Divorce proceedings require full financial disclosure from both parties, and one of the most significant assets to consider is the family home. Accurately valuing the property is essential for ensuring a fair financial settlement, and this is typically done using Form E, the document required for financial disclosure in divorce cases. Of course, you need to know the figure to place on the Form E !
Initial Valuation: Market Appraisals from Estate Agents
The starting point in valuing a home is often to obtain three market appraisals from estate agents. These appraisals are free and provide a general estimate of what the property could sell for on the open market. However, estate agents’ valuations may differ significantly due to:
- Market optimism: Some agents may inflate the price to win a potential sale.
- Comparables: Agents rely on recent sales of similar properties, but there may be variations in condition, location, or unique features.
- Sales strategy: Agents may suggest a lower price for a quick sale or a higher price to test the market.
While these estimates are useful, they lack a detailed assessment of the property’s structural condition and may not always reflect its true market value.
Professional Valuation: RICS Chartered Surveyor
If there is a dispute about the value, or a more precise figure is required, a RICS (Royal Institution of Chartered Surveyors) Chartered Surveyor will need to conduct a formal valuation. This is often a single joint expert instructed by both parties, but technically, they are considered a Part 25 expert, which means they could be ordered by the court if necessary. However, it is common practice for both parties to agree on one surveyor to save time and costs.
RICS valuations tend to be more realistic because they consider the true condition of the property, such as:
- Structural issues (e.g., subsidence, damp, roof integrity)
- Internal defects (e.g., outdated wiring, plumbing, heating system issues)
- Leasehold concerns (e.g., short lease terms, ground rent clauses)
- Local market conditions and recent comparable sales
Unlike estate agent valuations, which focus on potential selling price, a RICS surveyor provides a solid market value based on professional assessment, making it more reliable in legal proceedings. However, if a valuation is done too soon in the divorce process, it may become outdated and need revisiting at additional cost.
The Common Dispute: Buying Out vs Selling the Property
A frequent issue in divorce settlements is when one party wants to remain in the home and buy the other out. This often leads to disagreements over the valuation because:
- If buying out a partner, the occupying party typically wants a lower valuation to reduce the amount they must pay.
- If selling on the open market, both parties generally want the highest possible price to maximise their share of the proceeds.
This conflict can delay proceedings and cause frustration. However, balancing the desire for a high sale price against the risk of a property lingering unsold on the market is key.
Final Thoughts
When valuing a home for divorce, the approach taken will depend on whether the property is being sold or one party is buying the other out. While estate agent appraisals provide a quick and free starting point, they can be inconsistent. A RICS surveyor offers a definitive valuation, but this can come at a cost and may need updating if done too early. Understanding these nuances can help divorcing couples navigate the process more smoothly and reach a fair settlement.