Property expert Ruaraidh Adams-Cairns explains the process of completing an independent property valuation during divorce
I understand, from working with clients during family breakdown for 20 years, that the process of divorce can be confusing and overwhelming. I believe that information can help: the more clients know about how things work, the easier it is to understand or at least not worry about one part of the system. I am often asked about how I go about valuing a property, or properties, and I hope this short blog can give a flavor of how I work in the collaborative process and outside it.
The first stage is go to the property and inspect it. In doing so, I will measure up and photograph it, checking its physical condition and how it presents to me as a valuer, and to a potential purchaser. This is all about getting to know the property physically, getting a sense of it and understanding its situation and context. Once back in the office, I’ll check the Land Registry to find out how it is owned and when it was last sold, or go through the deeds if it’s not registered, and check its full history. This means also looking at whether there have been any planning applications and what they have been for. After that, I’ll look around for similar properties in the market, and compare them to see what light they shed on the valuation and talk to agents in the area. The last stage in the process is to put all of these things together into a report, which I submit to the instructing solicitors.
There are inherent difficulties with property valuations. My opinion is just an opinion – one that is formed through settled process, experience and the cultivation of expertise, but an opinion nonetheless, and necessarily subjective. Different people, whether valuers or prospective buyers, may take a different view. The other major difficulty is that the property market is constantly shifting and evolving. It never stays still. A valuation is indisputably a snapshot taken at a certain time that needs to be reconsidered frequently if it is to remain up to date.
Considering these problems with the valuation exercise, clients often consider the short cut of obtaining marketing appraisals from estate agents. There’s no doubt that this is cheaper – even free – however, it is not without significant risk. Estate agents usually pitch their appraisals above market value, and sadly it is not unknown for client to seek to mislead or influence local estate agents in order to acquire a valuation at a level that suits them. Indeed, when working as a single joint expert where I am presenting an independent report to both sides, problems often occur when estate agents have given unrealistic expectations to one of the clients. My role is to give a realistic value, without any influence from either side.
In the collaborative setting when I am asked to prepare a valuation report for clients, we have the opportunity to discuss these problems and the issues with estate agents’ views in a meeting, so that everyone is directly involved and can ask questions until they have sufficient understanding. I am also able to give an insight into the robustness of the valuation, which can vary from property to property and from time to time. We have the opportunity to investigate any “special value” which a property may have to both clients or either of them, which might affect the way a settlement is structured. These discussions inevitably help the collaborative lawyers and their clients better understand their property needs going forward, and contribute to a lasting and practical resolution of financial matters.
Property valuation is not an exact science, but experienced valuers can contribute significantly to a discussion on resources and future needs. It is most productive to do this in the context of collaborative practice, and I commend this approach to those considering how to resolve matters arising on relationship breakdown.