Why Does the Home Need to Be Appraised?

For many families, the marital residence is the largest asset that will be divided during the divorce. Before the court can fairly divide that asset, it must first determine what the home is worth.

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The value assigned to the home affects nearly every aspect of the property division. If one spouse intends to keep the residence, the court must determine how much equity exists so the other spouse can receive an appropriate offset through cash, retirement accounts, investment accounts, or other community property. If the home will be sold, the value helps the parties evaluate settlement offers and determine how the sale proceeds should ultimately be divided.

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An inaccurate valuation may substantially affect the overall property division.

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Fair Market Value Is the Standard

Texas courts generally value real property according to its fair market value.

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The Texas Supreme Court has long defined fair market value as the price the property would bring when offered for sale by one who desires, but is not obligated, to sell, and purchased by one who desires, but is under no necessity of buying. See City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177 (Tex. 2001); State v. Windham, 837 S.W.2d 73 (Tex. 1992).

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Fair market value attempts to measure what a willing buyer would pay a willing seller under ordinary market conditions. It is not based upon what one spouse hopes the property is worth or what the parties originally paid for the home.

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A Licensed Real Estate Appraiser Is Usually the Best Evidence

The most reliable method of establishing the value of the marital residence is through a licensed real estate appraiser.

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An appraiser performs an independent analysis of the property by inspecting the home, evaluating its condition, reviewing recent comparable sales, analyzing market trends, making adjustments for differences between properties, and preparing a written appraisal report.

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If the case proceeds to trial, the appraiser may testify regarding the methodology used, the comparable sales selected, and the opinions supporting the final valuation.

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Because the appraiser is serving as an expert witness, the opinion generally carries substantially more weight than unsupported estimates offered by the parties.

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Expert Testimony Is Often Necessary

When the value of the marital residence is disputed, expert testimony frequently becomes necessary.

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Although parties are generally permitted to testify regarding the value of property they own, competing opinions offered by the spouses often leave the court with little objective evidence upon which to base its decision.

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A qualified appraiser provides an independent opinion using accepted appraisal principles and recognized valuation methodology. That testimony frequently gives the court a more reliable basis for determining fair market value than conflicting estimates from the parties themselves.

In cases involving substantial equity, the cost of obtaining an appraisal is often small compared to the financial consequences of relying upon an inaccurate valuation.

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A Homeowner May Testify Regarding Value

Texas law generally permits a property owner to testify regarding the value of his or her own property.

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This principle is sometimes referred to as the Property Owner Rule, under which an owner may offer an opinion regarding market value based upon familiarity with the property.

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That testimony, however, is not necessarily as persuasive as a professional appraisal. If the owner’s opinion is unsupported by market data, comparable sales, or accepted valuation methods, the court may give it less weight than expert testimony.

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For that reason, owner testimony often supplements an appraisal rather than replacing it.

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What If Neither Party Hires an Appraiser?

In many divorce cases, neither spouse obtains an expert appraisal.

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When that occurs, courts frequently look to whatever competent evidence has been presented. One common source is the county appraisal district’s assessed value.

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Although county appraisal district values may provide some evidence of value, they are not prepared for the purpose of dividing marital property. Appraisal districts determine taxable value under the Texas Property Tax Code, which serves a different purpose than determining fair market value in a divorce.

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As a practical matter, if neither party presents expert testimony and neither party provides persuasive evidence establishing another value, the court may give considerable weight to the county appraisal district valuation because it is one of the few objective valuation figures before the court.

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County Appraisal District Values Are Not Always Accurate

Many homeowners assume that the county appraisal district value reflects the true market value of their home.

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That assumption is not always correct.

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Historically, appraisal district values were often lower than actual market value because of appraisal limitations, homestead caps, and rapidly appreciating real estate markets.

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More recently, particularly in portions of Central Texas, rapidly changing market conditions between approximately 2021 and 2025 produced unusual circumstances in which some appraisal district values occasionally exceeded what buyers were actually willing to pay after the real estate market cooled.

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Because market conditions fluctuate, the county appraisal district value should not automatically be treated as the property’s fair market value without considering current market evidence.

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Equity Is What Ultimately Matters

The court is not simply interested in the value of the house itself.

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The more important question is how much equity exists.

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Equity is generally calculated by subtracting the outstanding mortgage balance and any other valid liens from the home’s fair market value.

For example, a home worth $700,000 with a remaining mortgage of $300,000 has approximately $400,000 in equity. That equity becomes an important component of the community estate and must be considered when dividing the marital property.

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An inaccurate home valuation therefore affects not only the residence itself but also the overall property division.

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Timing Can Affect Value

Real estate markets change.

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In some cases, the value of a home increases substantially while the divorce is pending. In others, interest rate changes or market conditions cause property values to decline.

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Depending upon the facts of the case, the parties may need to decide whether the home should be valued as of mediation, the date of trial, or another appropriate point in time.

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Selecting the appropriate valuation date can significantly affect the amount of equity available for division.

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Fergus & Tomanka Works With Experienced Real Estate Appraisers

The value assigned to the marital residence often has a substantial impact on every other aspect of the property division. Obtaining a reliable appraisal, understanding how fair market value is determined, and presenting competent valuation evidence at trial frequently make the difference between an equitable property division and an inaccurate one.

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At Fergus & Tomanka, we regularly work with licensed real estate appraisers, business valuation experts, forensic accountants, and other professionals in divorce cases involving significant real estate holdings and complex property divisions. We help our clients obtain reliable valuations and present persuasive evidence so that the community estate can be divided fairly under Texas law.