Portland Area Real Estate Appraisal Discussion

The Difference between Appraisals for Divorce and Refinance
June 11th, 2015 1:02 PM

Difference between appraisal for divorce and refinance

Last week a client asked me the following question (which is edited for clarity).

“I need to have my house appraised due to a divorce.  Is there any difference between a divorce appraisal and a refinance appraisal?”

The answer is yes.  While the appraisal report may look outwardly similar, there are four key differences between appraisals done for divorce and those done for other factors like finance or refinance.  Appraisers are required by licensing laws to determine the appropriate research and reporting (the scope of work), given the intended use and intended user, that will yield credible results.  A divorce appraisal has a different intended use, user, and scope of work from that of an appraisal done for a loan or a lender.

  1. Refinance appraisals are centered on the lender requirements, use, type of form, and other needs.  For example, an appraiser for a refinance might point out that there is a repair necessary given the lender’s minimum property requirements.  The lender might require that the appraisal be made with the condition that the issue has been repaired (“subject to”) and then the lender would choose not to fund the loan until the repair is completed.  On the other hand, a divorce appraisal is made “as is” which may result in a very different value conclusion.

  2. A divorce appraisal can often become a point of contention between the involved parties.  Occasionally, an appraiser must testify in court to defend the analysis and conclusions made within the report.  Appraisers who perform such appraisals typically have specialized training, in addition to standard licensing, which helps to prepare them for a courtroom appearance.  Divorce appraisals are presented in a manner that anticipates the potential for legal testimony.

  3. A divorce appraisal might be timelier than a refinance appraisal.  Typically, a refinance appraisal is done close to the date of the refinance while a divorce appraisal can be effective on any date specified by the client, which might be the date of separation.  Real estate markets change quickly and just a few months can mean many thousands of dollars.  Even when prices are stable here in Portland, Oregon values will often swing by five percent from the winter low to the summer high.  Consult with your attorney to be sure on the correct date of value (effective date) when ordering an appraisal for divorce.

  4. Refinance appraisal reports are presented on a different form than divorce appraisals.  Strictly speaking, the appraisal report form does not matter from a standpoint of analysis.  However, most lending and refinance appraisal forms are preprinted with statements specifying that the intended use is for mortgage finance purposes.  (See the image at the top of this post.)  In a divorce, such statements could discredit the entire appraisal report.

Did I leave anything out or do you want to join in the conversation?  Let me know in the comments below.

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Thanks for reading,

Gary F. Kristensen

Posted by Gary Kristensen on June 11th, 2015 1:02 PMPost a Comment

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Thanks for clarifying the differences Gary. Most people don't consider that a divorce appraisal might be done with an effective date earlier than the actual date of inspection. Depending on the market this could mean a significant difference in value as you pointed out.

Posted by Tom Horn on June 11th, 2015 2:20 PM
After 46 years I'm still married to my first wife and I certainly don't plan on a divorce anytime soon, but very interesting nonetheless. Your blog always teaches us something that we didn't previously know.

Posted by Frank Greenburch on June 11th, 2015 5:18 PM
I found this topic to be confusing even for appraisers. While the type of value can be the same, the client, intended use, intended users, the purpose of the appraisal and the date of value are not. From an appraisal perspective if you have inconsistent uses it would call into question the credibility; however, in my experience the arbitrator/judge is not going to be as concerned about the technical side rather they're more interested in the value and if it is well supported in their opinion. Very good post #Portland #Appraiser

Posted by John Tsiaousis on June 11th, 2015 6:54 PM
Thank you Tom, Frank, and John for the comments. Tom, you're correct, most of the appraisal orders that I receive for a divorce are current and the client did not consider a retrospective value date until I ask them to clarify. Frank, thank you for following and I wish you luck with your marriage. John, you're absolutely right, the judge likely will not be concerned with the intended use on the appraisal showing that it is for mortgage, rather than divorce. However, if there is another appraisal for the other side that was developed for lending, rather than divorce, I would be sure to educate the attorney on my side about why it is relevant and why it calls the entire appraisal into question.

Posted by Gary Kristensen on June 11th, 2015 7:15 PM
Another great article Gary providing some great clarification for those who need to be in the know in these matters. I would also add that occasionally appraisers mistakenly use the wrong form when doing divorce appraisals which dooms them from the start should they have to appear in court...so as a consumer you may want to make sure the appraiser isn't using a lender form to do your divorce appraisal. Thanks again for the great article.

Posted by Roy Meyer on June 11th, 2015 8:57 PM
Thank you Roy for the comment. Well said. Using a mortgage lender form for a divorce appraisal can discredit the appraisal.

Posted by Gary Kristensen on June 11th, 2015 9:27 PM
Good stuff, Gary. Over the past two years in particular, it seems divorces are increasing as the economy improves. Maybe having equity again has been the catalyst to untie the knot? I am finding myself doing exponentially more divorce appraisals in Sacramento at least. What are you finding in Portland? Also, I like how you said this: "Consult with your attorney to be sure on the correct date of value (effective date) when ordering an appraisal for divorce." This is very key, and this date needs to be known from the very beginning for the appraiser.

Posted by Ryan Lundquist on June 14th, 2015 6:15 PM
Thank you Ryan. Yes the appraiser needs to know the correct date right from the start. I had a divorce appraisal recently where the client gave me the wrong date and I had to almost completely redo the entire appraisal.

Posted by Gary Kristensen on June 14th, 2015 6:48 PM
I think it's interesting that you need to have your house inspected in the case of a divorce. It makes sense, especially if they need to determine who gets it. It could change who gets it if it's worth more or less. Thanks for sharing!

Posted by Braden Bills on July 18th, 2016 11:13 AM


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