Step 2: What Is The Asset Worth?

Valuation of the asset depends on the asset but, fortunately, there are very few assets that are incapable of valuing. Nearly everything from a home to a painting to a business to a classic car has a “price” that we often call fair market value. Let’s look at the most common valuations.

1. The family home: Residences in the State of California simply require a formal appraisal by a certified appraiser or, if the cost of an appraisal is too much, “comps” which refer to “comparable” and are generally prepared by Real Estate Brokers or Salespersons. We prefer formal appraisals although one is not always needed at the beginning of the case. The best time to obtain an appraisal is when serious settlement discussions take place. That is because home prices, especially in the current volatile market, can vary from yearly quarter to quarter. A home worth $800,000.00 in July may be worth $725,000.00 in December. Farzad Family Law works with experienced and knowledgable real estate appraisers and we have established contacts within the real estate industry that will guide you through the valuation of your family residence.

2. The rental property: If an Orange County couple owns one or more rental properties, the same appraisal or comparable process can be used for the valuation of the home with one exception. If a home’s monthly rental exceeds its mortgage (creating a “profit” at the end of each month), that home may be worth more than just its fair market value. That is because the home is also an incoming producing property and that income not only has value in the money it puts in the pocket but that tax benefits (for example, depreciation) that come with it. For these reasons, a rental property’s valuation should also take these factors into consideration.

3. The business: This can get complex depending on what the business does to earn money and one or more of the spouse’s roles in operation or management of the business. A business that can operate on its own and sells a product to the general public (restaurant, car dealership, etc.) is valued differently than a business that is purely service driven (like an accounting, medical or law practice). The analysis gets a little complicated when placing a value on “goodwill” for businesses that have been around for a while, especially if the business was owned by one spouse prior to the marriage and its profits have increased during the marriage.

4. Cars: Cars are relatively easy to value and, unless they are classic vehicles or custom ones, websites like Kelly Blue Book are helpful and often used by Orange County divorce lawyers to determine the car’s net worth. Classic or custom vehicles generally require the involvement of a specialist and Farzad Family Law has established contacts that can value even the most rare of cars, trucks or motorcycles.

5. Furniture and furnishings: A good rule of thumb for everyday furniture and furnishings is to keep the lawyers out of it. I have seen couples in Orange County divorce cases try to spend more money on lawyer’s fees fighting over couches, beds and desks than what the things are worth. If the item or items are custom or antique, we will hire an expert to perform a valuation.

Got questions about valuing your assets in an Orange County divorce case? That’s why we’re here. Call or email us today.

B. Robert Farzad
FARZAD FAMILY LAW, APC
Orange County Divorce & Family Law Attorneys
1851 E. 1st Street, Suite 1150
Santa Ana, CA 92705
Telephone: (714) 937-1193
Facsimile: (714) 937-1192

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