Attacking Real Estate & Valuation Experts in a Divorce

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Attacking Real Estate & Valuation Experts in a Divorce

I. Understanding the Valuation Process and the Law

One of the major issues in a divorce is dividing marital or community property, and it can easily become a source of conflict. Before dividing an asset, you need to know what its worth by completing a valuation process for the property. Valuation is especially important for real estate, namely the marital home, because it’s often one of the most valuable assets owned by a couple. Being familiar with the basics of valuation methods for real estate and the role of an appraiser can help you reach a fair and reasonable agreement on the value of real estate owned between the spouses and how it should be divided.

Most spouses have a marital home. A home can be a single-family house, a condo or co-op, or even a mobile or trailer home. Some couples may have vacation or second homes, or maybe a timeshare. Non-residential property includes investment property, farm land, and business property used in the owner’s business. The monetary value of all of these kinds of real property must be assessed in a divorce.

Three valuation methods are commonly used with real estate. The Market or Sales Comparison Approach compares a property to recent sales of similar properties. These comparable sales should be as close in location and type as possible to the subject property. Adjustments are made for differences between the properties. This approach is most useful for single-family homes or properties that are sold on a unit basis, such as apartments or office space. The Capitalization of Income approach is based on the net income that a property will generate. A present worth is then determined. This complex method is often used for investment properties. The Cost Approach is based on the concept of substitution. No careful person would buy property for more than it cost to buy land and a building with equal desirability and use. Another description of this method is reproduction cost new, less depreciation and obsolescence. This method is also used as a check for the other two valuation methods. It is also used for new buildings and special use properties, and for insurance or tax purposes.

Getting appraisals or valuations of real property assets is generally a necessity where the parties cannot stipulate to it. State laws often require judges to determine the fair market value of marital assets before deciding property division issue. While judges may refuse to make decisions without this information, they may act on information provided by just one spouse. It is best to obtain the services of a professional appraiser. Sources for finding the right appraiser include: State licensing boards for real estate appraisers; Appraisal societies and associations, such as the American Society of Appraisers; Securities organizations, such as the Federal Analysts Federation; Trade organizations; Telephone directories; Bar associations; and Business brokers. A court can also order appraisals of certain property.

Most appraisers rely chiefly on the cost, market and income approaches to value (and, if applicable, the development cost approach). Each technique gives the client an indication of value. In the end, one method may be more reliable than the others for any given assignment, but the appraiser should attempt to employ all applicable methods, comparing the concluded values. During the final reconciliation, the appraiser considers and selects the most likely value based on the market evidence and current valuation trends.

Cost Approach to Value

The cost approach is a methodology through which an appraiser derives value by considering the cost to create a new building with optimal physical condition and functional utility. The appraiser estimates the cost to construct a reproduction of, or replacement for, the existing structure and site improvements (including direct costs, indirect costs, and an appropriate entrepreneurial profit), and then deducts all accrued depreciation in the property being appraised from the reproduction or replacement cost of the structure as of the appraisal date. When the depreciated value of the building is measured, the value of the land is then added to this figure, and an indication of the value for the fee simple interest in the property results.

This approach is most applicable in valuing new or relatively new construction, when the existing improvements represent the highest and best use of the land, land value is well supported, and little functional or external obsolescence is evident. It is also used to estimate the value of proposed construction, additions and renovations, special purpose properties, and properties that are not frequently exchanged in the market. An estimate of probable building and development costs is an essential component of feasibility studies that test the investment assumptions on which land use plans are based. Financial feasibility is indicated when a property’s market value exceeds its total building and development cost, including a reasonable market-supported entrepreneurial profit.

The cost approach is an essential ingredient in any development cost analysis or feasibility study. It is most appropriately applied when an appraiser wants to evaluate the economics of a proposed real estate project. In valuing investment properties, the persuasiveness of the cost approach is seriously diminished by the premise that improvements can be constructed without undue delay. Development and construction of investment properties may take several months to several years and, in the eyes of most investors, this constitutes an unacceptable delay.

