Divorced? Know the true value of your home

Households often go to the ending spouse with custody of the children. In fact, courts almost always give special consideration to the parent who keeps the children: keep the kids, keep the house. However, the spouse who gets the house may not get the fair ending of the divorce settlement.

Few homeowners understand the true value of the home, even though the marital home typically accounts for 60% of a family’s net worth. Additionally, the Commonwealth of Massachusetts does not have a state-prescribed guide for divorce real estate. Often, when the family home is not sold (ie transfer between spouses), the valuation of the property is not accurate. In most divorces, the value of the home is determined by the spouses and/or an appraiser, and the relinquishing owner is usually given some form of credit for his or her half of the equity the couple has in the home. So if an appraiser says the home is worth $600,000 and the homeowners owe $400,000, the spouse moving out of the home gives up their right to their $100,000 equity interest for perhaps $100,000 in stocks and bonds.

If a home is appraised by a third party, it is usually done by a professional who knows little about how to assess the home’s true condition. Owners themselves often also have inadequate knowledge of a home’s true value. For this reason, a home inspection by a licensed home inspector is highly recommended. A home inspector can evaluate the home’s structure and systems to determine its true condition. Once homeowners have a detailed report of the home’s defects, they can proceed more precisely with the divorce settlement. Both a home inspection and at least one title search must be completed prior to the settlement agreement.