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Written by
Noel Cookman

How and When To Order an Appraisal In Divorce

Published On 
May 16, 2014

How and When To Order an
Appraisal In Divorce

A few years ago, two divorcing parties had obtained an appraisal (directly from a reputable appraiser) on their house which reported a value of $545,000. Based on the perceived equity, the buyout was agreed and the grantee (husband in this case who needed to refinance and include the buyout amount) called me.

Note, I was called in after the settlement numbers had been agreed.

Because of new federal rules, the appraisal which the parties had obtained could not be transferred or used. It could not even be consulted or used as a reference point. We had to order our own through a “black-hole / round-robin” ordering system known as an Appraisal Management Company. These are order-takers created by politicians (now included in Dodd-Frank) which add their fee and nothing much else. The cost for appraisals has risen from about $300 to over $500 in the past few years chiefly because of this newly required process.

The appraisal we obtained reported a value of $470,000. The loan approval was null, the new terms of the loan changed dramatically including the interest rate and the price of costly mortgage insurance. Because the borrower’s new LTV (Loan To Value) ratio – significantly higher than anticipated because of the lower value – did not allow a debt ratio above a certain ratio, we had to take the loan to another outlet and almost were not able to close the transaction.

If financing is required, no other appraisals count. In fact, they could be quite misleading. Only the appraisal ordered by the lender can be relied upon; and, even that one must be underwritten and accepted by the lender.

So, how can divorce negotiations obtain accurate, reliable and - most of all – FINANCEABLEappraisal reports?

The straightforward answer is – call me.

And, here’s why.

We can order the appraisal as part of a loan application process. We can even get the loan into underwriting – not only before final divorce but before final figures are agreed. This will give assurances to both parties and the attorneys that a fair, reasonable and financeable opinion of value has been obtained.

Along with the appraisal, you can receive a report on the rational calculation of “net equity” in a property. This includes finance costs and considers the industry maximums allowed in financing.

Here are the options:

1.    Pursue an opinion of value on your own
a.    Takes several days to order and obtain
b.    Who is qualified to review and evaluate the appraisal; and how much time will that take and at what cost?
c.    Sometimes two appraisals are ordered; generally, because each side suspects that the other will somehow manipulate the opinion of value; this suspicion alone should give us some idea of why the process if flawed. (Recently heard of two appraisals – one reporting a value of $305,000 and the other of $365,000 – that’s a nearly 20% differential. At least one appraiser was either manipulating or being manipulated).

Or….

2.    Call me.
a.    Now “ain’t” that simple?
b.    No cost other than the actual cost of the ONE appraisal.
c.    Someone else reviews and evaluates the appraisal – the company that is lending money on it!
You can save a lot of time and expense and confusion by developing opinions of value based upon the only reliable information available in financing – the appraisal ordered as part of the loan process.

Oh yes…my phone number and email. J

Noel Cookman
817-454-4555
noel@themortgageinstitute.com
Other aritcles about appraisals as they relate to the process of divorce. For reference and research, please visit

Appraisals In The Dodd-Frank Era

New Regulations

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