Market Approach to Value

The market approach is the process by which a market value estimate is derived through analyzing the market for similar properties, and comparing those prope1ties to the subject property. Market value is estimated by comparing the subject property to similar properties that have recently sold, are listed for sale, or are under contract. The major premise of the market approach is that the market value of a property is directly related to the prices of comparable, competitive prope1ties that could be proxies for the subject.

The market approach is applicable to all types of real property interests when there are sufficient recent, reliable transactions to indicate value patterns or trends in the market. For property types that are bought and sold regularly, the market approach provides a supp01table indication of market value. When data is available, this is the most direct and systematic approach to value estimation. When the number of market transactions is insufficient, the applicability of this approach may be limited. For example, the market approach is rarely applied to special purpose properties, because few similar properties may be sold in a given market, even one that is geographically broad. This approach can also be used in estimating a level of market rents, replacement cost information, depreciation, and other value parameters that may be used in the other approaches to value.

The market approach is persuasive when sufficient data is available. It is probably most useful in appraisals of properties that are not purchased for their income-producing characteristics. It provides the best indication of value for small, owner-occupied commercial or industrial properties. In a market with rapidly changing economic and market conditions, the market approach will lose much of its reliability. For example, changes in income tax Laws and zoning regulations, the availability and cost of financing, and moratoriums on buildings and infrastructure development may result in a lack of useful comparable information, whereupon the appraiser will find it difficult to rely on the market approach.

Income Approach to Value (Direct Capitalization or Discounted Cash Flow Analysis)

The income approach is an approach through which an appraiser derives a value estimate for income-producing property by converting anticipated benefits – for example, cash flows and reversions – into current property value. This conversion can be accomplished in two ways: 1) one year’s income expectancy or an annual average of several years’ income expectancies may be capitalized at a market derived capitalization rate, or at an overall rate that reflects a specified income pattern, return on investment, and change in the value of the investment; or 2) the annual cash flows may be discounted for the holding period and the reversion of the sale price, several years later, at a specified yield rate.

From an investor’s perspective, the earning power of a real estate investment is the critical element affecting its value. The fundamental investment premise is, “the higher the earnings, the higher the value.” Investment in an income-producing property represents the exchange of present dollars for the right to receive future dollars. In the income approach, an appraiser analyzes a property’s capacity to generate benefits, and converts these benefits into an indication of present value. The income approach is typically used in appraisals of all investment property that is income-producing (office buildings, shopping centers, multi-tenant warehouses, hotels, apartments and multi-tenant industrial property). This approach is also very helpful in market value appraisals of specialized properties, especially where market comparables are sometimes more difficult to find (mining properties, parking lots, landfill operations, movie theaters).

The income approach is a primary approach to valuation of investment real estate. It represents the thinking and actions of the equity investor. It is clear that investors purchase income producing properties for the future dollar benefits that these properties will produce. Thus, in all instances when appraising investment property, the income approach is the most useful and meaningful in reflecting the true motivations of buyers and sellers. It is also most useful when it is difficult, if not impossible, to adequately adjust for various market com parables to obtain a true valuation.

Discounted Cash Flow

The discounted cash flow approach is a type of income approach that can be used both to estimate the present value and to extract a discount rate from a comparable sale. “Cash flow” refers to the periodic income attributable to the interest in real property. Each cash flow, including the reversion if any, is discounted to present value, and then all present values are added together to obtain the value of the real prope1ty interest being appraised. When is it used? The earning power of real estate investment is a critical element affecting its value. In recent years, appraisers have focused on the use of discounted cash flow because it adapts well to the dynamics of the market, and can be applied to specific cash flow characteristics of a particular property. Often, the discounted cash flow more closely mirrors the behavior of market participants than any other approach to value. It is used in all types of residential, industrial, commercial, and recreational properties.

