Jack's New Hampshire Real Estate Blog

February 8th, 2016 1:28 PM

DIVORCE…..We all know someone who is going through a divorce. It may even be yourself. I am not going to give you general divorce advice, but I am going to offer you divorce real estate advice….

Divorce is a terrible thing. It is a polarizing event in which every body takes sides.   Everything “he” does is good…Everything “she” does is bad and vice versa. While I don’t think divorce should be war, it is important that you take the financial part of it seriously and thoroughly. Too often one side gives in too easy because they “just want it over” giving away thousands of dollars in the settlement. Don’t be bullied!

THE HOUSE…. Even if you are in agreement WHO gets the house, you may not be able to agree on how much its worth. How much it’s worth effects the equity and is the basis for one side buying out the other.   I have a few important thoughts regarding the appraisal of the house. In no particular order they are:

  • Even if the value the spouse places on the property seems right, get an appraisal to 1) make sure it’s right and 2) to give you the comfort of knowing its fair. SADLY, I see VERY often one side of the divorce “tricking” the other side into false value.
  • Ask your lawyer what effective date the appraisal should be. Depending on your attorney’s strategy, they may want it effective separation date, date of court filing, date of appraisal inspection (current date) or some other date.
  • When selecting an appraiser hire some with a STRONG background in non-bank appraisal work. Many appraisers only do sales and refinance appraisals and are not experienced in non-lender and Litigation appraisals. YOUR appraiser needs to have a “Bullet-proof” file with support and documentation in his/her file. If the file is not complete the opposition attorney will have a field day. Your appraiser needs to be able to explain, and justify each of the methods and adjustments,
  • The goal is to settle, but hire an appraiser who is willing to testify in court and have the experience in doing so. Choose someone who can stand up to hostile cross examination.
  • Hire someone with vast experience in YOUR area. Real estate is local and local experience really is important and will be crucial if the value of the house is litigated in court.
  • Consider using a professional, designated appraisal from a highly recognized organization such as the “Appraisal Institute”. AI offers an SRA designation for residential and MAI for commercial appraisers.
  • Make sure the appraiser is using the correct forms or format for appraisals. If the appraiser uses the same form they use for the bank they are; a) in violation of standards and b) obviously the wrong person for the job for not knowing this.
  • Don’t price shop. Qualifications, education, experience and knowledge is VERY important. Do you hire the “cheapest lawyer” or do you hire the best attorney to get the job done? Saving $100 on an appraisal and putting tens of thousands of dollars at risk is like stepping over $50 dollar bills to pick up pennies.
  • The appraiser can work for you directly meaning that YOU are the client. In some circumstance when husband and wife are amicable and working together they can order a joint appraisal in which the appraisal is completed for BOTH of them and they are BOTH the client. Be sure to ask your attorney about this option. If you do this, you want to make sure both of you choose THE best appraiser in the area as the appraisal will hold strong weight in front of a judge.
  • When meeting the appraiser, be sure to point out all important aspects of the house specifically items not necessarily obvious during inspection, such as defects, broken items and overall condition. It is even better to provide a list.  You may be hoping for a low appraisal, but may be disappointed if you don’t let the appraiser know that “the septic system has failed” or the “roof leaks” when those items affect value.
  • Before sharing the results with your spouse and his/her attorney, carefully review the appraisal for factual accuracy. If you find an error (ie. appraiser indicated fuel is “gas”, then it is actually “oil”), then inform the appraiser to correct the appraisal BEFORE providing the other side with the report. One little, typographical error can give the opposition to discredit what is otherwise a sold, sound, quality appraisal.
  • Consider the timing of the appraisal is that is an option. Residential real estate values in New Hampshire vary by season. Appraisal results can vary by season and it may be worth a discussion with your attorney.


If you have any questions regarding a divorce or any other appraisal, don’t hesitate to contact me at (603) 644-1000 or at appraisals@jacklavoie.com


Posted by Jack Lavoie on February 8th, 2016 1:28 PMLeave a Comment

Subscribe to this blog

Here are a FEW of the questions I fielded this week:


Homeowner (who is also a broker): We are thinking of adding an enclosed porch, but not sure if we will get a return on our investment. Do you think will get our money back?

Jack: You actually have two questions there. Should you build the porch? And will you get your money back (in increased value or resale)? With regards to the latter, it is quite possible you won't get a dollar for dollar return. As a general rule, when you cure a problem (I.e. Fix something that's broke) you often get more than a dollar for dollar return. When you add features that are beyond what the "typical house" has, it generally costs more than what you will get in increased value.   If you are adding a feature that is expected in the market that nearly all competing houses have, you probably will get full value back. With regards to the enclosed porch, it may only increase the value a 1/3 to 2/3 of the cost of house. So, in answering your second question, the answer is NO (you will NOT get all your $$ back). As to whether or not you will do it, it is a function of how long and how often you will use and home much enjoyment it brings you. As an example, if it costs $18,000 and you only get a $9,000 return, but you enjoy the porch for the next 10 years, than I would say "Who cares" if you don't get your money back in resale, since you have gotten your value back in the way of enjoyment.


Homeowner: I have a 4.375 interest rate. Does it make sense to refinance?

Jack: first of all, I am not a mortgage expert, but I can give you this general advice. Whether or not you refi is a function of your new interest rate, the new loan costs and how long you expect to own the property. This is how you calculate savings and break even. Let's say you are going to save 1/2 percent on your rate and you have a $200,000 mortgage. That means you will save $1,000 (1/2 of 1 percent) on annual interest. If the cost of the loan is $2,000, it would take you 2 years to break even. If you plan on owning the property for more than 2 years it probably makes sense. Many lenders with also do a no closing costs loan in which they will incur the cost themselves and build those costs into the new interest rate, which will be higher than if you paid the cost. So, if you are not sure how long you will own your house, you may pay no closing costs and just lower the rate to just 4 percent (as an example). Nothing to scoff at since even lowering 0.375 percent will save you $750 per year in interest or $63 per month. Not bad for "free money". Lastly, I BEG you to use a LOCAL lender. Don't get tricked into thinking these national online lenders are better.


Posted by Jack Lavoie on February 8th, 2016 1:26 PMLeave a Comment

Subscribe to this blog

Archives:

My Favorite Blogs:

Sites That Link to This Blog: