To divide home equity in a divorce, the first step is to calculate the equity. The process to calculate home equity is fairly simple, you must first get the currently appraised value of the house by a qualified residential real estate appraiser, and subtract the mortgage and any other liens on it. The result is the equity figure, which will likely be divided between the spouses during a divorce, except under certain circumstances.
If the house is sold, both parties will share the commissions and sales expenses, so each spouse would get one half of the remaining balance after commissions, provided the home equity is to be divided equally between the parties. If one party is interested in buying the home from the other party, the question of whether commissions and sales expenses are included would probably be a negotiation issue.
While the party hoping to buy out the other would most likely wisth to buy the home at half the equity less the sales commissions, likely fix up costs, and taxes that have to be paid until the sale, the other side would most likely argue that if the party wishes to buy it there wouldn't be a sales commission or fix up expenses.
A reasonable compromise might be to agree on the purchase of the home at half the equity minus half of what the normal sales commissions would be and half of what the essential fix up would be.
In addition, the buyer of the home would most likely wish to buy out the other party with a lower appraisal, while the seller would clearly prefer a higher appraisal. Since appraisals are just estimates of the value of the home, selecting an appraisal or an appraisal value may be the most difficult part of the process.
One way to eliminate this problem is to select two appraisers, and then pick a number mid-way between the appraisal provided by each appraiser. This way, neither party is affected by an overly high or low appraisal value. Some parties may choose to select three appraisers, and take the median appraisal value.