Investment Value (or Fair Rate of Return)

This approach to value is an adaptation of the income approach that evaluates investment backed expectations, and can be based on specific and sometimes subjective and personal parameters of information for a particular property. Often, a client’s investment criteria are different from the market on average. This methodology allows the appraiser to measure a specific value of goods or services to a particular investor. The appraiser will analyze a series of investment opportunities or possible decisions, and evaluate them in terms of their benefits to a given client for a particular property. Decisions involving a single parcel of real estate will often require the evaluation of other possible decisions, and an analysis of how each possibility may affect the decision being considered.

Typical kinds of assignments where investment value is appropriate include highest and best use studies, market studies, marketability studies, rent studies, absorption analyses, feasibility studies, and other studies that have a specific analytical objective. It can be applied in all types of real estate and is used by investors, developers, lenders, and other real estate professionals.

Investment value is most relevant to a specific investor with specific investment criteria.

Development Cost Approach to Value

This technique is a method used to value land when either subdivision or development represents the highest and best use of an appraised land parcel. This technique may involve industrial, residential, commercial, or recreational land. An appraiser applies the subdivision development technique by determining the optimum improvement that can be created on vacant land (or improved land, with a possibility of expanding the improvements) considering all physical, legal, and economic constraints. This valuation methodology is a residual valuation technique that encompasses the cost, income and market approaches to value. It is often used in a feasibility analysis.

Subdivision development analysis can be used for all types of land appraisals where future development for residential, commercial, industrial, and recreational use is anticipated. The appraiser first determines what actual or hypothetical improvements represent the highest and best use of the land, and then subtracts all direct and indirect costs associated with developing and marketing the proposed highest and best use. These costs may include engineering, and other expenses to clear, grade and finish the land (to build streets, roads, and sidewalks) and install utilities. Carrying costs such as taxes, insurance premiums, overhead expenses and inspection fees must be considered, along with marketing costs for sales commissions and advertising. Further deductions must be made to provide an appropriate return on the total investment during the development period, and an entrepreneurial profit for the developer.

This approach is most appropriately used when the current use of the property does not represent the highest and best use of the land.

II. Nuances in the Valuation of Specific Marital Assets

a. Pension/Retirement Accounts

Individual Retirement Accounts (IRAs) are typically one of the items allocated in a divorce decree. An IRA is a type of custodial account or trust held for the benefit of an individual or their beneficiaries. It is created by a contract between the bank that manages the account and the owner (i.e. the depositor). Part of this contract includes the beneficiary/beneficiaries who will receive the balance of the IRA upon the owner’s death. The beneficiaries are usually the owner’s spouse or children. Upon dissolution of the marriage, the divorce decree will award the IRA to one of the parties, and whichever party receives it is able to change the beneficiaries. For example, if the husband is awarded the IRA in the divorce, he can substitute his children as the primary beneficiary for his ex-wife beneficiary.

It is important to change the beneficiary on an IRA as soon as possible. Beneficiary designations often trump provisions laid out in a will and if a beneficiary isn’t changed, an ex-spouse can still have access to the IRA. A recent Missouri Court of Appeals case details this possibility. In 1996, the husband designated his wife as a beneficiary of a Fidelity IRA account. The couple divorced in 2000 and husband received the IRA in the property settlement. Several times over the years, the ex-husband contacted Fidelity for information on how to access the Beneficiary Change Form yet he never actually changed the beneficiary. When he died, a fight between his estate and ex-wife ensued over the IRA. The estate cited a Missouri statue that revokes an ex-spouse as the beneficiary on the date the marriage ended. Several states have such statutes, but they have not held up to judicial scrutiny. In the Missouri case, the appellate court referenced a U.S. Supreme Court case that held ERISA governed and overrides or pre-empts state statute to reduce administrative burdens in identifying the correct beneficiary. The circuit court had not addressed the Supreme Court case and instead awarded the funds to the estate based on the intent of the ex-husband. The Court of Appeals reversed and remanded the case to the circuit court with the specific instruction to enter a judgment in favor of the ex-wife including costs and attorney’s fees.

