Many married couples in Massachusetts decide to buy real property together. They purchase a home and invest a substantial amount of their income toward mortgage payments and property upkeep. If couples that own homes together divorce, they usually need to address their equity as part of the divorce process.
The Massachusetts approach to property division requires a fair or equitable distribution of both assets and debts. Homes can represent both the biggest asset that someone owns and the biggest debt that they may owe in the form of a mortgage. Couples talking about how to handle their homes when divorcing often make a simple mistake that puts one spouse at a significant disadvantage.
Couples fail to establish a realistic fair market value
Unless the spouses purchased the property recently or refinanced in the last few years, they may not understand what the home is actually worth. People sometimes make the mistake of calculating their home equity by determining what they paid for the property and what the current principal balance is on their mortgage.
The reality is that the home may have appreciated in value due to market conditions and investments in the property. People frequently underestimate what their homes are worth, and then one spouse may accept an unfairly low value for the home that they purchased together. Especially when spouses attempt to settle outside of court, undervaluations may go unquestioned.
Hiring an appraiser or partnering with a real estate professional can produce a more realistic estimate for the current fair market value of the property. Establishing what the home is worth is a crucial part of negotiating property division matters. Without an accurate home valuation, one spouse might accept an unfairly low amount of equity or other assets in consideration of the home’s value.
While there can be some expense involved in hiring a real estate professional to determine what a home is worth, that cost is often far less than the equity overlooked by a low valuation. Carefully evaluating the marital estate is a key component of a complex or high-asset divorce. Those who take the time to accurately value their homes and other assets can pursue a reasonable property division settlement more effectively.
