As the housing market rebounds in the Twin Cities, separating couples are in better position of splitting positive equity. The Pioneer Press reports that the median sales price in the 13-county metro area rose to $160,000 in January, which is 14.3 percent higher than a year ago. As the market thaws, a correct home valuation should be a priority in every divorce.
There are typically two property division scenarios related to the marital home. One of the former spouses may continue to live in the home and pay a share of the accumulated equity to the other spouse. Sometimes an interest in homestead equity can be offset by an award of retirement accounts to the spouse who does not keep the home. Adjustments must be made to the value of the retirement account to account for tax considerations. In other cases, refinancing the home may provide a means of splitting equity. The other common solution is to sell the property and split the proceeds. Either way, it is important to determine the value of the property.
A professional appraisal
Going with a tax-assessed value or an internet search may yield inaccurate information. Many counties aggressively raised real estate values as the housing market boomed to make up for shortfalls when state aid dwindled. An inflated value may mean paying more than necessary to stay in the home. Conversely, if the tax-assessed value is too low, the spouse who does not stay in the home may not receive a fair amount.
It is often worth the cost to hire an independent appraiser, who understands the area and can provide a more accurate picture. If there are disagreements on value, an appraiser can also testify at trial. In most cases, it is advisable for parties to consider a neutral appraiser to provide a definitive valuation of the homestead.
Comparative Market Analysis
Realtors often complete Comparative Market Analysis for properties at little or no cost. This is another way to determine the ballpark fair market value of the residence. The value of the CMA may be enhanced if is prepared by a realtor who is familiar with the market for your particular neighborhood.
A CMA uses recent sales of homes in your area and compares those homes with yours to arrive at an estimate of your home's value. The CMA's usually result in range of value, as opposed to the precision of a formal appraisal. CMA's may not be admissible as evidence in Court.
If underwater on the mortgage, a short sale might be an option
When your home is not worth what you owe, and neither spouse can afford to stay in the home or refinance, a short sale is one way to avoid foreclosure. A new federal rule went into effect November 1, which allows homeowners current on payments to qualify for a short sale.
Following the change, a borrower who suffers a hardship, such as a divorce, may qualify for a short sale from their loan servicers even if they are not behind on payments. The rule change only affects loans backed from Fannie Mae and Freddie Mac though.
If you have separated from a spouse and are considering divorce, contact an experienced Minnesota family law attorney. Depending on your circumstances, mediation may be one way to solve disagreements on how to divide property. From mediation to trial, if necessary, a lawyer can make sure your rights are protected.
Article provided by Meinerts Law Office
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Source:
Who keeps the home: Property division in a Minnesota divorce
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