Our house is worth...what exactly?

April 29, 2023 12:18 PM

How should my ex and I determine the value of our house during our divorce when we have two very different assessments?

My ex-wife and I (still legally married) own our house together, and for our divorce, the current plan is that, instead of selling the house and splitting the revenue, I buy out her share of the house so as not disrupt living situations. We’re working with a mediator who suggested the basic formula:

(estimated_value – current_mortgage) / 2 = each_persons_share

Simple enough. But the problem is getting the estimated value. The mediator suggested we each find a real estate agent to give us estimates and perhaps pay a professional assessor. Both my ex- and I have friends who are real estate agents. She got her friend to come by to look at the house, and I got mine. Her friend gave us a value of x. My friend ghosted. We paid an assessor a few hundred bucks and got a value of y, which is less than x.

If the two assessments, x and y, were close, say a 5% difference, it would be relatively easy to agree on a value for the house. But the problem is there’s a 25% difference between x and y, and it’s quite a bit of money. I haven’t dug into the details of assessments, but I don’t really feel qualified to do so competently anyway. I’m wondering if one of the assessments is wildly off. I asked my ex’s real estate agent to review the paid assessment and see if she could find the reason for the wide discrepency from hers, and she said she would. But I don’t think it’s a priority for her and don’t know when she’d get to it. (She’s helping as a friend, after all.)

As our mediator pointed out, the only way to find the true value of a house is to put it on the market and sell it, which of course we’re not doing. So how to determine the value of the house? Which assessment should we go by? Maybe we spring for another independent assessment?

I’d appreciate any helpful ideas.

posted by Leontine to Work & Money (23 answers total)

I think it's obvious that your ex's friend/agent has a conflict of interest, because they presumably want the best deal for their friend, which means the highest estimate they can offer without being laughed at. On the other hand, your friend/agent who backed away would have a conflict, wanting the best deal for you, which is the lowest value they can get away with without looking unprofessional too (may also be part of why they backed out).

So I think the best thing to agree on is to throw the friendly estimate out, pay for another assessment, and average those two (simple mean). You could do more paid estimates but I think it's unlikely to move the mean much, and would start to cost a lot of money. Maybe a third would put you all at ease, if the cost is no big issue.
posted by SaltySalticid at 12:30 PM on April 29, 2023 [38 favorites]

I have never done this, and have never heard of anyone else doing it, but it's what comes to my mind first:

If the difference is that drastic, the difference is more than a realtor's commission in your city - likely 2-3% of house value. Put the house on the market for an agreed to amount of time. Decrease the house price on the market until you get an offer. Whatever highest offer you get in that time is the market price of the house. Decline all offers. Pay your realtor their commission since they did their job. You won't have to pay a buyer's agent commission because there were no buyers.
posted by saeculorum at 12:31 PM on April 29, 2023 [1 favorite]

Any two assessments were never going to come back with exactly the same number. What was your original plan for how to proceed once the two numbers came back? Or just get another assessment and average all three.
posted by ThatCanadianGirl at 12:36 PM on April 29, 2023

Best answer: Yes, I would say both of your friends ought to be off the table here for consultation. Either go with Y, or get a second independent assessment to make sure this one wasn’t wildly off base for some reason and average the two.
posted by Stacey at 12:39 PM on April 29, 2023 [6 favorites]

You shouldn't have agreed to ask real estate agents, that isn't their job. The right thing to *assess* the value of your property is to... pay an assessor. Which you did.

The only further thing I'd agree to is the mediator hire an assessor and you both abide by that.
posted by flimflam at 12:41 PM on April 29, 2023 [14 favorites]

If you want to consider the realtor's valuation at all, which I wouldn't, get a second assessment, so you have three values. Then use the average of the two values that are closer to each other. (If the three are evenly spaced, use the middle.)

