How the Marital Home Is Valued in a Divorce: Appraisal vs. Market Analysis

The marital home is usually valued one of two ways: a market evaluation from a real estate agent, or an appraisal from a New Jersey licensed or certified appraiser. A market evaluation is a pricing tool built from recent sales, and an appraisal is a formal valuation; which one your case needs is a decision for your attorneys, your mediator or the court.

I'm Dennis Mark Interdonato with The Dennis Mark Group. As a Master CDRE®, I prepare market evaluations that both spouses see at the same time, and when the attorneys or mediator call for a formal appraisal, I give the appraiser the property details and recent sales. Here's how the two compare, and when each one fits.

Why does the value matter so much in a New Jersey divorce?

Because almost every decision about the house runs through it. The present value of the property is one of the factors a judge weighs in equitable distribution (N.J.S.A. 2A:34-23.1), and the Family Part's Case Information Statement asks each spouse for every property's value and the date that value was set (NJ Courts, CN 10482). In a sale, the value sets the list price. In a buyout, it sets the size of the check.

What is a market evaluation?

A market evaluation estimates what a home would sell for. It's built from recent comparable sales, the homes a buyer would compare it with right now, and adjustments for size, condition, lot and location. It's what I use to recommend a list price.

New Jersey has rules for it. A written market evaluation from a real estate licensee has to say that it's not an appraisal and shouldn't be considered the equivalent of one, in print as large as the main text (N.J.A.C. 11:5-6.1(m)). The Real Estate Commission's Bulletin 13-05 treats preparing a market evaluation as real estate brokerage activity, and it suggests a statement that a market evaluation shouldn't be considered the equivalent of an appraisal by a New Jersey licensed or certified appraiser (NJ Real Estate Commission).

What is an appraisal?

An appraisal is a formal opinion of value from an appraiser licensed or certified under New Jersey's Real Estate Appraisers Act (N.J.S.A. 45:14F-1 and following). It's the report people turn to when the number itself is in dispute, or when a lender or the court needs a formal valuation. Who orders it, what date it measures value as of, and who pays for it are decisions for your attorneys, your mediator or the court.

Which one does your situation call for?

• You've agreed to sell. A market evaluation sets the list price, and buyers set the final number. Their offers are the real test of value.
• One of you is buying the other out. The value is the deal, so your attorneys may want a formal appraisal, and a refinance lender will look at value through its own underwriting. Read how a spouse buyout works.
• You disagree on the number. That's the point where your attorneys or the court may bring in a formal appraisal.
• You're still deciding what to do. A market evaluation gives both of you a realistic starting point for the conversation with your attorneys or mediator.

Whichever it is, my number is a recommendation, not a ruling. I don't pick a value for either of you. The comparable sales, the condition adjustments and the reasoning go in writing, and both of you get the same copy.

Why can two values for the same house come out different?

• The date. A value is a value as of a date, and markets move.
• The comparable sales. Which sales get picked, and how close they are, changes the answer. A sale on your side of Brick or Middletown says more than one across the county.
• The condition. It's the hardest part to read from a spreadsheet. I'm a former New Jersey home builder and residential remodeler, and I read a house the way a buyer's inspector will: roof, heating and cooling, windows, water.
• The purpose. A list price strategy and a formal appraisal answer different questions, so they're built differently.

What should you gather before anyone values the house?

• The deed and your original closing papers
• A list of improvements with dates and costs, and receipts if you have them. IRS Publication 523 explains how improvements add to your tax basis, which matters again when the house sells.
• Permits for any addition, deck or finished basement
• Recent statements for every loan against the home
• A list of known issues, so nobody's surprised later

Hand the same packet to whoever values the house. When both spouses and every professional work from the same documents, the numbers argue less.

How does this play out in Monmouth and Ocean County?

A fair value depends on sales that look like your house, close to your house, whether that house is in Toms River, Howell or Point Pleasant. That's why I show both spouses the comparable sales behind every number instead of handing over a single figure. If you're selling, the steps after the value are in how to sell a house during a divorce, step by step.

What mistakes do people make with the value?

• Treating an online estimate as the number. It never saw the kitchen, the roof or the basement.
• One spouse's agent sets it alone. A value only one side trusts settles nothing.
• Using an old number. A value from last year isn't this year's value. Write down the date on every figure.
• Using the value as a lever. Pushing the number up to slow things down, or down to get out faster, pulls it away from the market, and one of you pays for it.
• Skipping condition. A value that ignores a failing roof gets corrected later, usually at the worst time.

Frequently Asked Questions

Is a realtor's market analysis the same as an appraisal?

No. In New Jersey, a written market evaluation from a licensee has to say that it isn't an appraisal and shouldn't be considered the equivalent of one (N.J.A.C. 11:5-6.1(m)).

Can a market analysis be used in our divorce?

Ask your attorney how it will be used in your case. A market evaluation is built to set a list price and give both of you a realistic starting point; when the number itself is in dispute, your attorneys or the court may call for a formal appraisal.

What if we can't agree on the value?

Start from the same evidence: one market analysis, with every comparable sale shown, sent to both of you. If you still disagree, that's usually the point where your attorneys, your mediator or the court bring in a formal appraisal. Your attorney tells you how it works in your case.

Who pays for the appraisal?

That's decided by your agreement, your attorneys, your mediator or the court.

What date is the house valued as of?

That's a legal question for your attorneys. The Case Information Statement asks for the date each value was set, so record the date with every number you get.

This is general information, not legal, tax or lending advice. Your attorney, mediator, tax professional or lender has the final word on your own situation.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. He's a former New Jersey home builder and residential remodeler. See how he handles home sales during a divorce.

Keep reading

• Request a neutral home value
• The Divorce Guide
• Who gets the house in a New Jersey divorce?
• Have a question this didn't answer? Send it to Dennis Mark.