If you have never been through the process of a divorce yourself you may not know how, at the end of the day, things are actually decided. For example, how do attorneys or the court calculate how much of a spouse’s pension or 401(k) gets divided?  How do attorneys or the court calculate the value of real property? Experts are obtained to appraise assets in order to obtain values.  Often parties each get their own experts and their are dueling appraisals.  If the parties cannot agree on a value, a court will have to hear testimony from both experts and make the call.

That was an issue that was recently addressed in the published Appellate Division decision of Pansini Custom Design Associates, LLC and Roger Parkin Joint Venture v. City of Ocean City and Patrick Newton and Saving Our Station Coalition, A-2003-07T1, decided May 14, 2009.

Many people who go through the process of divorce own real property.  If parties are unable to reach an agreement as to the value of real property owned so as to determine how much each may be entitled to, how does the issue get resolved?  Typically, the parties may either retain a joint real estate appraiser or each obtain their own real estate appraiser who will create an appraisal.  In the latter scenario, the result may be competing real estate appraisals and values.  If no resolution is reached among the parties and the issue is left to a court to decide in a trial, the importance and validity of these real estate appraisals will be tested.

There are experts available on nearly every topic if you look hard enough.  In family law, real estate experts abound.  Many attorneys have their “go to” experts or others who may solicit them for business.  No matter what, whatever expert is involved in your matter should be selected with thought and consideration to the specific facts of your case and the ultimate goals of the clients they work for.

Once an expert is selected and the real estate appraisal performed, how does the court determine which expert to rely upon when called upon to make a determination as to the value of real property? Are not all real estate appraisals the same? The answer is simply no. Courts have a body of case law that guides them on what considerations and factors they must focus on when called upon to make this determination.

A court’s need for an expert to testify arises “where the fact [-] finder is not expected to have sufficient knowledge or experience and would have to speculate without the aid of expert testimony.” Torres v. Schripps, Inc., 342 N.J. Super. 419, 430 (App. Div. 2001). While expert testimony is generally necessary to determine the fair market value of real property, Jacobitti v. Jacobitti, 263 N.J. Super. 608, 613 (App. Div. 1993), the court is not required to accept the testimony of an expert witness and may accept some testimony and reject other parts, Torres supra 342 N.J. Super. at 431. Where there’s a question or rejection of the expert’s testimony, the judge may appoint an independent expert. Id. at 436.

What it comes down to is the judge is left to weigh and evaluate the expert’s opinion and credibility in order to reach a reasoned, just and factually supported conclusion. Pansini supra at p.9. The trial judge in Pansini decided to take the values and discounts given by three different experts and average them in order to reach a final number for fair market value. The Appellate Division tells us that “averaging…is not an appropriate methodology for assessing divergent values. The reasoned weight of authority provides sound policy reasons for such a conclusion. Properties are not fungible. Even with adjustments during the appraisal process, there are sufficient differences that must be weighed and considered by the fact-finder in addressing the ultimate issue in dispute.” Id. at p. 13.

The Court goes on to state that averaging “will intentionally distort and skew the values to insure a high or low number without concern that the fact finder must resolve the issue with a careful analysis of data that may result in adoption of one appraisal figure over another.” Id. at p. 14.

Pansini tells us that while it may seem like an easy and fair on its face solution, simply averaging competing expert’s appraisal values is not sound methodology and should not be done by trial judges faced to decide such an issue as the fair market value of real property.

On another note, when using a real estate expert, don’t be afraid to ask questions about comparable values used, discounts applied, etc. If the report and/or expert is going to be tested during a trial, you want to be sure that your expert can defend his/her report and will do well under the stress and pressure of a trial. Always talk to your attorney who should as well know and understand the expert’s report and be able to present and defend it during a trial.