Otherwise, yeah, just get another assessor and use the average of the two assessments.
posted by likedoomsday at 12:50 PM on April 29, 2023 [1 favorite]

You don't ask friends to do this, you ask property assessors that are independent and not friends. Obvious conflict of interest. Start over and each procure one assessment.
posted by Ahmad Khani at 12:54 PM on April 29, 2023 [21 favorites]

The approach I've always heard is that your wife and you each pick an appraiser; those two appraisers agree on a third appraiser. The third appraiser determines the value of the house. This system is designed to minimize any possible conflict of interest.
posted by Winnie the Proust at 12:57 PM on April 29, 2023 [16 favorites]

One value is likely possible sale price on the current market, the other may be the actual value of the home.
posted by corb at 1:05 PM on April 29, 2023 [3 favorites]

Unless by "real estate agent" you meant "real estate appraiser" then yeah, I agree your ex-wife's friend's number needs to be thrown out since that isn't even her job. If your ex doesn't like the assessment amount, then I'd say offer to get a second opinion and average them.

For your own curiosity, you could just look on Zillow and see if any houses similar to your house in your neighborhood have sold recently. This is what a real estate appraiser will look for (this was my dad's job) - their way of calculating the final figure it obviously a bit more complicated since no two houses are entirely alike, but that might be able to give you a sense of which number is closer to the "truth."
posted by coffeecat at 1:52 PM on April 29, 2023 [1 favorite]

Take a moment and *do* dive into the details of the assessments you have already gotten. Any authoritative assessment is going to include comps -- recent sales of similar houses in the same area. Look at those comps on paper, see how they relate to your house, and you should pretty easily see if the assessment is valid. The paid assessor likely cites specific issues -- "this house sold for 50k more, but it has a pool" or "this house sold for 100k less, but it's at a noisy intersection," and the like. You should pretty easily be able to see if the comps seem logical, or if they half-assed it and the comps are irrelevant to your situation. (Like, "you can't call this a comp; it's on the other side of the train tracks and that's considered to be a much nicer neighborhood than ours.")

You can definitely proceed with other plans like hiring a new assessor, but you need to start with what you already have on hand.
posted by BlahLaLa at 2:05 PM on April 29, 2023 [4 favorites]

the best thing to agree on is to throw the friendly estimate out, pay for another assessment, and average those two (simple mean).

Employing friendly appraisers would have been unprofessional. I hope that's not what the mediator had in mind. Seconding SaltySaltAcid, that arrangement would have created conflicts of interest.

A good approach is for each of you to engage a professional appraiser, and then have those two together select a third one. Then average the three appraisals.
posted by JimN2TAW at 2:24 PM on April 29, 2023 [3 favorites]

Nthing that you need an appraiser to find the value. Appraisers are licensed, regulated professionals, and subject to professional censure if they cut corners or otherwise don’t give you a full and fair appraisal. Put it another way and consider who usually hires an appraiser: the mortgage company - they’re making sure the amount they’re loaning you is somehow related to the value of the house. And there’s a defined process to do that. They look at other houses with similar features in the same general area. It’s not arbitrary. Hire one. And if you and your ex can’t agree on one, have the mediator hire one.
posted by kevinbelt at 2:28 PM on April 29, 2023 [1 favorite]

In most parts of the US, some agency, usually your county assessor or treasurer, determines the value of your home for property tax purposes. In many areas, this value is somewhat less than market value, but is adjusted year by year according to whatever algorithm that agency uses. That information is usually public knowledge, and you can likely look it up online. That valuation of your property would give you a neutral, and free, additional figure to use in finding a mean value for your home. Two paid assessments plus the county's valuation, I would think would be a good mix.
posted by xedrik at 2:54 PM on April 29, 2023 [3 favorites]

We're in the early stages of selling our house and our realtor prepared a 60 page analysis to describe to us how much she felt we should be listing our house for and why. If your ex's friend didn't visit your house, walk through it, and prepare some kind of analysis -- if she just gave a number -- I would ignore it altogether. But if she gave some details or rationale to the number, I'd at least look at the documentation because your current plan to not sell the house may not be where you land in the future. (I would still not use this number for the purposes of understanding your home's value because as others have noted, you actually need an assessor for that. But some of the information might be useful.)
posted by sm1tten at 3:20 PM on April 29, 2023

Absolutely take your wife's friend's numbers out of the mix and get an assessment by a qualified assessor, vs a real estate agent. If there's a big difference between the two numbers, get a second assessment and average those, taking the other real estate agent's number out.

