For most people, the family home is the most valuable asset they own. When couples separate, the family home is usually the most significant asset that needs to be divided.
Should one of you keep the home and pay the other out? Or should you sell it and divide the sale proceeds?
At Martens Legal we assist our clients to work out the best strategy regarding the family home (and other assets, debts and superannuation) to help them to achieve their short and long-term goals. This is known as a property settlement.
The first major step of a property settlement strategy for many of our clients is to identify and value all of the relationship assets, debts and superannuation.
But how is the family home valued? Don’t worry – you are not alone if you had this thought. It is one of the most common questions we get asked. So, we thought it would be a great topic to touch on!
This post sets out the options available to value the family home.
What are your options?
Options to value the family home may include:
Negotiate a value
You and your former partner can negotiate and agree on a value.
With the use of wonderful websites like ‘On The House’ (it’s a favourite of ours!), in some cases, you can work out an estimated value of the family home and put that to your former partner. You can use the estimated value to negotiate your property settlement as long as you and your former partner agree to it.
It does save you the hassle and cost of other options; however, the risk is that it is only an estimate and it may be inaccurate. If you are not confident about the estimated value, then we recommend you proceed with another option.
Real Estate Appraisal
While real estate appraisals are usually free, in our experience agents can tend to give optimistic values. So, an appraisal may not be ideal; particularly in situations where one of you wants to retain the family home and pay out the other. This is because it may be at an inflated value.
Unsurprisingly, bank valuations tend to be cautious and the valuation of the family home is often at a price less than a willing buyer would pay. This is because the bank will value the family home for the purpose of giving you a loan. So, they will base the value on how much they could recover of that value if it had to sell the home in a hurry.
Expert Property Valuation
An expert property valuation is completed by a registered property valuer who will:
– work out the fair market value of the home;
– look at the major issues affecting the homes value; and
– prepare a detailed report with photos and descriptions of the home, with comparisons to other houses in the area.
In our experience, selecting this option will ensure the fairest value for both of you.
Most separated couples will agree to jointly engage the property valuer as a ‘Single Expert Witness’. This is because there are many benefits of having a Single Expert valuer; with the main benefits being:
– the cost of the valuation report is typically shared between you and your former partner;
– it also limits the potential for dispute because the valuer was engaged jointly and there will only be one value; and
– in addition, the value provided by the Single Expert valuer is accepted by the Court as evidence without either you or your former partner having to apply separately to the Court.
How can we help?
Our role as your family lawyer is to guide you through a property settlement; which includes the valuing process. We can help you identify values and communicate those to your former partner, arrange the Single Expert Property Valuation and recommend registered property valuers. We can also help you to negotiate your property settlement with your former partner and prepare the necessary legal documents to formalise the settlement.
Would you like further information?
The information contained on this site is for general guidance only. No person should act or refrain from acting on the basis of such information. Appropriate professional advice should be sought based on your particular circumstances.