Value of home to lien strip 2nd

[Houseofcards]

Looking for advice and clarity on how to determine the value of our home in an effort to strip the 2nd lien on the house.

We currently owe 211k on our first and 81k on a second (HELOC).

2 months ago we had a realtor "friend" do a CMA on our home and his numbers showed a value of near 240k on the house - this was not an official CMA however and I know that the value has decreased since then.

I know that "Zillow" and "realtytrac" values are not legal binding numbers but I have been watching those values recently decrease significantly.

What i see really makes me think it may be time to actually get an appraisal done.

We are in the pre-filing stages of our bankruptcy now and are not yet sure if we will be a 13 or a 7 (I understand that the lein strip can only happen in a 13 proceeding).

What will be the number used to determine value here - the actual appraisal value? Or will it be the "Net proceeds value" after a quick sale of the property?

I am trying to decide if we should pull the trigger and get the official appraisal done for $350

[gettingby2008]

We are also in Las Vegas, we had an official appraisal done and we lien stripped very easily. We bought in 2005 for 277K current 1st note = 210K second was 50K Zillow was showing a value of 210K actual appraisal was 130K.

Good luck!

[CH33 Paralegal]

you MUST be able to PROVE BEYOND ALL DOUBT that the ENTIRE 2nd MORTGAGE is UNSECURED.

[justbroke]

As CH33 eludes to, you must first have an appraisal performed by a certified appraiser, and licensed to do so in your State. Then, that appraisal must show a value which is less than the balance on your first mortgage. That value can't even be $1.00 (one-dollar) more than the balance on your first mortgage, or the lien strip will not be allowed.

You need to go ahead and get an appraisal as close to the day you are going to file as possible. (Meaning, don't do one now, then file in six months and try to use the "old" appraisal.)

Also, if you're paying $350 for an appraisal on a home that is less than $500K, you're probably paying too much. You should be able to get one for $299 for a home less than $500K.

[markdel16]

Call around and get some prices, mention you are doing it for a bankruptcy. I had one go from $350 to $300 for me because it would be done for a bankruptcy, and I guess there's people out there who still have a heart.

[HHM]

Well, you don't have to prove BEYOND ALL DOUBT...in point of fact, the burden of proof is "preponderance of the evidence." In any event; the attorney's I know will have the client start with a current market analysis from a realtor (might cost $100), if the value is close (just over/under), then they would bring in an appraiser. But if a CMA comes in way under the first, that will usually suffice.

[justbroke]

I think that the only problem with a CMA is that a Certified Appraisal (performed by a licensed appraiser) trumps it. I read a case in Florida where the Lender used a CMA and the Debtor used a licensed Appraiser. The Debtor won. It's always best evidence, and true, as HHM writes, that it's a preponderance of evidence as the threshold.

I say, that if a CMA is going to cost you... you may as well do a full Appraisals. But, that's just me.

[HHM]

By the same token, if the CMA comes over the top, you didn't waste your money on the appraisal?

[albacore44]

You can also contact an appraiser and ask for a rough estimate, based on what is going on in the neighborhood. They can pull a sheet showing recent closings and what the new Sq ft to $ is currently at. tell them what you need it to be at and if they think they can justify it. Most will help you. I keep in contact with my last appraiser. I send him an e-mail every couple of months. He knows I need a BK appraisal, and he e-mails me a Comps sheet . My situation is tough.....so many forclosures, nothing to comp against since nothin is sellin. Checked realty track today, 2 neighbors down the street just hit the forclosure list.......One i used to go camping with. i'm afraid to ask.

[justbroke]

By the same token, if the CMA comes over the top, you didn't waste your money on the appraisal?

That's why you make the big bucks. I was just suggesting it if the CMA has a cost. Of course, a free CMA is nice too. Your strategy of using it for a benchmark isn't a bad one at all. I did get a CMA, and the Realtor was too iffy and unsure because of no recent comps (no sales). The (free) CMA came in at around my balance on my first.

What I did in my case, was ran two custom electronic AVMs (automated valuation method) appraisals to see where it would come in. They cost me about $80. These were not "Zillow" or any of those dumb, free, cost estimators. These are AVMs (of which there are more than 4 models) from RealQuest. (I'm a subscriber of RealQuest.)

One AVM came in at about $60K below the balance of first. The other came in at $35K below the balance of my first. I trusted the second one more.

I decided to do the professional appraisal, so no one could challenge my AVM. The professional appraisal came within $1K of the second electronic appraisal (about $36K below the balance of my first).

But alas, you do have a point because I did spend near $80 before I spent the $299 on the non-electronic (professional) appraisal.

