Frequently Asked Questions (“FAQ”)
on Determining Equity in a Home
Experienced Law Firm Offers Answers to Determining Equity in a Home
Q: How Can I Figure Equity in Our Home to Buy My Husband Out of the House? Are Sales Expenses and Commission Considered?
A: The first step is to get the currently appraised value of the house, minus the mortgage and any other liens on it. A qualified residential real estate appraiser should perform the appraisal. This difference is the equity in the house.
Next, if you sold the house, both of you would share the commissions and sales expenses. You would get half of the remaining balance. If you want to buy the home from your spouse, it would be a negotiation issue. You could try to negotiate for half of the equity of the sales commissions, fix-up costs, and half of the taxes you must pay until the sale. The other side might say if you want to buy it, there is no sales commission and no fix-up expense involved, so why should you get a discount?
A reasonable compromise is half the equity. This is less than half of what the normal sales commissions would be and half of what the essential fix-up would be. You would also want to get a low appraisal and your ex-spouse would want a high appraisal. All other appraisals are estimates and only an actual sale would give the exact price. Some people agree on a single appraiser, others each select one and split the difference.