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How do I determine my home equity in divorce?

Property Division Issues

You may have settled on a decision with your spouse to buy the marital home as part of your upcoming divorce settlement. This allows you to hold on to the home you have lived in during the marriage and enables your spouse to start over elsewhere. To come up with an amount to buy out the ownership interest of your spouse, you will need to determine the equity in your home.

To arrive at an equity amount, you need to figure out the overall value of your home first. From there, you can arrive at your home’s equity by subtracting liens and encumbrances. Forbes explains a few ways how you may valuate your home.

Hiring an appraiser

To arrive at the most accurate value of your home, you may need the expertise of a professional appraiser. An appraiser will look at your home and offer a neutral opinion, known as an appraisal, of how much the home is worth.

Hiring an appraiser may yield additional benefits. Your spouse might feel comfortable with the opinion of an appraiser since the opinion comes from an unbiased source. You might also need the appraisal if you want to refinance the home in your name.

Asking for a broker price opinion

If the expense of getting an appraisal concerns you, you may be able to find a cheaper way to valuate your home through a broker price opinion. While an appraiser can perform a BPO, you can also have a real estate broker or a professional real estate agent conduct one for you. In addition to the cheaper price, a broker or an appraiser can perform a BPO in a quicker time frame than a full appraisal.

Other methods of valuation

Some home owners utilize other methods of figuring out home value, such as a comparative market analysis. A CMA determines equity by comparing the sales of properties in the nearby area. A broker can perform this action. You might also consider using your property taxes as a valuation tool, but since property taxes do not update frequently, you may end up with a result that does not comport with current market value.

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