When two parties with competing interests need to agree on the value of the real estate, hiring one neutral appraiser versus two non-neutral appraisers can save a lot of expense. In addition to the extra appraisal fee, the appraisers will likely not come to the same value conclusion which can lead to a lot of litigation expense to determine where the “value lies.” Neutral appraisals are a great way to save money and obtain an accurate valuation of real property when there are multiple parties with opposing interests.
A neutral appraisal is a well-written and documented report completed for parties with opposing interests by a neutral third-party real estate appraiser. Generally, a neutral appraiser has experience being appointed by judges to determine real estate values and has a high success rate in facilitating party consensus related to the opinion of value. Neutral appraisal experts have significantly more experience and fees may be somewhat higher than that of non-neutral appraisers. A few hundred to a thousand extra dollars for a more accurate valuation of an asset that is worth hundreds of thousands or even a million or more dollars is almost inconsequential.
A neutral appraiser has a greater duty to the clients to ensure accuracy, as well as a clearly written report that lay people can use to understand the methods, analysis, and logic used to support an opinion of value. A good neutral appraiser should be able to provide a list of referrals from attorneys and judges. Just like other appraisal assignments, a neutral appraiser should be competent in the geographic location as well as the property type.
It is important for a neutral appraiser to explain, define, and follow their neutral protocol. This protocol can vary from appraiser to appraiser; however, a few things are expected from a neutral appraisal protocol. Primarily, an invitation for all parties to attend the inspection and to obtain information about the property from all parties. Information requested should be the same for all parties and may include understanding what improvements have been made, any problems or maintenance issues to note, and any insurance claims pending.
For neutral appraisals, the clients are generally the parties’ legal counsel. This keeps an arms-length distance from the parties who each have opposing interests regarding the value of the marital real estate. It is also equally important to deliver the report at the same time to both attorneys. There is nothing worse than when it comes time to exchange the kids on the weekend when one spouse is aware of the appraised value and the other is not. Any questions about the appraisal should be directed through the legal counsel, with answers copied to both attorneys to then share with their clients.
The neutral appraisers at Lake State Realty have been appointed by judges and are recommended by dozens of attorneys across Minnesota. Julie Jeffrey Schwartz is one of the best neutral appraisers out there and has written articles on the subject featured on the Minnesota Bar website such as A Neutral Appraisal Provides Accurate Valuation to Fairly Divide Marital Equity.