Appraisal vs. Comparative Market Analysis in Divorce: Which is Right for You?

When divorcing, should you obtain an appraisal or a Comparative Market Analysis (CMA)? Understanding the differences between these two methods can help you make informed decisions about your real property and mortgage options during the divorce settlement process.

Appraisal vs. CMA: What's the Difference?

Both an appraisal and a CMA provide opinions on the value of your property, but they come from different perspectives and serve different purposes:

Comparative Market Analysis (CMA)

Conducted by: Licensed real estate professional
Based on: Potential selling price in the current real estate market
Use Case: Ideal for determining a potential sale price for the marital home

Appraisal

Conducted by: Licensed residential appraiser
Based on: Recent comparable home sales data
Use Case: Best for refinancing purposes or equitable buy-outs during divorce

While both methods provide valuable insights, the choice between them depends on your specific needs during the divorce process.

Why Understanding These Differences Matters

Knowing the primary differences between these valuation methods and the requirements for obtaining mortgage financing can help you avoid obstacles and frustration during the divorce settlement process.

How Mortgage Companies Value Real Property

When refinancing the marital home, mortgage lenders require an independent appraisal by a licensed appraiser. They cannot use an appraisal ordered by homeowners or attorneys for settlement purposes. This can create discrepancies in the valuation used for settlement and the actual refinance.

Example:

John and Mary had their home appraised during their divorce settlement, with a value of $750,000. With an existing mortgage balance of $500,000, they agreed on a $250,000 equity split. Mary planned to refinance and pay John $125,000 for his share.

However, the lender's independent appraisal valued the home at $710,000—a $40,000 difference. This discrepancy could hinder Mary’s ability to access the needed equity, potentially derailing the settlement agreement.

The Role of a Certified Divorce Lending Professional (CDLP®)

Involving a CDLP® early in the divorce process can streamline mortgage planning and real property valuation. A CDLP® can:

Ensure Consistency: Use lender-owned appraisals to maintain consistent property valuations.
Provide Expertise: Offer specialized knowledge in divorce mortgage planning, avoiding common pitfalls.
Facilitate Smooth Transactions: Help divorcing homeowners make informed decisions about their home equity solutions and mortgage financing options.

Obtaining a CDLP® Divorce Mortgage Planning and Real Property Report

A CDLP® report provides an in-depth analysis of real property details and the financial outlook for obtaining mortgage financing. This report helps the divorce team and homeowners understand the property's value and how it impacts the divorce settlement.

Why Work with a CDLP®?

Working with an experienced mortgage professional specializing in divorce can make a significant difference. A CDLP® offers:

In-Depth Knowledge: Understanding of divorce-related mortgage issues
Strategic Planning: Guidance on integrating mortgage options with financial goals
Professional Collaboration: Coordination with attorneys, financial planners, and real estate agents

Conclusion

Choosing between an appraisal and a CMA depends on whether you need to sell the home or refinance it. Involving a Certified Divorce Lending Professional (CDLP®) can ensure you receive accurate valuations and expert advice, facilitating smoother divorce settlements.

Call to Action

For more information and personalized advice, contact a Certified Divorce Lending Professional (CDLP®) today. Let us help you navigate your real estate and mortgage decisions during divorce.

Disclaimer

This is for informational purposes only and not for providing 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 contained in this article is prepared by or purchased from an independent third party for consumer education purposes.