This case is just one of many where failure to change a beneficiary designation results in an unintended transfer of assets. The circuit court seemed to do what it thought was just by awarding the IRA to the estate, but the law did not support the decision. In the Supreme Court case, the couple had only been divorced for two months and it was likely that the ex-husband did not have an opportunity to change designations before dying in an auto accident. That did not matter. Thus it is important to change beneficiaries as soon as possible after a Divorce becomes final.

Normally, withdrawing money from a 401(k) or an IRA is considered a taxable event that requires a party to pay income tax on the funds contributed as well as penalties. When accrued during marriage, retirement accounts are also considered marital property and are subject to equitable division in family court. The Internal Revenue Code recognizes that a Qualified Domestic Relations Order (“QDRO”) can divide funds in a 401(k) or similar retirement account. This allows the providers to roll funds into a retirement account for their spouse. While QDROs do not apply to Individual Retirement Accounts, a spouse can avoid a taxable event by rolling the divided funds into another qualified retirement account. Know that a spouse who converts any retirement funds to cash will be responsible for taxes and penalties for the account.

6 USCA § 408. Individual Retirement Accounts

§ 408(d)(6). Transfer of Account Incident to Divorce

The transfer of an individual’s interest in an individual retirement account or an individual retirement annuity to his spouse or former spouse under a divorce or separation instrument … is not to be considered a taxable transfer made by such individual notwithstanding any other provision of this subtitle, and such interest at the time of the transfer is to be treated as an individual retirement account of such spouse, and not of such individual. Thereafter such account or annuity for purposes of this subtitle is to be treated as maintained for the benefit of such spouse.

Qualified domestic relations orders (often called QDROs) create or recognize the existence of an alternate payee’s right to receive all or a portion of the benefits payable under a retirement plan. They are complex matters orders or decrees that require an attorney’s guidance in order to effectively transfer an interest in a qualified retirement plan. 401(K)’s, IRA’s, Pension Funds can be split should both parties agree and file a qualified domestic-relations order (QDRO), a legal document that directs pension-plan sponsors how to pay out the funds. These funds are tax free if rolled over into your individual retirement account.

A domestic relations order (DRO) is an order that grants alimony and/or property rights to the pension owner’s spouse, or child support under domestic relations law. For example, a property settlement could trigger the distribution of the retirement benefit plan to anyone who is not the plan participant. For the non-participant spouse to receive payment from the plan, the payment must be made in accordance with the qualified domestic relations order (QDRO). A DRO is qualified if it “(1) creates or recognizes the existence of an ultimate payee’s right to, or assigns to an alternate payee the right to receive benefits with respect to a participant under the plan, and (2) complies with other statutory requirements.” An alternate payee can be a spouse, a child, former spouse, or other dependent that is recognized by the QDRO as having a right to receive either a portion of or all of the benefits payable under the participant’s plan.

For a domestic relations order to become qualified, the plan administrator must join the suit as a party, and then decide if the DRO is qualified, and be permitted to represent the important interests. When determining if the DRO is qualified the plan administrator must determine if it fulfills several requirements. First, there must be a transfer of ownership. Thus, the order must “be one which ‘creates or recognizes the existence of an alternate payee’s right to…receive all or a portion of the benefits’ payable to the owner.” Second, the DRO must specify the names and addresses of each participant in the suit and the alternate payee; the amount that each alternate payee will receive; the number of payments that the order will be effective for; and the exact retirement plan the order governs. Third, DRO must specify the amount and duration of the payments. Fourth, when talking about retirement plans, the DRO must “provide that the court may not order the plan to provide to an alternate payee any type, form, or amount of benefit not normally available to the owning spouse. It also may not order the plan administrator to provide to one alternate payee any benefit already being paid to an alternate payee under another QDRO.”

