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What makes a divorce appraisal different?

Let’s face it, going through a divorce is an emotionally challenging time for everyone taking part.  It involves many difficult decisions about the kids, investments and marital assets, including who gets the house.  When it comes to the house and other real estate, the two most common choices are selling and dividing the proceeds, or one party can “buy out” the other.  In either case, one or both parties will order an appraisal of the residence and other real estate
holdings. 

A divorce appraisal is not the same as your typical appraisal used for lending purposes.  Some of the differences are:

Most attorneys’ primary concern when they order an appraisal is the final value and how it will affect their case. They are usually not too worried with how the report is presented, so long as it is defensible. Many attorneys are used to receiving residential appraisals on the URAR 1004 Form which is the most commonly used Form for residential appraisals.

Why give it a second thought, right?  Wrong.  This could prove to be a huge mistake.

FACT: The common URAR 1004 Form is not intended to be used for valuation matters other than mortgage finance. (It even says so right in the report.)

Yet, all too often, this is the “go to” Form for appraisers who may not be experienced performing appraisal for legal purposes. Their mistake could cost you your case.

Imagine being in court for a hearing and presenting your appraisal prepared on the URAR 1004. While the court may not know the nuances of the Intended Use of a URAR 1004, a savvy opposing counsel, township solicitor or expert appraisal witness could very easily point this out. Technically, the report is invalid as a result of the Form’s Intended Use being violated by the appraiser. The court could deem the report inadmissible and jeopardize your client’s case.

There is a simple solution. There are a number of general purpose appraisal forms available to residential real estate appraisers that are also in compliance with USPAP*. They are typically called GPAR Forms (General Purpose Appraisal Report) and they address most residential usages (single family, multi-family and condo.)  The Appraisal Institute has even developed its own USPAP compliant GP Forms as have most appraisal software providers.

So, next time when ordering an appraisal; be sure to specifically ask your appraiser which Form they intend use. If they say the URAR 1004, you need to insist that they use a GPAR Form or you run the risk of presenting an invalid appraisal.

It is always important to work with an experienced mortgage professional who specializes in working with divorcing clients. A Certified Divorce Lending Professional (CDLP) can help answer questions and provide excellent advice.

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