Individuals who have significant resources or competitive income levels often acquire a variety of different types of assets. Married couples may have retirement savings, investment accounts and even digital investments.
Investing in real estate is also a common practice. Spouses might purchase property that they intend to hold until prices increase. They might repair damaged residences and then attempt to flip them by selling them for a significant profit. They might rent to tenants. Other times, they may simply own a well-appointed marital home and vacation properties.
Real estate holdings are often among the most valuable shared assets subject to division in a divorce. Before spouses try to address real property, they have to determine what it is worth. How can couples set fair market values for real property?
Professional valuation is often necessary
The prices that people associate with real estate holdings may not be accurate. Some people reference the price initially paid for the property. That figure fails to take market fluctuations and property improvements into consideration. Others may point to tax assessments, but those values tend to be far lower than the fair market value for the property.
Some people even log on to popular real estate websites to get an instant estimate of what their home might be worth. The calculations performed by those websites are generic and may be inappropriately low or artificially high depending on the circumstances.
The best way to determine what each individual real property holding is worth is to work with a professional. Spouses can consult with a real estate agent. They can also hire an appraiser when they want the most accurate value possible.
Even in scenarios where real estate agents or appraisers have given their opinions, there may still be disagreements between the spouses. Clients typically provide indications to professionals about their intent when seeking valuations. People hoping to sell obviously want to secure the highest price possible. Those trying to buy out a spouse, on the other hand, often hope for lower values.
In scenarios where spouses question the objectiveness and accuracy of a professional assessment, a second professional valuation might be necessary. The spouses can then compare the two values for each property and try to find a compromise. The process of actually dividing real property holdings or integrating them into a property division settlement begins with an agreement about the fair market value of those assets.
Learning more about the factors that influence property division during divorce proceedings can help people push for the best possible outcome. Spouses who ensure that they accurately value their real property holdings can better negotiate for an appropriate allocation of their marital assets.