Drafting a proper QDRO depends largely on the companies your clients have retirement accounts with. It is good practice to contact the companies where these accounts are located and ask if they have a sample QDRO they like their clients to use. Often this can save you and your client time and money. After you have drafted the QDRO but before you have a judge sign off on it, it is a good idea to send the QDRO to the plan administrator and see if it will be acceptable. The plan administrator can then either approve the QDRO as is or make suggestions as to how to change the document. Following this extra step would prevent having to take multiple QDROs to the judge for their signature and it will often save you and your client time and money in the long run. Once the plan administrator informs you the QDRO will work, you can then proceed with obtaining a judge’s signature.

b. Real Estate, Stock Options, Vehicles and More

In many families, the marital home is usually the largest asset they own. When couples divorce, the house and what will happen to it are often a major focal point of the property division proceeding. There are a number of factors that can come into play in these matters. In some cases, one spouse will buy out the other and keep the house. In others, it becomes apparent that neither spouse would be able to afford the house alone, so the court will order it to be sold and the profit split between the spouses.

There are other issues that need to be addressed with regard to the marital home. If one spouse bought the house prior to marriage and made the entire down payment with personal funds, they can seek to recover it. If one spouse made considerable improvements to the house, compensation could be awarded for the skill and labor that went into them.

If there are children, then the parent who does the majority of the child-raising generally keeps the marital home. If one partner purchased the house with separate funds and there are no children, then they can keep it and legally require the other partner to vacate. If there are no children involved, then courts vary considerably on how they distribute the marital home. Neither party typically has a legal right to ask the other to leave, but one partner can always request it. If spouses cannot agree, the court will decide based on the rules in its state and which kind of property system the state has. Ultimately it is different in every divorce, and is often dependent on the spouses’ personal circumstances.

III. How to Get Your Own Valuator’s Testimony/Evidence Admitted

Lay the appropriate foundations, including as much of his/her expertise in the specific area as possible. Do not simply introduce into evidence, without further examination, the curriculum vitae of the expert unless you are sure that the court is familiar with and recognizes your key witness as an expert in the specific area upon which you expect testimony to be elicited.

Introduce the factual basis upon which the expert relies for his/her conclusions. Proceed with a carefully structured and tight-knit elicitation of testimony regarding the specific findings, recommendations and the reasons the expert drew the particular conclusions.

Do not seek to elicit information from your expert to which your expert is not qualified or is not prepared to testify. Not only would this be embarrassing to your expert, but it would also diminish his value as an expert in your case.

Know when to quit your examination. Do not repeat questions that seek to elicit testimony already in evidence. Do not ask questions in a manner that is easily attacked by objections. Do not ask leading questions. Make sure that any psychological terminology to which your expert testifies is very clearly explained in lay terms. Keep in mind that by the time you reach the trial phase, you are likely to be so familiar with the expert’s report or your expert’s testimony you could almost testify to it yourself, but the court may be hearing this for the first time-it takes time to make the court understand the testimony, especially if it involves complex psychological issues and terminology.

If the evaluation report was admitted into evidence before your direct examination of the favorable evaluator, do not waste the court’s time in eliciting the identical testimony. Have the expert identify and elaborate on the key reasons or findings that may clarify or strengthen what has already been written in the report. If your expert’s testimony discredits or disagrees with the evaluator’s report, focus simply on the areas you wish to discredit and the specific reasons. Focus on key areas, not minutiae.

IV. Cross Examination: Capitalizing on Top Errors Financial Experts Make

It is useful to have some general guidelines for how much time it takes to complete an appraisal assignment. The typical financing appraisal takes four to six weeks to complete, while a typical litigation assignment may take four weeks for a phase 1 (verbal opinion), and an additional few· weeks for a phase II (written report) suitable for testimony. Complicated litigation appraisal assignments often take much longer. It helps to be aware of certain situations when preparing for trial.

If an attorney has reviewed an appraisal report and does not have questions or comments, it is a bad sign. It usually means that he or she did not understand the appraisal report in the first place, or that the report was, in fact, not read at all. If the direct testimony goes smoothly, the attorney probably understands the appraisal as well as the appraiser does. On the other hand, if the direct testimony is choppy, it is likely the attorney is reviewing the appraisal repo1t for the first time while conducting the direct examination. (Caution: if the attorney did not understand his or her own witness’ report, direct examination can be worse than cross-examination.)

