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The (oddly) dreaded home Appraisal (advice)

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  • The (oddly) dreaded home Appraisal (advice)

    Hey guys,

    I am lined up for a chapter 7 and everything so far is fine, except one thing. My home has too much equity and my wife and I want to keep it. We have some pretty good reasons (like having to change schools for our special needs kids) so it's not just about a "want" but mostly about needs (otherwise I would say bleep it). The one issue is I am basing the value off of my last appraisal (2016), it was for a refinance. The appraiser was generous with the end result and overlooked many issues, even a few that would've failed FHA. This pushed me out of the homestead limits.

    He also comped the most expensive homes in my area, looking around today many have sold since for way less that are even nicer than mine. My home was appraised at 255k for instance, the others sold in the 230s.

    It ended up well over what was needed for the refinance, however as of today it messed things up (obviously).

    A few questions:

    Is it possible to find an appraiser that would be honorable but yet "helpful". Most try and get the appraisal as high as they can, but I need to go in the other direction. Has anyone went out and tried to find one, and if so how did you go about it? Secondly (should've asked this first) do the courts use a full legitimate appraisal in this situation or will they insist on something else (like tax valuations). I have not heard back yet from my attorney so I thought I would ask.

    Regardless of all this, do you guys have any tips on getting a lower appraisal without making it obvious? Since my last one many things have gone down hill (due to being broke), I feel I need to somehow even point things out so they aren't missed. Not sure how to approach that.

    Thank you very much for the help, I have been bombarding the forums lately (freaking out). For that I apologize!

  • #2
    So I met with an attorney to go over a chapter 7 yesterday. He went through all the common various questions and everything seemed to be fine. Then came my house. I had it appraised just over a year ago and it was valued more than I owe. I had about 25k in equity after the final numbers.

    So we spoke about that (I actually thought it was only 20k but I was wrong) and he explained that even if your over the homestead amount it doesn't mean you will lose the home. His reasoning was that the court wont take it due to the fact that they still have to pay out for an agent to sell it, get it on the market and sell it for full appraised value (which doesn't always happen). So the amount in the end isn't always worth all the time and effort for the courts to deal with (or whoever handles it).

    My main question is has anyone been over the amount and still were able to keep their home? Does this situation sometimes hold true?

    To expand on my appraisal a bit. I was refinancing the home and the appraiser was pretty "generous" with his final amount. He even mentioned he overlooked a few things due to it just being a refi, and I am guessing it centered around needing to be at a certain amount to be qualified (I just squeezed in).

    I only mention this due to the home needing a lot of TLC, some repairs and having an in ground pool that is cracked and messing with the patio etc. I highly doubt it would sell anything close to that due to so much needing done (pool tear out is 10k alone). So I was also curious if you have to go out and get a new appraisal by someone approved by the courts? Now I doubt it will fall into the 15k my state allows (no Fed option) but it would be much lower.

    Has anyone dealt with this in Chapter 7 before? And I completely out of luck, or can I hold onto some glimmer of hope. I have not actually "hired" the attorney I met with (prob will) but he hasn't gotten back to me yet on this and I was hoping for more insight.

    REALLY appreciate the help!

    Comment


    • #3
      I'm sorry I can't help you with your question ~ just wanted to say, no need to be sorry. We've all been here *freaking out* at one point or another.

      I will also just caution you to really listen to your attorney on this one. If you really, REALLY want to keep your house -- I'd be sure to get all kinds of reassurance from him/her about the way the trustees operate in your own district ~ before venturing down the Chapter 7 road at all. This can vary from place to place, for sure.

      We've heard here lately about one trustee in particular (I believe in Georgia) who appears to just make up his own rules (or play dirty within the rules, I guess) -- with little regard for anyone else. That's a horror story, for sure. I brought it up to our attorney, and she was able to put my concerns to rest. She said our trustee is "very nice" and it appears that she was exactly right.

      Comment


      • #4
        I appreciate your response! I kind of hoped that it was common for people to get a bit freaked out and post a lot here. =)

        I guess your right, the guy knows how they work in my area better than anyone else. I think the point that he made was unless they know they can turn it and make a good amount off of it they don't want to mess with it. It was a relief but I found out It was worth more than I thought after reviewing my last appraisal. That take me back to my original post though. Thanks again!

