Recently we had a situation where a couple client of ours was going through a divorce. We’d been asked at one point to provide a Comparative Market Analysis (CMA) on a rental property (former personal residence) so that it’s value could be considered in part of the splitting of assets. Our analysis looking at current and recent sale data showed the home to be valued in the mid-$200’s. Some time went by and as the timeline for the end of the divorce proceeding loomed, we were asked to update our analysis to confirm the prior value and/or to see if the value had changed at all.
During that time we were still in the declining market for our area so the value stayed in the mid-$200’s. I was surprised to hear that one of the homeowners had been told by one of the attorneys that if a market analysis couldn’t be completed that they’d have to use the Zillow valuation for the home. Yikes! I took a look at it and the “Zestimate” was at $313,000 with a range of $278k – 332k. Not a realistic value for this property at all. Perhaps if the one owner was actually getting something out of the divorce this might be a good thing to hear, but the reality of the divorce was that it was a splitting of debt mostly. Having the value be higher meant she’d be shouldering more debt than would have been appropriate for her.
If you’re going through a divorce and splitting of assets includes real estate, be sure to look at all your options for valuation – including paying an appraiser or a real estate broker to put a market analysis together for you. We do these regularly for estates where the stepped up cost basis needs to be determined and it can be done for divorce cases as well.