The toughest cross-examination comes from a knowledgeable divorce lawyer who understands the appraisal as well as the appraiser. Usually, the opposing attorney will avoid asking open-ended questions, and will resist posing a final, summary question. Summary questions often provide an appraiser with a welcome opportunity to elaborate and, possibly, close the door on the attorney’s strategy. Wise divorce attorneys often finish their arguments in briefs or closing arguments, as opposed to trying to accomplish them in cross-examination.

V. Financial Terms and Concepts You Do Not Want to Confuse

The following is a list of common terms and concepts to know and be aware of in the world of Real Estate and finance.

Accrued depreciation: The actual depreciation of a property at a given date; the difference between the cost of replacement as of the date of appraisal and the present appraised market value.

Actual cash value: The price property will bring in a fair market, after fair and reasonable efforts have been made to find the purchaser who will give the highest price. Also called fair cash value.

Amortization: The process of recovering, over a stated period of time, a capital investment; the provision for the gradual liquidation of an obligation, usually by equal payments at regular intervals over a specific period of time.

Arbitrage: Buying in one market while selling simultaneously in another to make a profit (minus transaction costs).

Capitalization: The process of converting into a present value (obtaining present worth of) a series of anticipated future annual installments of income.

Capitalization rate: The rate used to convert income into value.

Compound interest: The interest on interest; interest earned during a given period is added to the principal and included in the next period’s interest calculation.

Consumer price index: Various statistical indexes gathered and published by the U.S. federal government as economic indicators.

Cost approach: A method in which the value of a property is derived by estimating the replacement cost of the improvements, deducting the estimated depreciation, and adding the value of the land, as estimated by use of the market data approach.

Creative financing: Any financing arrangement other than a traditional mortgage from a third-party lending institution.

Debt service: The payments consisting of amortization and interest on a loan.

Depreciation: A loss from the upper limit of value caused by deterioration and/or obsolescence.

Discount rate: An interest rate commensurate with perceived risk; used to convert future payments or receipts to present value.

DOWNREIT: Similar to an UPREIT, with the difference lying in asset holdings. Most of a DOWNREIT’s holdings are in property, whereas with UPREITs assets lie in Operating Partnership Units.

Equity: The net value of a property, obtained by subtracting from its total value all liens and other charges against it. The term is frequently applied to the value of the owner’s (as opposed to the lender’s) interest in property in excess of all claims and liens.

Funds from operations: Net income, excluding gains (or losses) from debt restructuring and sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis.

Income approach: An appraisal technique in which the anticipated net income is processed to indicate the capital amount of the investment that produces it.

Leverage: The use of borrowed funds to complete an investment transaction. The higher the proportion of borrowed funds used to make the investment, the higher the leverage and the lower the proportion of equity funds.

Market sales approach: An appraisal technique in which the market value estimate is predicated upon prices paid in actual market transactions and current listings.

Market value: The price to expect if a reasonable time is allowed to find a purchaser and if both seller and prospective buyer are fully informed. Market value connotes what a property is actually worth and for what market price it might sell.
mortgage constant: The total annual payment of principal and interest (annual debt service) on a level-payment amortized mortgage, expressed as a percentage of the initial principal amount of the loan.

Multiple percentage rates: A lease agreement in which the percentage rent rate changes at various increments of sales.

Net operating income: The income after deducting from gross income the operating expenses, including property taxes; insurance; utilities; management fees; heating and cooling expenses; repairs and maintenance; and replacement of equipment.

Operating expenses: Generally speaking, all expenses, occurring periodically, that are necessary to produce net income before depreciation. Under some conditions these expenses are placed in two categories: operating expenses and fixed charges.

Recapture rate: The annual rate at which capital investment is returned to an investor over a specified period of time; the annual amount, apart from interest or return on interest (compound interest), that can be recaptured from an investment. Also called capital recovery rate.

