Guest post by Joe Gordon
Broker / Owner / Certified Divorce Real Estate Expert
Direct: 801-577-6304
Email: Joe@Gordon-RealEstate.com
This practice tip comes to you after a heartbreaking case where the parties were counting on proceeds to pay for, among other things, their child’s senior year college tuition, only to find out the projected profit was not calculated correctly. Turns out, there were no proceeds, and their son had to withdraw from school.
When a marital home or investment property is part of a divorce, equity is often treated as a simple math problem. Small oversights in how equity is calculated can materially change a client’s net outcome—sometimes by tens of thousands of dollars.
Below are three common areas where equity is frequently overstated or misunderstood.
Assuming Market Value – Mortgage Balance = Net Equity
Online estimates or informal broker opinions often get used as stand-ins for value. But equity is what remains after all costs to sell or transfer the property. Failing to account for transaction costs, concessions, or market-specific pricing adjustments can create unrealistic settlement expectations and stalled negotiations.
Overlooking Deferred Maintenance and Non-Standard Improvements
Deferred maintenance—aging roofs, HVAC systems near end-of-life, foundation concerns—directly affects value and marketability. Likewise, unpermitted work or highly customized improvements (garage conversions, enclosed patios, ADUs built without approvals) and solar liens may not add value and can reduce buyer demand or require costly remediation. These issues should be surfaced early and reflected in valuation discussions, not discovered mid-transaction.
3. Payoff and Proceeds Miscalculations
Mortgage balances alone do not tell the full story. Equity calculations are often distorted by:
– Incorrect payoff figures (especially on HELOCs or adjustable loans)
– Missed prorations for taxes, HOA dues, or rents
– Outstanding liens, judgments, or unpaid contractor bills
– Prepayment penalties or transfer fees that surface late
– Deferred principal balances from loan modifications, forbearances, etc.
Each of these can materially reduce net proceeds and should be verified before a settlement is finalized.
Practice Tip:
Before relying on a headline equity number, ask: “If this property were sold or transferred tomorrow, what would the client actually walk away with?” Engaging a Certified Divorce Real Estate Expert to prepare a property for market early —before positions harden—can prevent renegotiation, post-decree disputes, and unhappy surprises at closing.
Real Estate Issue to Spot This Month: Equity Red Flags
Before relying on a stated equity number, check whether:
☐ The property value is based on an online estimate or informal opinion
☐ Deferred maintenance or unpermitted / non-standard improvements were ignored
☐ The payoff figure excludes HELOCs, secondary loans, solar liens or updated interest adjustments
☐ Taxes, HOA dues, rents, delinquent payments or other prorations have not been verified
☐ Liens, judgments, or transfer and prepayment fees may reduce net proceeds
Why it matters:
Any one of these can materially change what a client actually walks away with—and may surface too late to fix once terms are finalized. As a CDRE, I can help walk you through equity calculations in cases where selling vs keeping the house is still not decided.