        Comment


        • #5
          Tell your attorney about the prior appraisal and that you think it is high, but don't go get a new appraisal unless your attorney tells you to. An appraisal is a guess of what a willing buyer would pay and a willing seller would accept. Two appraisers can come up with very different values. An appraisal that is close to a year old is not likely to be accurate. An appraisal is not required to file BK. You decide what you think the house is worth and put that value on the petition. That is basically the opening bid. The trustee will decide whether he thinks the appraisal is too low and object if he does. Your attorney will then discuss the value with him and try to compromise. If they don't reach a compromise, you can then get an appraisal to use as evidence when trying to convince the judge that your valuation is better supported than the trustee's.
          LadyInTheRed is in the black!
          Filed Chap 13 April 2010. Discharged May 2015.
          $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

          Comment


          • #6
            LadyInTheRed,

            Thank you very much for replying. I had no idea that's how it worked (submit value), I wonder why my attorney has not mentioned it? Does it work differently from state to state?

            I wonder how you would come up with a number, if it's via comps I could get it down with that as the original was matched up with homes 50 to 60k higher. It was kind of ridiculous.

            Comment


            • #7
              What is different is what any particular attorney will advise based on the circumstances of your case.

              What did your attorney say? Did he ask for an appraisal? If so, talk to him about the one you have and ask if you should get a new one since you think the value is high. If he says you should get a new appraisal, ask if a broker's opinion of value would be sufficient. You could also look at comps yourself. Zillow now lets you choose which comps to include in a valuation, so ask your attorney if that would work. The petition may not even state how you arrived at the value. It will just be a number. What that number is based on is only relevant if the trustee objects to the value.

              My attorney used Zillow value (before you they improved to allow you to choose comps so it was very unreliable), but I was in a Chap 13 and far underwater, so the issues were different. I just needed the value to be less than the balance on my first mortgage so I could strip the 2nd mortgage and that was not even a close call at the time. It was the low point in the housing market and it was obvious I was far from having any equity, even without including the second mortgage.

              [I merged your two posts because they ask the same question. Please do not post the same question twice as it causes confusion when people start responding in both places]
              LadyInTheRed is in the black!
              Filed Chap 13 April 2010. Discharged May 2015.
              $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

              Comment


              • #8
                He is going to get back to me on it (I followed up earlier today). I am going to ask if I would be able to just put down a fair number via my own research. But Zillow has many homes in my area sky high (including mine) but the homes keep consistently selling well below what it lists. Most sold by 10 to 20k below Zillows estimate.

                I am 100% certain that my last appraisal was very generous. I just read through its entirety an hour or so ago. The one thing I noticed was there were zero marks and everything was good or excellent. Although at the time the guy was pointing out a bunch of things that needed to be done / repaired. And my house now (due to the lack of funds) needs a ton of work done (its much worse off than last year). So that's giving me some hope that I can get it re-appraised and hit a much lower number.

                Obviously I need to wait to hear back and see the best way to handle this. I wish I knew someone that... well knew someone who did appraisals lol.

                Comment


                • #9
                  As Lady said ~ we just put down a number on the petition. We used the number on Zillow (nothing fancy -- just whatever pops up when you look), and the number on our tax assessment, and settled somewhere in between -- which really was just "what we think" we could realistically get out of it, if we tried to sell it. No one questioned this number, no one asked for an appraisal... but we really weren't close to being over our allowed exemption in equity, either.

                  Comment


                  • #10
                    At our 341 meeting, the trustee asked how we arrived at our home valuation. We used the last years tax valuation, Zillow + one other online valuation site. Plus, the house needed a new roof to the tune of several thousand $$$. I handed over photographs of the roof, an estimate of the repairs + Zillow home valuation copies. That was the end of the questions re: the home valuation from the trustee.

                    Comment


                    • #11
                      Originally posted by Taipans View Post
                      He is going to get back to me on it (I followed up earlier today). I am going to ask if I would be able to just put down a fair number via my own research. But Zillow has many homes in my area sky high (including mine) but the homes keep consistently selling well below what it lists. Most sold by 10 to 20k below Zillows estimate.
                      Zillow definitely varies in its accuracy and can only be relied on to give you an idea of value. But, you can improve the accuracy. When you view your home in Zillow the default view is the public view. If you choose "owner view" at the top of the page, there will be an option under "zestimate tools" to "view my comps". If you click that, it will lead you through a process to choose the best comps depending on location and condition and then give you an adjusted zestimate.

                      Originally posted by Taipans View Post
                      I am 100% certain that my last appraisal was very generous. I just read through its entirety an hour or so ago. The one thing I noticed was there were zero marks and everything was good or excellent. Although at the time the guy was pointing out a bunch of things that needed to be done / repaired. And my house now (due to the lack of funds) needs a ton of work done (its much worse off than last year). So that's giving me some hope that I can get it re-appraised and hit a much lower number.
                      I just refinanced and I think my appraiser was generous too. He did indicate it is mostly in "average" condition, except for the bathroom that he said was in "good" condition, but he didn't mention the broken tiles on the kitchen floor, the cracked tiles and lack of baseboards in the bathroom, the need for a new roof, the rotting facia board falling off the garage and other deferred maintenance. Appraisers do need to be careful though. They are under a lot of scrutiny because of the housing crash. The crash was partly blamed on appraisals for sales coincidentally being exactly what the sale price was because of the pressure lenders and real estate agents put on the appraisers they hired. I remember laughing at the coincidence when I bought my house: "Surprise, surprise! It appraised for exactly the purchase price!"