Real estate investment trust (REIT): A company dedicated to owning and, in most cases, operating income-producing real estate, such as apartments, shopping centers, offices and warehouses. Some REITs are also engaged in financing real estate. To be a REIT, a company is legally required to pay virtually all of its taxable income (95%) to its shareholders every year.

Time value of money: The concept underlying compound interest: that a dollar received today is worth more than a dollar in the future, due to opportunity, cost, inflation and certainty of payment.

UPREIT: In the typical umbrella partnership real estate investment trust (UPREIT), the partners of an existing partnership and a newly formed REIT become partners in a new partnership termed the operating partnership. For their respective interests in the operating partnership (units), the partners contribute the properties from the existing partnership and the REIT contributes the cash proceeds from its public offering. The REIT typically is the general partner and majority owner of the operating partnership units.

VI. Sample Scenarios and Damaging Questions in Divorce Cases

After qualifying the valuation witness as an expert in the field and introducing him to the judge as someone they should trust and rely upon, you should begin the process of educating the judge on the nature of real estate appraising, so they may begin to form their own opinions about the quality of your witness’ work ethic, thoroughness and credibility.

Q: Mr. Expert, let me direct your attention back to your earlier comment concerning what the profession of appraising real property entails and ask if you may explain to us what the process of appraising any particular piece of property requires.

A: Certainly. As you know every piece of real property is different and unique. Consequently, the market value of any piece of real property will depend on the unique characteristics of the property, its location, its zoning, its geography, its potential yield and many other factors…. . . . .

Q: You mentioned that location is important in a property’s value. Why is that so?

A: . . . .

Q: What is the impact of zoning on a property’s value?

A: This portion of the testimony should address every characteristic of the subject property that the attorney knows will be relevant to determining its market value.

By addressing each element initially with respect to the appraisal of real property generally, you will be able to capitalize on the importance of frequency to a judge by reviewing each of these critical characteristics again later in the witness’ direct testimony with respect to the specific property at issue in the case. For example:

Q: Mr. Expert, you mentioned earlier in your testimony that a property’s location is an important factor to consider in determining the market value of that property. Please explain to us how the location of Mr. and Mrs. Condemnee’s property impacts its value.

A: . . . .

Q: You also explained that a property’s value is dependent on what the owner may do with the property and that that is controlled by various zoning and land use regulations. What is the zoning of Mr. and Mrs. Condemnee’s property and how does that affect its value?

A: . . .

Through this process the judge has been slowly and effectively introduced to the witness as an eminent professional, experienced in the field, and fully knowledgeable of the subject matter about which he is testifying. In short, the judge will recognize that the witness should be able to determine what the value of the subject property is and tell them. The only question remaining for the judge to determine is whether this particular witness is objective and telling them the truth, or shading his or her testimony to help the attorney who hired the witness. You can assuage this lingering concern by demonstrating that the witness “did his homework on this particular property” and that he applied the general principles affecting real property values fairly and objectively., Valuation of Real Estate in Divorce, Family Law,




William C. Herber and Robert J. Strachota, Real Estate Valuation and Division, Family Law Financial Deskbook,

















99 A.L.R.5th 637 (Originally published in 2002).

2 Equit. Distrib. of Property, 3d § 6:19.

11 Ohio Forms Legal & Bus. § 27:62 (2014 ed.).

11 Ohio Forms Legal & Bus. § 27:62 (2014 ed.).

2 Advising the Elderly Client § 19:212.

2 Equit. Distrib. of Property, 3d § 6:19.

2 Equit. Distrib. of Property, 3d § 6:19.

Alexandra Leichter, Practical Tips on Preparing and Trying Child Custody Cases, Leichter Leichter-Maroko LLP, (2013),





William C. Herber and Robert J. Strachota, Real Estate Valuation and Division, Family Law Financial Deskbook,



Real Estate Finance Terms, ICSC,

Joseph P. Suntum, Direct Examination of a Valuation Witness, Miller, Miller & Canby, Chtd., (2009),



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