Real Estate Cycle in Denver by Dennis H. Babiniec

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Real estate is an asset whose value tends to go in cycles rather than always in one direction up or down.  From property tax valuations and websites such as zillow.com and trulia.com there is strong evidence that we are in an up cycle as far as real estate values in the Denver metro area.

The practical impact that higher real estate values have in divorce cases is that rising values make it more expensive for one party to keep real estate.  On the other hand, rising values also can make refinancing the property in order to fund a buy out of the other party's marital equity more feasible due to the better loan to value ratio.  

It is important to determine an accurate value for the real estate in developing a logical strategy.  Especially when there has been a rapid market trend, it becomes advantageous in considering your options to obtain the most current information.  Getting appraisals of real estate instead of relying on property tax valuations or estimates of value can be a wise investment when you consider what is at stake.  The cost of the appraisal can in many cases be agreed to be split by the parties as it is useful to both parties to know what their home is worth.  Once you have a handle on the value of your marital residence, then the next consideration is to determine whether you wish to keep it or sell it.  

As a divorce attorney with over 30 years of experience in the Denver metro area, I believe that ultimately it is the client's decision of whether to try to keep the marital home or sell it.  I believe however that in representing a party that I can give counsel in analyzing the extent of marital property to review how keeping or selling the marital residence affects the marital property distribution.  People may have their own reasons for wanting to keep or sell their marital residence, but they should at least consider the financial impact. Analyzing what portion of the marital assets being divided are concentrated into the value of the marital residence gives some perspective of whether the client could end up in a cash flow problem if the monthly mortgage payment increases in order to come up with the money to buy out the other party.  Also, if the client does not have a sufficient mix of liquid assets in addition to the real estate asset, they could find themselves in a bind if there is an unexpected financial need.  Typically if a party is retaining the marital residence, the full value of the residence is considered when determining an equitable division of the asset.  If however, later on the party finds themselves having to sell the property because they can not afford it or they need to come up with a sum of money to address a financial need, they will incur the costs to sell the residence which will reduce the net amount of value they receive from the real estate asset.  So a reasoned financial analysis of how the division of the marital residence impacts the monthly cash flow, asset liquidity and long term objectives of the client is an important step to making the decision of what to do with the marital residence in a divorce case.

Dennis H. Babiniec
attorney at law
10701 Melody Dr., Ste. 350
Northglenn, CO 80234
(303) 451-9110  posted: May 5, 2015 - Dennis Babiniec - Divorce Lawyer - Blog

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