topic Re: Fair Market Value of House in Bankruptcy

Fair Market Value of House

Anonymous — Thu, 03 Dec 2020 18:49:17 GMT

Homeowners with chapter 7 experience, have you ever had a trustee get their own CMA/appraisal, even though you furnished one in your filing from a licensed realtor familiar with the property? What was the outcome? What happens if a trustee lists your house for sale but can't actually get what they thought it was worth?

Re: Fair Market Value of House

sccredit — Thu, 03 Dec 2020 19:35:05 GMT

IME the trustee will disregard any appraisal provided by you and/or your attorney. That is exactly what they did with mine. The trustee has a realtor (or realtors) they use when selling a home and they will obtain that realtor's opinion. In my case the difference was $50k and they proceeded with the sale. In the end the house sold for exactly what was on the appraisal that we ordered and provided. In my case the equity in the home was about $250k so there wasn't a question about whether it would be sold or not as the homestead was $100k.

Re: Fair Market Value of House

Anonymous — Thu, 03 Dec 2020 19:56:42 GMT

@sccredit wrote:
IME the trustee will disregard any appraisal provided by you and/or your attorney. That is exactly what they did with mine. The trustee has a realtor (or realtors) they use when selling a home and they will obtain that realtor's opinion. In my case the difference was $50k and they proceeded with the sale. In the end the house sold for exactly what was on the appraisal that we ordered and provided. In my case the equity in the home was about $250k so there wasn't a question about whether it would be sold or not as the homestead was $100k.

Thanks, that's very helpful. May I ask if you are in a state with a large homestead exemption or small homestead exemption? I saw some states go up as high as $150K to $500K! I'm assuming that's not the case for you.

Re: Fair Market Value of House

sccredit — Thu, 03 Dec 2020 20:04:24 GMT

Mine was $100k

Re: Fair Market Value of House

Anonymous — Thu, 03 Dec 2020 20:08:03 GMT

@sccredit wrote:
Mine was $100k

Apologies, I misread it the first time!

Re: Fair Market Value of House

sccredit — Thu, 03 Dec 2020 20:17:50 GMT

@Anonymous wrote:
@sccredit wrote:
Mine was $100k
Apologies, I misread it the first time!

No worries!

Re: Fair Market Value of House

jmw1 — Thu, 03 Dec 2020 21:47:39 GMT

When it is your house on the line, you don't go cheap and get a broker's price opinion from a realtor familiar with your property. The realtor's opinion is worth nothing. You use your bankruptcy attorney's recommended licensed appraiser who will lowball somewhat for you. The appraiser's license is on the line so he can't go overboard. That will cost around $400-$500 and you better be happy to pay every last cent of that. If the trustee doesn't give up at this point, the trustee will be forced to spend his own money upfront for his appraiser and both of you take your real appraisals to the judge for the final decision. Sometimes the trustee thinks there is value there where there isn't. Make it expensive and a possible money loser (appraisal cost plus the cost for the trustee to hire an attorney to show up in court) for the trustee to go forward by going in front of the judge. Hopefully you have a good lowball appraisal that convinces the trustee to give up.

Re: Fair Market Value of House

Anonymous — Thu, 03 Dec 2020 21:58:08 GMT

Yes, agreed. However, our lawyer advised that we didn't need to get the bankruptcy appraisal even though we wanted to. He said the CMA was sufficient.

@jmw1 wrote:
When it is your house on the line, you don't go cheap and get a broker's price opinion from a realtor familiar with your property. The realtor's opinion is worth nothing. You use your bankruptcy attorney's recommended licensed appraiser who will lowball somewhat for you. The appraiser's license is on the line so he can't go overboard. That will cost around $400-$500 and you better be happy to pay every last cent of that. If the trustee doesn't give up at this point, the trustee will be forced to spend his own money upfront for his appraiser and both of you take your real appraisals to the judge for the final decision. Sometimes the trustee thinks there is value there where there isn't. Make it expensive and a possible money loser (appraisal cost plus the cost for the trustee to hire an attorney to show up in court) for the trustee to go forward by going in front of the judge. Hopefully you have a good lowball appraisal that convinces the trustee to give up.

Re: Fair Market Value of House

jmw1 — Fri, 04 Dec 2020 17:31:17 GMT

@Anonymous wrote:
Yes, agreed. However, our lawyer advised that we didn't need to get the bankruptcy appraisal even though we wanted to. He said the CMA was sufficient.

OK. I think that's fine for now. But once you get a hint that the trustee won't abandon your home, it's time to bring in the big guns and let the trustee know that you will see him in court if he presses on. You need a lowball appraiser that's used to doing them for bankruptcy clients and not any random one. Hopefully the trustee is reasonable and will move on.

Re: Fair Market Value of House

Anonymous — Fri, 04 Dec 2020 18:19:31 GMT

@jmw1 wrote:
@Anonymous wrote:
Yes, agreed. However, our lawyer advised that we didn't need to get the bankruptcy appraisal even though we wanted to. He said the CMA was sufficient.
OK. I think that's fine for now. But once you get a hint that the trustee won't abandon your home, it's time to bring in the big guns and let the trustee know that you will see him in court if he presses on. You need a lowball appraiser that's used to doing them for bankruptcy clients and not any random one. Hopefully the trustee is reasonable and will move on.

Thanks. I hope the trustee moves on... so stressful!

Re: Fair Market Value of House

DebtStinks — Fri, 04 Dec 2020 21:12:13 GMT

@sccredit I know it's water under the bridge now, but I'm curious. Of course, don't feel obligated to answer. You had 250k in equity, knew your exemption was only 100k leaving 150k that you're presumably going to forfeit. Did you have quite a bit more debt than that? Business go south?

Re: Fair Market Value of House

sccredit — Mon, 07 Dec 2020 17:01:50 GMT

@DebtStinks wrote:
@sccredit I know it's water under the bridge now, but I'm curious. Of course, don't feel obligated to answer. You had 250k in equity, knew your exemption was only 100k leaving 150k that you're presumably going to forfeit. Did you have quite a bit more debt than that? Business go south?

It's a very long story but the short version is a partnership that went very VERY south, debt well into the six figures and lawsuits totalling high seven figures from personal guarantees. Basically one partner ripped the bank off for about $4mm but I was also PG'd on it. BK was 99.996% business related debt. We tried to use the appraisal to buy back the house from the estate but they thought it was worth way more than it actually was. By the time they figured it out it was too late and they wouldn't even consider it.

Re: Fair Market Value of House

DebtStinks — Mon, 07 Dec 2020 19:36:18 GMT

Thanks for answering my very nosey question. I'm sorry for the misfortune with your business partner.

Best of luck going forward!

Re: Fair Market Value of House

sccredit — Mon, 07 Dec 2020 20:03:34 GMT

@DebtStinks wrote:
Thanks for answering my very nosey question. I'm sorry for the misfortune with your business partner.

Best of luck going forward!

No worries. I have told the story to many, many people as a cautionary tale of business partnerships. It's also a testament of how our fortunes can change very quickly. Luckily I was able to move directly into consulting for other businesses so income stayed pretty close to what I was making before and the financial rebuild was pretty easy. Even with the entire mess I was left with I am more fortunate than many others.