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Fort Myers Florida Family Law Legal Blog

Using professional appraisers in an Illinois divorce

On Behalf of | Jun 16, 2021 | High Net Worth Divorce |

Most couples who have decided to end their marriage are concerned about how their marital assets will be divided. For most middle-income couples, their house is their most valuable asset. For wealthy couples, other assets may have value equal to or in excess of the value of the homestead. Examples of such assets include ownership of a business, securities such as stock and mutual fund shares, and retirement plans. Determining the fair value of these assets can be laden with conflict if the parties disagree on the question of value, but one highly successful method of resolving this issue is the use of a professional appraiser.

What do appraisers do?

A professional appraiser is an individual who has received formal training in determining the value of various kinds of assets, ranging from the family home to rare works of art. Appraisers use various techniques depending upon the asset that is being valued. An appraiser will examine the asset, make any necessary measurements, note defects or special features, and then provide an opinion on the fair market value.

How do appraisers do their work?

As noted, appraisers use different techniques for valuing various kinds of assets. Because real estate is the asset most often appraised in a divorce, a description of the real estate appraisal methods will be useful in understanding how other kinds of assets are valued.

In appraising a piece of real estate, the appraiser first makes an inspection of the property. If the property is a dwelling, the appraiser will measure the size of the rooms, the existence of any special features such as a swimming pool or tennis court, and the lack of any normal features such as an up-to-date kitchen or bathroom. The appraiser will next use three different methods to establish value: replacement cost, sales comparison approach, and income capitalization approach.

The replacement cost is rarely used for real estate because costs of construction are constantly increasing. The sales comparison approach requires the appraiser to gather sales information about similar properties, including sale price. If the property is income producing, such as an apartment building, the appraiser will project future income and then use an appropriate interest rate to reduce the income stream to present value. The appraiser will then endeavor to reconcile the different values and produce a single opinion as to the value of the property.

Should you opt for an appraiser?

Using a professional appraiser may add significantly to the professional fees payable during the divorce. The decision to hire one or more appraisers should be made in conjunction with a knowledgeable divorce attorney. An experienced lawyer can find a suitable appraiser and direct the appraiser’s work. In addition, an attorney will be needed to prepare the appraiser for any necessary deposition or courtroom testimony.