Divorce Appraisal-Bathroom remodled

[Kevin Gregan]

I am doing a divorce appraisal. There subject is 3 bedrooms and 2 baths, and there are plenty of similar homes in the market area. The issue is, the subject was in the middle of getting one of its bathrooms remodled when I did the inspection and it was not functional at the time of inspection. There were no plans on getting the bathroom fixed until the divorce proceedings were completed.

My question is Can i do a subject to appraisal for a divorce?

Or should I just deduct the cost to cure from the final value?

Your expertise would be appreciated.

 

[Lee Lansford]

Have you asked your client how they would like you to approach this matter?

 

[The Warrior Monk]

Don't assume anything in a divorce case. Ask the attorney how they want it handled.

With that said, chances are "subject to" isn't going to fly. I'd request that a contractor estimate be provided to me so that I could estimate a cost to cure. If the request is refused, the ball is in their court, and they could not fault me if my estimate is not correct.

IMO, a cost to cure isn't enough. My adjustment would be higher than the cost to cure due to the aggravation of a potential purchaser having to fix the bathroom.

 

[hastalavista]

Kevin-

Welcome to the forum.

Have you done any non-mortgage appraisals before? They can be different in some significant ways. Especially when yours might end up in litigation.

If you haven't, that's not a problem. Asking questions here is a good start, but I'd definitely recommend you team-up with someone local who has some good experience.

As to your question, I agree with Lee and David. My guess is that you will be requested to provide an "as is" value. If so, I'd definitely recommend you have a good handle on your cost-to-cure estimate; even showing the photos to a contractor you know and getting some feedback is better than nothing (cite the source in your report!).

Good luck.

 

[aussie ken]

Check with Solicitor

G'day Kevin,

These are all good points but the key issue is that until the solicitor advises you how he wants this handled your flying blind.

Get his/her feed back as to the start point or you could well wind up a side track. In this game, particularly litigation issues please, please never assume anything. Let those more knowledgeable then us humble valuers direct how a job of this type is to be specifically focussed.

 

[Richard Carlsen]

Kevin

Tell you how I would do it. First thing to do is to look at your assignment. I suspect it says, "appraise to market value".

OK. That means you do an "as is" appraisal. You don't ever really want to introduce a "subject to" into a divorce proceedings. These folks could not agree on who picks up the dog poop let alone who will oversee the completion of a bathroom.

So you go into the house. There are 3 bedrooms and 1 working potty. And that's exactly what a potential buyer would see when viewing the house. That is what they would make a judgment on if they were looking at the house as a potential purchase. Make your comparisons on that basis. Now you have all of the plumbing, wiring, etc. in for a 2nd bath that is being remodeled but not complete. I would address this in a separate line in the grid giving them credit for work done less 25% entrepreneurial profit that the buyer is going to knock off for having to finish the unfinished bath.

What you have done is compare the house "as is" and in its present functionality (1 serviceable bathroom) with similar sales in the market. You have also given the HO a contributory value of the unfinished remodeled bath.

That's would be my way of handling it. Unless the attorney specifically requests a value that is "subject to", don't ever go there in a divorce. This is not lending consideration. It is war!

 

[Jody Doyle]

Thanks

That is well said. Thank you for some of the clarification regarding the assignments purpose.
Jody Doyle

 

[Jungle Boy]

I think that many buyers, if not most, would see the potential of the 2nd bathroom (face it any way you want, the majority of the work has been completed - there really isn't that much work to get an established area set aside to function as a bathroom, back into operating shape), and would consider it as part of their buying decision.

The area and demographics would have to be considered when figuring out how to deduct for the limited functionality. Is this a working class neighborhood ? Is this a neighborhood with many families with children ? What type of schools are nearby ? Is this a 55+ community ?

For example, in our neighborhood which has many older homes, and people move into the neigborhood because it is a desirable neighborhood - 6 months ago when the market was really hot, most buyers would have overlooked one bathroom which does not function. It simply would not have mattered. Nowadays, with more available inventory, buyers can be more selective. But most people around here would buy for location and living area, and the potential of the home.

But you know your market.

So, it depends. Who knows, the judge may like the cost approach.
As Richard said, it may not hurt to add in a little entrepreneurial profit for the buyer.

 

[Otis Key]

Kevin,

You just got some good advise. Here's my take, which sounds an awful lot like many above.

1.) Contact the attorney that hired you (it was an attorney --- right?);
2.) Odds are in favor of said attorney instructing you to provide "as is" opinion so get those C2C numbers rolling (including the suggestion of Denis to contact some friendly "handymen");
3.) It is a divorce and they are "at war" as Richard said and so you can expect to be picked over by the attorney on the other side (ie, KNOW what you're doing and what you wrote!); and
4.) I hope you charged an appropriate fee for this because you now need to let them know that going to court is going to require a retainer of $#,### paid in advance with any excess to be refunded and that you charge $### per hour in whole hour increments.

At that point you're still going to come out of the court room about a pound or two lighter from sweating under the gun.

 

[Kevin Gregan]

Wow, this sounds like it has potential to be a ton of trouble.