Why Appraisals for Divorce and Separation Cost More than for Financing

Introduction 

If you are going through a divorce or separation, you may need to get an appraisal of your property to determine its fair market value. This is often required by the court or by the lawyers involved in the settlement process. You may be surprised to find out that the cost of an appraisal for this purpose is higher than when you get an appraisal for financing purposes, such as when you are applying for a mortgage or refinancing your home. 

We will explain the main reasons why appraisals for divorce and separation are more expensive than appraisals for financing, and give tips on how to choose an appraiser who is qualified and experienced in this type of appraisal. 

Reason 1: More Time and Work Involved 

One of the main reasons why appraisals for divorce and separation cost more is because they involve more time and work for the appraiser. Unlike appraisals for financing, which are usually based on the current market conditions and the most recent sales of comparable properties, appraisals for divorce and separation may require the appraiser to perform a retrospective analysis of the property value as of a specific date in the past, such as the date of marriage, the date of separation, or the date of filing for divorce.  

This means the appraiser has to research and analyze historical data, which may not be readily available or reliable. The appraiser may also have to adjust for changes in the market, the property condition, and the improvements or renovations that have been made over time. 

Another factor that adds to the time and work involved in appraisals for divorce and separation is the need to comply with the standards and guidelines of the court or the legal system. The appraiser has to ensure that the appraisal report is accurate, complete, and defensible, and that it follows the Uniform Standards of Professional Appraisal Practice (USPAP in the USA) or the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP in Canada).  

The appraiser may also have to provide additional documentation, such as photographs, maps, floor plans, sketches, and invoices, to support the appraisal. Furthermore, the appraiser may have to testify as an expert witness in court or in arbitration, which requires preparation, travel time, and time spent in court. 

Reason 2: More Risk and Liability for the Appraiser 

Another reason why appraisals for divorce and separation cost more is because they involve more risk and liability for the appraiser. Unlike appraisals for financing, which are usually intended for the use of the lender or the borrower, appraisals for divorce and separation may have multiple intended users, such as the spouses, their lawyers, the court, the arbitrator, or the mediator.  

This means the appraiser has to be careful and diligent in communicating the scope of work, the purpose and function of the appraisal, the intended use and users of the appraisal, and the limitations and assumptions of the appraisal. The appraiser also has to be prepared to defend the appraisal against potential challenges, disputes, or lawsuits from any of the parties involved in the divorce or separation. 

Because of the increased risk and liability, appraisers who specialize in divorce and separation appraisals usually have higher professional fees, higher insurance premiums, and higher overhead costs. They also have to invest more in their education, training, and certification to maintain their competence and credibility in this field. 

Reason 3: More Demand and Less Supply of Qualified Appraisers 

Appraisals for divorce and separation cost more is because of the market forces of supply and demand. Appraisals for divorce and separation are in high demand, especially in areas where the divorce rate is high, the property values are high, or the property types are complex or unique.  

However, there are not many appraisers who are qualified and experienced in this type of appraisal. Appraisals for divorce and separation require not only technical skills and knowledge, but also interpersonal skills and emotional intelligence. The appraiser has to deal with sensitive and stressful situations, such as angry or distraught spouses, hostile or aggressive lawyers, or conflicting or unrealistic expectations.  

The appraiser has to maintain a high level of professionalism, ethics, and impartiality, and avoid any appearance of bias or favoritism. Therefore, appraisers who are capable and willing to perform appraisals for divorce and separation can charge a premium for their services. 

Reason 4: Often Two Values are Required: Retrospective and Current 

An additional reason why appraisals for divorce and separation cost more is because they often require the appraiser to provide two values for the property: a retrospective value and a current value.  

As mentioned earlier, a retrospective value is the value of the property as of a certain date in the past, such as the date of marriage, the date of separation, or the date of filing for divorce. A current value is the value of the property as of the date of the appraisal. The difference between the two values may be relevant for the division of assets, the calculation of spousal support, or the determination of capital gains tax. 

Providing two values for the property means that the appraiser has to perform two separate analyses, using different data sources, methods, and assumptions. The appraiser has to justify and explain the rationale for each value, and how they relate to each other. The appraiser also has to address any discrepancies or inconsistencies that may arise between the two values, and how they affect the overall conclusion of the appraisal. 

Final Thoughts 

Appraisals for divorce and separation are more expensive than appraisals for financing because they involve more time and work, more risk and liability, more demand and less supply of qualified appraisers, and often two values for the property: retrospective and current.  

They are also more valuable and important, because they can affect the outcome of the divorce or separation settlement, which can have a significant impact on your financial and emotional well-being. Therefore, it is worth investing in a quality appraisal that is performed by a reputable appraiser who specializes in divorce and separation appraisals. 

If you need an appraisal for divorce and separation purposes, we can help. We have appraisers across Canada with decades of experience in appraising residential and commercial properties for divorce and separation, and have testified as expert witnesses in court and in arbitration.  

Getting started is easy. Start with an automated valuation to get a sense of your home’s value, then step up to a full report from one of our experts. ORDER NOW