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Establishing home value is an important step during a divorce

On Behalf of | Sep 7, 2023 | Division Of Assets

Divorcing in California means that a married couple needs to address multiple practical considerations. If they have children, they will need to make arrangements for sharing parenting time. They will also need to find a way to divide their assets. Couples tend to focus most of their property division efforts on their most valuable resources. The home that a couple lived in and the equity they have accrued through years of mortgage payments may be the most valuable asset in a couple’s marital estate.

Understandably, people frequently focus on whether or not they can continue living in the marital home when they set priorities for the property division process in their divorces. However, community property rules mean that retaining the home doesn’t necessarily mean keeping its whole value. Establishing the fair market value for the home can, therefore, be a key factor in securing a fair property division outcome for both spouses.

People don’t realize what their homes are worth

There are multiple sources of home values that people may refer to during divorce proceedings that will likely be inaccurate. They may point to what they paid for the house when they purchased it or the assessed value for property tax purposes. Neither of those amounts is likely to be an accurate representation of the current fair market value of the property.

Especially if it has been several years since someone purchased the home or if they have made significant upgrades to the property, it may be necessary to bring in a real estate professional to calculate the current fair market value for the home. Getting an appraisal is a common practice during divorce. In high-conflict cases, spouses may even get two separate appraisals and then split the difference between the two values.

Why the value matters so much

While only one spouse can keep the home, both deserve their community property share of its equity. Therefore, establishing what the home is worth and then comparing that with the current principal balance on the mortgage will provide a realistic estimate of the total value of the equity that the couple has accrued in the property.

The value of the property will determine how much equity one spouse withdraws when refinancing the home to compensate the other or can have a major influence on the allocation of other assets during property division negotiations or litigation. Having a realistic idea of what a home is actually worth is, oftentimes, an important starting point for those preparing for a California divorce who are eager to protect their financial interest in their property.