                      The way I would deal with an appraiser in your situation is to tell him the purpose of the appraisal (they usually ask) and say something like "I sure hope the value isn't too high or the trustee might try to take the house." Then, walk around with the appraiser and point out all of the problems with the house and even things that aren't really problems, but could be considered undesirable. Like "Look at that tiny closet". That is likely to help the appraiser arrive at a low value without either of you crossing the line of committing fraud.
                      LadyInTheRed is in the black!
                      Filed Chap 13 April 2010. Discharged May 2015.
                      $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                      Comment


                      • #12
                        OK so reading through everyone's responses (I can not get quote option to work properly) if I am understanding correctly you get to submit a price that you "think" the home would sell at. And also given the opportunity to explain how you came to that amount. If so the explanation can include comps that you put together along with the repairs needed to the property (with estimated costs). This brings me to the question (if I am right) of what can and should be included? I am guessing there are limitations to how detailed you should get. Such as listing things more minor problems like cracked tiles and out of square doors.

                        I ran my address through every site I could find and get a pretty big range. So as mentioned they aren't always accurate (149k to 190k). The tax evaluation is somewhere in the middle (close to my last full appraisal of 155K). So if I am understand correctly I can drive that down some due to disrepairs.

                        I went through my appraisal on Friday line by line. As you also said LadyInTheRed nothing was marked down even though many things were pointed out. And I seem to just come in at the cost that was needed. I never thought that would end up biting me in the end of course. Mine also didn't list anything below an "average", in fact it was all good and excellent.

                        The last part "tell the appraiser the situation" is something I wondered about. All I am asking is them to be honest and conservative (which they should be in general), and list all of the problems. On one hand its nice they usually work to help out (upward) on another its a bit discerning that they will once again. Now considering you can just toss a number with the filing down with some reasons (hopefully once again I understood correctly), I am curious if it gets rejected if it's worth paying out the money for a full appraisal? I am guessing I need to find that out from my attorney but thought I might as well get some insight.

                        Again I REALLY appreciate all of the responses. I was anxious and stressed all weekend.

                        Comment


                        • #13
                          Originally posted by Chrysalis View Post
                          As Lady said ~ we just put down a number on the petition. We used the number on Zillow (nothing fancy -- just whatever pops up when you look), and the number on our tax assessment, and settled somewhere in between -- which really was just "what we think" we could realistically get out of it, if we tried to sell it. No one questioned this number, no one asked for an appraisal... but we really weren't close to being over our allowed exemption in equity, either.
                          My attorney used Redfin for an estimated value on my house. All of those online value estimators typically overestimate property values in my neighborhood by a LOT. My house was valued at $230K by Redfin, which I literally laughed at. A house across the street that was same style, extremely close to the same size as mine, and in comparable condition sold last year for $178K. It was not a foreclosure nor a short sale, either--just a standard sale.

                          Comment


                          • #14
                            So considering Redfin was overvaluing your house (by a lot) what did you end up going with?

                            LadyInThe Red: I went ahead and ran the comp tool in Zillow, I left 10 similar homes on the list (axed 3 that were sky high) and it brought my estimate down by about 20k. The tool seems to tweak the values up and down according to the differences your home has in regards to the comparable's. I did note it raised and lowered, so it wasn't all in one direction. I wonder if this can be used as the number I put down when I file or if they would scoff at it.

                            If they do reject it, how does the process then work, do you go back and forth with them trying to find a compromise?

                            Comment


                            • #15
                              My attorney and I went with the Redfin number as it was still lower than what I owed on the house and my other debts combined. The trustee had no issues with it at the 341 meeting.

                              I am in a different situation, though. I did not keep the house--the house was the main reason I filed Chapter 7 (property value crashed and never came back up, the mortgages were not government-backed so I could not qualify for those government refinances to get a lower interest rate, school district has gone to pot, property taxes skyrocketed, flood insurance got tacked on a few years ago when FEMA redid the flood zone maps...not to mention the next-door neighbor was and continues to be a complete jerk, but that's another story...). It's the only remaining albatross around my neck from the entire Chapter 7 process as the banks have been slow to initiate foreclosure and I wish they would just get it over with. I have already moved out but I am still paying for minimal utilities and lawn care to maintain the property.

                              In your case, if you are going to get a new appraisal done, I would just be honest with the appraiser as to what you are trying to accomplish.

                              Comment

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