Your wife's friend has reason to want to help her, although she is risking professional trouble by not giving an honest estimate. But, at the same time, even an independent agent might hope to make money by valuing the property higher, just in case you did decide to sell. The only way around that kind of thing is to get your numbers from someone with no interest in a potential sale.
posted by rpfields at 3:21 PM on April 29, 2023

shotgun clause or sell/buy clause

You offer x amount to buy the house,
she must either
A) accept the offer (sell)
or
B) decline and must buy the house at the same price offered.
posted by yyz at 3:31 PM on April 29, 2023

Be very careful of using the tax-assessed value. I skunked my ex out of quite a bit that way, because he didn't adult enough to insist on a genuine assessor. (Don't worry, he still left the marriage with more than he frankly deserved.)

Agree that the way out here is to toss the agent's valuation and get at least one more actual assessor in.
posted by humbug at 3:38 PM on April 29, 2023 [1 favorite]

Don’t get your friends involved in this. Pay for a valuation, or two and split the difference.
posted by koahiatamadl at 4:13 PM on April 29, 2023 [4 favorites]

You already paid an professional assessor for an unbiased opinion of the value. I would give your wife the choice to go with either (1) accept the professional assessment or (2) she hires a second professional assessor who also is getting paid for their professional opinion. These opinions should come with a written appraisal that shows each comparable property and the +/- used to adjust for the difference between the comparable and your house and you agree to average the two numbers or (3) you both agree on someone you believe to be neutral third party and hire him/her to do the assessment. I would note that if she accepts that the person you hired is already a neutral third party then she save a little money and accept that. But if she is unhappy that you aren't willing to accept the opinion of a real estate agent (who is not licensed to do a legal professional appraisal) then let her pick and pay for someone else who is qualified. (note if you both paid for your guy then you should both pay for the new one) A few hundred dollars is the least of our problems given what is at stake.
posted by metahawk at 7:16 PM on April 29, 2023

You need to get a 3rd number from an assessor. But I would get your mediators help in agreeing how to do that and how to proceed in establishing the correct figure.
posted by plonkee at 1:27 AM on April 30, 2023 [1 favorite]

Call your bank or insurance company or someone on the "buying" side of a real estate deal and see if they have a list of appraisers they recommend. Appraisers get known for reliably giving high or low estimates, and then they get business from either the buying or selling side depending to which side and to what degree they tend to lean. Appraisers know who pays them and want happy customers as much as their conscience permits. This is why even if your wife's appraisal was not a personal friend (terrible idea), you still wouldn't trust only the appraiser she hired.
posted by ctmf at 5:22 PM on April 30, 2023

In case it helps, you are confusing three terms:
- Assessment - what the local government thinks your house is worth for taxation purposes
- Appraisal - what a licensed appraiser thinks the estimated value of the house is
- Market Analysis - what a real estate agent thinks the house should be marketed for

In an ideal world, all three would be the same number, but rarely are. These are all educated opinions, but there is no science that will make them all perfectly accurately reveal the 'true' value. Hire two independent appraisers, and average their two numbers. This is how relocation companies typically work, since the employee being relocated wants a fair price and so does their employer that is paying for the relocation. If the two appraisers' values are not within, say, 5% of each other, the relocation company gets a third appraisal and then throws out the 'outlier' and averages the two that are closest to each other in estimated value.

I am not your appraiser or your real estate agent, but I used be the former and currently am the latter.
posted by juggler at 1:09 PM on May 1, 2023 [2 favorites]