Homestead Exemption

Are you allowed to subtract liens & home equity loans from the equity of the home?

For example,

155 K = Value of Home

Deductions
15.5 = Cost of selling (10%)
80.0 = Owed on mortgages
2.5 = Liens
13.0 = Home Equity Loan

111 = Total Deductions

Equity = Value - Deductions = 44 K

Homestead exemption in Colorado = 45 K

Does this sound right?

I'm not sure you can subtract the costs to sell the house if you want to keep it.

When we've been chatting with attny's during Consults, they know we are trying to sell, we intend to give up the house in BK, and we have a Contingent offer.

Their first question everytime has been, "Is there any equity in the house?"

After we pay our mortgage, realtor fees, docs fees, and other closing costs, there would have been about $5K. But now with all the lates and additional fees piling on by the lender, that's eating into the $5K.

And every attny says, "So there's no equity in the house."

You can deduct the mortgage, any 2nd's or HELOC's you may have, Liens, etc. from the value of the home to determine equity remaining. You are right on that part.

But if you plan on keeping the house, I don't know if REA commissions and associated selling costs enter in there or not. That would be a question for an attny.

...that you are expecting to get a realtor's estimate on your unit 6/22. Hope you get a figure that works for you! Let us know what you've uncovered re: the above earlier post for your situation in Colorado. Hope this is good news for you.:yahoo:

I have to postpone the market evaluation until Monday (yesterday was a crazy upsetting day and I just couldn't deal with it).

However, the lawyers I have contacted said it is alright to deduct the cost of selling; however, the trustees differ as much as 7 to 10%.

IMHO, 7-10% is too much swing between FMV appraisals. 2 or 3 independent appraisers should be closer than that. Generally they will have at least 1-2 identical comps. Their extra 1-2 comps may vary. But all their values should be very similar.

We've done Corporate Relo's where the Company worked on 5% max variation. The house we were looking to buy,.......... The purchase price offer had to come within 5% of what the Company's appraiser said, or the Company would not back the deal. We would have to renegotiate the price with the seller, or move on to another property. The Company's appraiser tended to run a bit low compared to the Loan appraiser.

And, since I initially posted, I have learned that you can indeed deduct the costs to sell the home. There's gonna be 6-7%, or whatever REA's charge in your area. The Title Company will charge a fee for their services. If you offer/are required to provide the buyers a Home Warranty, there's a fee for that. Prorated taxes to the date of sale. Seller's Title Insurance if that's typical in your area. So the total selling costs can easily run up to 10% of the FMV appraisal.

The difference is that some trustees use 7% of FMV as the cost of selling where others permit 10% of FMV to calculate the cost of selling. I wasn't talking about the actual FMV of the house.