As a divorced parent, who still owns a piece of undeveloped land jointly with my ex-spouse how do I report the value on the FAFSA?
How do I determine its value? Is the value considered the valuation as stated on the county assessor records or the value of what it would sell for minus commission paid to a real estate agent? For example the stated value on the county records is $54000, of which only 1/2 belongs to me. I believe it would sell closer to $40000 - 10% realtor commission. So my net half from the sale would be $18000. Is this the number I should report?
The value is $40,000. You could sell it yourself without a real estate person. I don’t believe their commission would count against the value.
Your value would be half of what you could get if you sold this property now so if that number is $40,000, your share would be half of that amount.
Any plans to sell it to ex in the near future?
If you sold it to him and paid down your home mortgage before filing your FAFSA, then there would be no asset.
Lots of assumptions and whatifs…would not having this asset result in a substantial increase in need based aid?
I would think they determine the value based on the assessment. If property value was determined based on a figure property owners claim they can sell it for, what’s to stop them from lowballing the number? And what’s to stop people from claiming a discount to pay for a real estate agent then selling the property themselves?
Austin…it depends. Around here, assessments for tax purposes are recalculated every 10 years at least. The value of a property can change significantly from what the town uses as an assessment value during that time…either up or down.
The owner needs to look at comparable properties, and what those have sold for recently. That is a better number to use in many cases than the town tax assessment number.
I do not believe the real estate commission is counted in the equation at all. None of the other closing costs are either (lawyers fees, taxes, real estate transaction fees, etc). It’s the value of the property as it stands…minus any mortgage on the property. In this case…half of the value as the property is co-owned.
Valuation can be arrived at using the following methods:
1 - Purchase Price, then use FHFA HPI Calculator for your part of the country and then add another 10% on top.
http://www.fhfa.gov/DataTools/Tools/Pages/HPI-Calculator.aspx
2 - Appraisal by Certified Appraiser minus commision.
If it ever comes to verification, nobody will ever call you on the fact that you subtracted commission, since that would be a more “real” representation of the monies that would be available to pay for college.
I heard that it is safe to use method (1), even if you believe it would turn out to be less than method (2). Don’t subtract commission in method (1), you are only trying to find a floor that can be backed up.
County assessment does not reflect property value, only what what property tax is based on.