Many clients embarking on mediation to resolve their property matter in order to reach a financial settlement, get stuck right at the beginning! Sourcing the values of all of their assets such as family home, investments, shares, cars, boats, caravans, and even down to the camping gear can be poles apart.
In order to gain the valuations of all the assets you need to agree on what source you will use to gain the valuations. For example, for properties, you may decide to get a valuer to do a formal valuation or each of you may get a market appraisal from a real estate agent and split the difference between the two appraisals to reach an agreed amount. You may be worried that the property will sell for more or less than agreed and be concerned that you won’t get your share of the profit. You can always ensure you put a caveat that the valuation is an estimate and the net profit will be shared less sale costs with agreed % split. It is wise to set a timeline on when the property is to go on the market so as to ensure that the financial settlement is imminent.
For cars, boats, caravans or assets worth over $1,000 you need to remember you are seeking resale value if you were to sell it today. How much would you get for it, NOT how much it would cost to buy a new one. The sources available could be REDBOOK, CARSALES, or similar second-hand sales channels. You need to consider the condition of your asset, whether it is ‘as new’, good or fair to gain a reasonable comparative value. Take screenshots of the values as supporting evidence to gain agreement.
If there are small items toaster, kettle, gym bag, kids’ toys etc, these generally are not included as they are miscellaneous which could be agreed who gets them between yourselves. They are certainly not worth bringing up in mediation where you are paying to negotiate the big-ticket items and therefore want to maximise the mediation duration. Second hand furniture are generally not worth much and therefore not worth paying for mediation or legal fees to negotiate on them. You may decide the contents are a nominal amount and advise the party who is deciding to buy the other party out to stay in the home that they could have them for an agreed value. It wouldn’t equate to an amount if the other party needed to go out and purchase all new stuff to set themselves up.
The key is to understand what your overall property pool net value is once all the loans and debts are subtracted. You may consider how much money is worth spending to fight over it. For example, if you owned a $10million house on the waterfront you may decide it is worth spending $100k in legal fees for a chance to get what you consider is your fair share. If you are fighting over a $1million home in the suburbs you may think it is best to negotiate and resolve the matter in mediation for $5-10K.
Try to agree on the asset pool values before you commence mediation if possible, so as not to eat up too much mediation time in arguing over how much the 10year old holden is worth!
There are 4 steps in property mediation with a 2–4 hour duration. You can come back to mediation as many times as you like, but you want to ensure that you are seeing the bigger picture of what you are fighting over and how much it may cost in legal fees to fight for it.
The 4 steps are-
1. What is the net asset pool? (values-debts)
2. How and who made the contributions? (financial and non – financial)
3. What are the future factors affecting the parties? (health, age, earning capacity etc)
4. Are the agreements ‘fair and equitable’?
So, its important to not let the emotions of the breakup cloud your judgement to make rational decisions. You need to treat the negotiation like a business transaction that is fair and just. Think of it like doing a deal in buying a car from a sales yard. You want the best deal and the salesman wants the best sale price. Respectfully you can negotiate a win/win so that both parties walk away happy and continue on with their life.
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Author - Cheryl Duffy, Divorce Coach, Family Dispute Resolution Practitioner, NMAS Mediator & Parenting Coordinator