Home is where the heart is. And, in a divorce, home is where the money is. Couples fight over the home for a number of reasons. The main questions that often arise are who can keep it, who owns it with right to sell it, and how will the profit be divided. These questions are first examined by having a divorce lawyer determine whether the house is deemed marital or non-marital property.
If the house was purchased after the marriage, that’s easy. It’s marital property and divisible.
Now, if the house was purchased prior to the marriage, but the home was put into the couple’s name in title or mortgage, or both, the house is now marital property.
When it comes to divorce, the couple has to determine the value of the home for purposes of dividing the asset. However, the hardest part is coming to an agreement on the value on the home. One party may have an emotional attachment to the home and will assign an unrealistic price to the value of the home. Or, one party may not be willing to give up the house in the divorce and, in fact, wish to keep the house. This often happens for a number of reasons, but it’s most often when it’s the home the children live in.
A lot of situations may come into play when trying to put a value on the marital home in a divorce. So… how is it done in Illinois?
Easy, Sell It.
Putting the home on the market and selling it can provide an easy way to divide the marital home. Another route, is for one party to keep the house and buy out the other party. Now, if the party keeping the house can’t pay their half of the value, the court may order the home to be sold.
If there are children involved, the couple could agree to allow one party to remain in the home until the children reach an agreed upon age and sell the home at that time. Of course, this agreement has to be in writing to keep things from being unnecessarily messy. Whomever keeps the house will be on the hook for all mortgage payments until the house is sold. No worries, the party that continues to pay the mortgage will be reimbursed for any balances or costs paid before the proceeds from the sale are divided.
Cost Comparative Analysis Approach?
With everything at the touch of our fingers, couples (and their divorce lawyers) can compare their home to others in the area to estimate the value of their home by way of a few different real estate websites. There are numerous ways of estimating the value of a home. The trouble with this is that homes rarely sell for the advertised listed price, so this method may be misleading. The easiest route may be hiring a real estate agent to do a comparative market analysis of the home. This process involves researching how much similar homes are currently listed for sale and those that have been recently sold. A cost comparative analysis can provide couples with a more realistic price range.
All in all, it’s best not to estimate. Know the value of your home.
An appraisal is completely different from the above-mentioned cost comparative analysis. This process includes a licensed professional coming into the home and placing a value on the home based on widely used quantitative measurements. Couples are, more often than not, disappointed in the outcome of this approach because the value is usually lower than a cost comparative analysis. In addition, appraisals cost money, and the whole point is to get money – not spend it
Difference in opinion on Value.
When the parties can’t agree on the value of the house, the court will order an appraisal of the home. Appraisals are favored over a cost market analysis because of the stability of the widely used quantitative measurements.
However, if both parties have hired appraisers and the appraisers come up with different figures, they may have to testify via a divorce lawyer’s questions and the judge will determine which appraiser is more credible. If the court decides on one appraisal over the other, that doesn’t mean the party that hired that particular appraiser has won the home. It simply means the court has decided to go with the value that particular appraiser came up with, and the house will be divided according to that figure.
Valuing the Other Marital Assets
If after the value of the home has been determined and the judge still awards the entire home to one party over the other, a portion of the home’s value will be awarded to the other party by way of other marital assets. This is most often, the retirement account. However, it’s important to remember that the value amount shown doesn’t account for taxes that will be taken out. To account for this, retirement accounts are usually discounted by 30% to cover expected deductions.
The home and retirement accounts usually provide for a large portion of the liquid marital assets in a divorce. If in doubt, a Qualified Domestic Relations Order prepared by your divorce attorney is the best way to go about equally dividing marital assets. Selling a home and liquidating retirement accounts may cause a storm of emotions. This route may be the most amicable solution.
If you have questions about how to value a house in your divorce, call an experienced Chicago, Illinois divorce lawyer today to get the advice you need regarding your valuable asset and how it will be divided in a divorce.