Appraising a property to split equity
November 14, 2013 5:16 AM   Subscribe

I currently jointly own a property in the US, that both parties agree I should take sole possession of. I would like to get a realistic appraisal value, in order to buy out the other person. Is there anything particular that I should discuss with a potential appraiser when I contact them? Thanks!

Both names are on the title, my name only is on the mortgage, and I only want to take over the title, and not refi the mortgage. I understand that I need a novation to transfer the title. An appraisal for a novation seems to be different to an appraisal for a refi, as the latter needs to come in at a certain value (e.g. current equity plus 20%) in order to qualify for a better mortgage. However I am not looking to refi, just to try and find a fair way to split whatever value is in the property (which according to online sources is underwater to a greater or lesser extent). I think I can explain this to the appraiser, but I also feel a bit lost in the whole process. Any help appreciated. Thanks!
posted by carter to Home & Garden (6 answers total) 1 user marked this as a favorite
Best answer: Contact an appraiser, use one recommended by your bank or your realtor. Explain what you need the valuation for. The other party may wish to get his/her own appraisal at the same time. (I'd recommend that to the other party.)

Then take the two appraisals and average them.

An appraisal costs about $250, so it's not a huge amount of money.

Here's what happens:

The appraiser will come to your house and will spend most of his/her time outside measuring your property. Then they'll come inside and do the same.

If there are issues with the property, old roof, old HVAC, etc, let the person know, it factors in. Ditto any improvements, new cabinetry, added a room, etc.

Then the appraiser will take a shit-ton of pictures.

You'll get a report in a few days. It will have pictures, explanations of things that either add or subtract value from the home, a copy of the county's survey of the property, and comps. These will be the real estate listings of similar homes in your area that have recently sold.

Based on this, the apprasier will come up with a value.

The comps are what can make or break you. If the comps are even 6 months old, the property could be undervalued. If one of the comps is from the next neighborhood over, the one by the golf course, it can jack up the value.

Discuss any questions you have with the appraiser.

And that's it. It takes a couple of hours. You can leave them to wander around your property while you play around on the computer.
posted by Ruthless Bunny at 6:10 AM on November 14, 2013

I'm confused. If the house is underwater (or turns out to be) are you splitting what money you and other party put down in order to purchase? I guess a better way to ask this is how long you've owned property and who is currently paying mortgage? I'm thinking you'd be better served by consulting with an atty (for the novation) as well as your lender (for appraisal referral)
posted by lasamana at 7:36 AM on November 14, 2013

Response by poster: It's kind of a long story, but my name is on the mortgage, and my 'A's names are on the title. I and 'A' agree for various reasons that I should take over the title; this is not going to change. Also the down payment is not an issue.

Say the balance on the mortgage is 100k.

If the appraisal value is higher than the balance on the mortgage - say 120k - I will split the difference with 'A', hand over 10k, and get the novation signed.

If the appraisal value is less than the balance on the mortgage - say 80k - I will get the novation signed, and possibly 'A' will contribute something to the difference.

Does this make sense? ... As I said I'm having issues wrapping my head around it.
posted by carter at 7:45 AM on November 14, 2013

Best answer: No that makes sense, I was curious as to what was going to split. My advice would be to contact your lender. Even if A's name is not on the mortgage, your lender should be aware that A's name is on the title (technically the bank still has the title since you owe but your state laws may vary). They will probably refer it out but IMO I'd also seek advice from an atty. (to protect your best interest)
posted by lasamana at 8:04 AM on November 14, 2013

Sorry recouping from dental surgery - the lender still has the lien against your property - so you are both on the title. (I probably should take a break now).
posted by lasamana at 8:29 AM on November 14, 2013

Response by poster: Thanks lasamana! I contacted the lender, told them I am transferring the title, they are mailing me a letter to approve of the transfer.
posted by carter at 8:34 AM on November 14, 2013

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