In litigation, such as contract disputes, construction disputes and divorces, determining the value of real property (like the value of a marital home, for example) may become a key issue in the case. While a seemingly simple concept, the term “value” may have several different meanings depending upon the context in which its used in litigation, and understanding the various methods of determining “value” of real property is crucial.
Comparative Market Analysis Reports provide an opinion of value prepared by a real estate agent who may, or may not, hold a license to do work as a certified appraiser. Such reports are based upon a comparable sales approach, which compares the property at issue to comparable properties in a similar area that have been recently sold, or that are currently being marketed for sale, to show trends in the current sales market.
Real Estate Appraisal Reports are generally much more detailed than comparative market analysis reports. A real estate appraisal may only be performed by state licensed, certified appraisers, who have completed specific training and are required to undergo periodic continuing education. Routinely, appraisers will visit the property/home for a viewing and take measurements and photographs. While a comparable sales approach may be utilized, a real estate appraisal will limit comparable sales to similar properties that have actually sold within a definitive time frame. Appraisal reports are prepared in accordance with specific, detailed guidelines. For example, a residential real estate report will contain the information set forth in the Uniform Residential Appraisal Report. The American Society of Appraisers is a helpful resource to locate licensed real property appraisers.
Tax assessed value: In Massachusetts, municipalities (cities/towns) impose property taxes upon property owners in accordance with annual budgets. Taxing authorities rely upon tax-assessed values of property to determine the amount of property taxes a property owner is required to pay. Real property tax rates and tax assessed property values are updated on an annual basis. As a general rule, tax-assessed value will be some percentage of the property’s fair market value; however, depending upon the property’s location, there may be a significant difference between the tax-assessed value and the fair market value of a property.
Please visit Fitch Law Partners LLP‘s website for more information about our real estate litigation practice.