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Valuing Real Estate in Divorce Cases: The trial court in a divorce case in Washington State is required by law to make a “just and equitable” division of all common and separate property and debts. RCW 26.09.080. Properties are included in this category. Of course, before the court can decide how to split and award property, it must first establish the value of that property.
In a property division, a major source of disagreement is often the valuation of individual items. It doesn’t help that the people involved in the value determination process may have different goals.
For instance, a party seeking to acquire an asset would like that its value is as low as possible, while a party surrendering its interest would prefer that it be as high as possible. In most cases, in order to divide property fairly, each partner must receive something of equal or nearly equal value.
If one party is given an asset with a disproportionately high value, the other party will likely be entitled to an asset (or assets) with a disproportionately high value.
The value of an asset is an issue of fact in Washington, and the trial court’s assessment will usually be upheld if it is reasonable and supported by the evidence.
In re Marriage of Matthews, 70 Wn. App. 116, 122, 853 P.2d 462 (1993). Assuming the evidence supports the value assigned, the court need not elaborate on the specific method adopted to arrive at that value. Re: Marriage of Luckey (73 Wn. App. 201, 868 P.2d 189) (1994).
The record is evaluated in the light most favorable to the party against whom the findings were entered to determine whether sufficient evidence exists to sustain the trial court’s conclusion on value. Hagen, 77 Wn. App. at 291; DeBenedictis v. Hagen, 77 Wn. App. at 284; 890 P.2d 529 (1995). Substantial evidence is that which would convince a reasonable person of the truth of a statement (i.e., the accuracy of the value determined). Marriage of Katare, 175 Wn.2d at 35, 283 P.3d 546 (2012).
The “fair market value” standard is used by the trial court to determine the worth of marital property at the time of divorce. Definition of “Fair Market Value” or “FMV”
No panic price, auction value, speculative value, or value set by artificially low or high prices qualifies as “fair market value.” We have defined it as the price at which an uncommitted buyer would purchase an uncommitted seller’s property, taking into account the whole range of possible uses for which the asset was designed and could be used.
40 Wn.2d 238 (Donaldson) 252 (Greenwood), 242 P.2d 1038 (1952). In determining the worth of an asset, Fair Market Value is just one factor to consider. The trial court has the final say on the applicable valuation standard in a divorce case. Assigning a value to an asset should typically be based on how much a spouse could get for it in a sale.
Expert appraisers are often consulted to help with the valuation process. Joint appraisals with a single expert can help parties save money, but parties should keep in mind that either spouse is free to seek a second opinion if they feel it is necessary after the joint appraisal.
Professionals that make a living appraising real estate and earning accreditation from the Appraisal Institute (www.appraisalinstitute.org) are the people you want on your side if you ever find yourself in a family courtroom. Among the many tools at their disposal, “comparable sales” in direct proximity and similar neighborhoods are used by these professionals trained to assess value.
The expert has likely appeared before a court before, and they have experience with depositions, discovery, and giving courtroom testimony in support of their opinion. Furthermore, these experts evaluate the assessments provided by opposing experts.
Avoiding a professional real estate appraiser can cause problems. Avoid the following approaches to establishing the value of real property in a divorce proceeding because they are less reliable, less convincing, and sometimes unjustifiable unless the parties agree in writing on a value, which typically eliminates the need for a formal appraisal:
- Using an appraisal contracted by your bank for your property buy or mortgage.
- Consult a real estate agent for a “Comparable Market Analysis.”
- Relying on valuations listed on Zillow.com, www.Redfin.com, etc.
- Using your property’s assessed value for tax purposes (assessed values are not accepted as proof of fair cash market value).
- The case was In re City of Medina, 69 Wn.2d 574, 418 P.2d 1020 (1966).
If the worth of your property has not been established through a sale, the parties involved must carefully consider the information they present.
To ensure that the value of the assets being divided in their case is truthful and correct, to the best of their ability, the parties to a dissolution proceeding can expect to work with their attorney to retain a qualified and experienced real estate appraiser.
