One of the most contentious issues in a Texas divorce is the valuation and division of the couple’s community property. This issue can be especially difficult for couples with significant assets. One potential solution is the hiring of professional appraisers to set the value of various assets, including the family home.
One appraiser or two?
In many high asset divorces, the couple hires a single appraiser to provide values for their various assets. While this method is far cheaper than hiring two appraisers to provide an estimate of fair market value to both parties, the choice of appraiser must be researched very carefully to ensure that the appraiser can be fair and impartial. In some divorces, the level of acrimony virtually forces each party to retain an appraiser. In other divorces, the use of a single appraiser may allow the couple to reach their own agreement about asset values and how to divide those assets.
What does an appraiser do?
While many wealthy couples have used appraisers in earlier transactions, such as applying for a loan to buy a house, the nature of an appraiser’s work is a mystery to some. An appraiser’s main job is to determine the value that a willing buyer would pay to purchase the asset under consideration from a willing seller. Appraisers use one of three techniques to reach this conclusion:
- The cost approach, in which the appraiser uses the costs of materials and labor to determine the cost of reproducing the asset;
- The income approach, in which the seller uses historic income data and market research to estimate the present value of the property; and
- The sales approach, in which the appraiser uses the sales of comparable properties to estimate the probable fair market value of the subject property.
When the appraiser finishes the necessary research, a written report is prepared and furnished to the client. If the parties do not reach an agreement on the value of one or more assets, the report can be submitted as evidence at trial and the appraiser can testify as an expert witness.
An experienced divorce attorney can offer important advice in hiring and using an appraiser. Such a lawyer can direct the appraiser’s research by providing relevant information and assist in preparing the appraisal report.