[walkthaplank]

As CH33 eludes to, you must first have an appraisal performed by a certified appraiser, and licensed to do so in your State. Then, that appraisal must show a value which is less than the balance on your first mortgage. That value can't even be $1.00 (one-dollar) more than the balance on your first mortgage, or the lien strip will not be allowed.

You need to go ahead and get an appraisal as close to the day you are going to file as possible. (Meaning, don't do one now, then file in six months and try to use the "old" appraisal.)

Also, if you're paying $350 for an appraisal on a home that is less than $500K, you're probably paying too much. You should be able to get one for $299 for a home less than $500K.

I searched pretty thoroughly in So Cal and the cheapest I found was $350. I was 99.99% certain that my appraisal would come in under the 1st based on the free online "eppraisals". While I think that a desk appraisal is all that should be required (it is all that the mortgage company used when I got the 2nd), it was worth the $350 so that I'll ultimately be shed of the 2nd.

[justbroke]

I searched pretty thoroughly in So Cal and the cheapest I found was $350. I was 99.99% certain that my appraisal would come in under the 1st based on the free online "eppraisals". While I think that a desk appraisal is all that should be required (it is all that the mortgage company used when I got the 2nd), it was worth the $350 so that I'll ultimately be shed of the 2nd.

While I can't believe they're getting $350, I'm certain it's because appraisers are en vogue again.

[TooMuchCredit]

I am attempting this now (originally was told it was not done in my district). I'm awaiting the motion to value hearing.

The 2nd responded to the motion and is using the zillow value and the tax assessors value to contest that it is still secured. However, I got an appraisal and it is several thousand less.

I also have a CMA that actually was a bit more than an average CMA. The realtors came and looked inside and outside my house. They provided a range that the upper limit is lower than my 1st as well.

However, I just got my new tax assessment for this year though and it is slightly higher than the value of the first.

Zillow is showing homes in my area being 60% higher than they actually are selling for - the few that have sold that is. There are 2 large bank websites that value is much less (less than my 1st).

I am hoping it is true that the appraisal trumps zillow and the tax assessor's appraisal!

[justbroke]

I am hoping it is true that the appraisal trumps zillow and the tax assessor's appraisal!

It does, because it's the only one that uses at least two methods of estimation. The three methods are market, cost to rebuild, and income (rental). Additionally, Appraisals are an eye's on review of the interior and exterior of the home. Zillow is nothing but a "guesstimate" (they actually call it a Zestimate). While they are a proprietary AVM model, they are the worse one I've ever seen and used.

First American Credco has eAppraisalIT that Bank of America used to use, provide for free on their website, and that one was excellent. Seems BofA is using something else now.

I have used some custom models (electronic appraisals or AVMs) from RealQuest. They have the best, most accurate ones to date (one was within $1K of my actual professional appraisal).

I would say that the CMA, if the Realtor entered the premises, is good too, but they tend to be "ranges" and do not look at any of the other two appraisal methods (cost, income), and don't lock in on a specific number. CMAs (usually) only use one method of evaluation, market value, with several variations on that. However, a CMA always trumps those silly Zillow things.

When your appraisal is just "several" thousands from the balance on the first mortgage, you will generally get some pushback from the "junior" lienholder. This is only because several thousand dollars isn't that much. However, I've seen cases where these lenders come into a Valuation Hearing with a Zillow and/or a CMA, and just flat out lose against an Appraisal.

Option One presented a Comparative Market Analysis prepared by a real estate agent, which sets forth three figures: (i) market value $307,000.00; (ii) quick sales $293,000.00; and (iii) suggested list $314,900.00. The figures are apparently based upon comparables, including three property sales and three listings. The sales comparables are for property sales in November 2006, February 2007, and July 2007, with the highest sales price of $345,000.00 in July 2007 and the comparables located more than two miles from the Property. The “List Comp” information provides listing prices and not actual sales.

The Debtors presented a Uniform Residential Appraisal Report prepared by a Florida licensed residential appraiser. The Report values the Property at $224,000.00 based upon a sales comparison approach and the appraiser’s visual inspection of the interior and exterior of the Property. The Report values the Property at $222,198.00 based upon the cost approach.

Option One’s Analysis is entitled to minimal weight. It is not a formal appraisal conducted by a licensed residential property appraiser and no inspection of the Property was conducted. It contains no basis for the selection of the alleged comparables or the calculation of the alleged value. The real estate market has taken a substantial downturn since the July 2007 sale comparable. The Debtors established the Property has a value of $224,000.00.

In re: KEITH C. SMITH and SHARI D. SMITH, Case No. 6:07-bk-05041-ABB -- 2/21/2008
Middle District of Florida - Orlando Division

(This is one of my "back pocket" cases. I keep it handy. )