analysis (CMA). It’s essential to understand the difference between these two methods and when to use each.
Appraisal:
- Conducted by a licensed residential appraiser.
- Based on recent comparable home sales data.
- Provides an opinion of value from a professional appraiser's perspective.
Comparative Market Analysis (CMA):
- Conducted by a licensed real estate professional.
- Based on the potential selling price in the current real estate market.
- Provides an opinion of value from a real estate professional's perspective.
Choosing Between an Appraisal and a CMA:
- Appraisal: Best for situations where one spouse is retaining the marital home and refinancing.
- CMA: Ideal when considering the sale of the marital home.
Role of a Certified Divorce Lending Professional (CDLP®): A Certified Divorce Lending Professional (CDLP®) can help divorcing homeowners make informed decisions regarding their home equity solutions. They assist in identifying potential conflicts between the divorce settlement, home equity solutions, and real property issues.
The Holistic Approach of Divorce Mortgage Planning: Divorce Mortgage Planning involves evaluating mortgage options within the context of overall financial objectives related to divorce. Working directly with the divorce team, a CDLP® understands the intersection of divorce, tax, real estate, and mortgage financing. The CDLP® helps integrate the selected mortgage into long and short-term financial and investment goals, minimizing taxes, reducing interest expenses, and maximizing cash flow.
Benefits of Involving a CDLP® Early: Involving a Certified Divorce Lending Professional (CDLP®) early in the divorce settlement process can help divorcing homeowners set the stage for successful mortgage financing in the future.
Conclusion: Deciding what to do with the marital home during a divorce involves careful consideration of various factors. Understanding the differences between an appraisal and a CMA, and involving a CDLP® early in the process, can help ensure a smooth and successful transition.
Disclaimer: This information is for informational purposes only and not intended as legal or tax advice. Contact an attorney or tax professional for legal and tax advice. Interest rates and fees are estimates and subject to market changes. This is not a commitment to lend. Rates change daily—call for current quotations. The information in this newsletter is prepared by an independent third party and distributed for consumer education purposes.
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