real estate value question

[jdcat]

Update-Great News!

I now have documentation showing that our house is not worth $125K!

I contacted a real estate agent and explained that we had just had our house appraised and that we didn't think the appraisal was correct and would she please do some research for us.

She looked into the homes the appraiser had used as comps for our house and come to find out these homes were all in prime condition and had all been completely renovated.

She came to our home and I walked her through so she could see the actual condition of our home and she said she couldn't understand why the appraiser had used the comps that he used.

She did some additional research and found two properties in the same age range as ours that are also in similar size and condition and the asking price for both (both are currently for sale) was under $108K.

She also said for our particular home she wouldn't want to list it at anything over $100K starting out and that we most likely wouldn't get that. The kitchen, in her opinion, is so bad that to replace the plaster walls and renovate would be at least $10K. And that's just the kitchen! To have the basement waterproofed would run into the thousands also.

Then our old barn out back, which is covered in peeling lead paint, and which won't last much longer, she said if something happens and it falls down the cost for having it removed because of the lead paint would be extremely expensive. She said no buyer would want to have to deal with that scenario.

I knew I was right! I can't believe I'm this happy that my house is such a piece of crap, LOL!!

So realistically, were looking at a situation were this house would only sell in an "as is" type of sale and that would mean we would walk away with almost nothing. So much for our $30K in equity!

She also said she thinks the only reason this house appraised for $107K two years ago was because of the financing. We paid $80K for it but the bank probably wanted it to appraise higher. She said a lot of that was going on for quite awhile.

I am sooooo relieved. I knew that appraisal was wrong! $250 wasted.

[jdcat]

I think we're going to be ok even if we do get questioned. I found out that we still have $8K in unused wildcard. Applying that $8K to the $18K that the appraisal put us over by will only leave $10K to cover the necessary repairs, realtor fees, trustee fees with probably nothing left over for creditors.

We're still going with $107K because the house just isn't worth more than that right now, but I'm not as worried now that I know we have that unused wildcard. I feel like I can breath again. Yesterday was a horrible day, way to much stress.

[jdcat]

Hey justbroke,

He used a cost approach and a market value approach. The cost approach was about $1K more than the market value approach. I'd love to tear this place down and rebuild it! The neighborhood is great but the house not so great lol!

[justbroke]

Hey, sorry that it didn't come in lower. Appraisers can be strange and I argued with one once because the appraisal was too low. Imagine that. They have their own system and some of them will take note of certain things but every one that I have worked with would not accept "input" or "numbers" or where it should come in at. Their professional license -- and reputation -- could be at stake.

You should check your appraisal and see which methods were used. usually they do a market approach or a cost approach (to rebuild), They may also do an income approach (rent). My neighborhood doesn't do much rental (due to high costs) so I only received the market and cost approach. My cost approach was lower than the market approach.

Just use your $107K value, and maybe see what your tax assessed value is and/or some other valuation (Zillow). As much as I hate Zillow, the Trustee may not even care that it came off Zillow.

[jdcat]

Thank you all for your replies and suggestions, especially you Tman...I was hoping you would chime in again. Just half an hour ago hubby and I were discussing listing the house on the petition at $107K. We know this house, we knew what we were getting into when we bought it, so we know what any potential buyer would be facing if it were to go on the market.

The house was refinanced in 2004 to put a new roof on, a complete tear off. So it's good to go there. I need to do some research on the cost of mold removal and chimney repair.

One thing the appraiser did mention to me on our front porch as he was leaving was the chipped/peeling paint on the front porch roof was lead based and we should have it removed as soon as possible. He also stated that the paint wouldn't affect the appraisal. I'm not sure how the paint could not affect the appraisal. There is lead based paint all throughout the darn house and he acknowledged that! But that doesn't affect the appraisal?? I don't understand that.

He was very standoffish with me and made a comment at one point that he gets people who try to tell him that they need the house to appraise for such and such an amount and that he doesn't do that. So I don't know if calling him up to discuss the needed repairs would sway him at all. He knows this is a bankruptcy situation and I wouldn't blame him for thinking that I would be attempting to get him to lower the price for my personal benefit due to the bankruptcy.

So my thinking now is to value it as $107K and if it's questioned the trustee will be told that any possible increase in value since it's 2007 appraisal would be voided by the cost to fix all of the problems the house has.

The appraisal report is between you and the appraiser - he/she CANNOT discuss the work they did for you without your permission. The report is NOT filed with any government agency. As I said there are thousands of people who file everyday with absolutley no idea what their house is actually worth.

This is exactly what my husband and I were wondering. You read our minds! Thank you so much Tman!

[Tman]

jdcat, call the appraiser and discuss these issues with him/her. These are issues that the appraiser should consider. If you have an old house with slate roof or even if it has asphalt shingles and you have had water, in all likelihood the roof will need to be replaced down to sheathing and possibly even a few rafters. This could easily cost $10,000. The appraiser should also consider the repair incentive to the potential buyer (few people will buy a house needing $10k in repairs, with no expectation of a return on the repairs - the incentive could range as high as 100% of the cost of the repair - it varies by area) Talk to some realtors about the sales the appraiser used - if possible have them visit your home and discuss how the actual sale was superior/inferior to your dwelling. If all else - just file using the information you had at the time you talked to your attorney. The appraisal report is between you and the appraiser - he/she CANNOT discuss the work they did for you without your permission. The report is NOT filed with any government agency. As I said there are thousands of people who file everyday with absolutley no idea what their house is actually worth.

[helpmeout]

You can contact a real estate agent and get an evaluation done on your house. That is what I did. And the value that they came up with is more then 6% lower than the appraisal that was done by the bank when I refinanced my ex's name off of the mortgage in 2007.

[LadyInTheRed]

The only thing the appraiser mentions on the appraisal is the unfinished siding which he states would cost about $1K to finish. No mention of the mold on the basement walls or the missing plaster wall behind the kitchen sink and so on and so forth. He didn't look in the attic to see the crumbling chimney, things like that.

I can see this place selling for around $107K in an "as is" sale, and that's pushing it, but not $125K. I don't know if the house would even sell because of the mold issue.

You might want to talk to the appraiser about these issues if he wasn't aware of them. He may be willing to make adjustments. It can't hurt to ask. The appraisal should be an estimate of the fair market value of the house. A buyer would consider the cost of needed repairs when making an offer, so should the appraiser (as he did with the siding).

[jdcat]

It may help. If the trustee can see that it needs $X amount in repairs to fetch the appraisal price they may back off on it. (Repairs + Realtor Commission + any other closing costs may not equal money for the unsecureds.)

What I need to find out is if the house could sell at all.

We bought it thinking we'd be able to fix all of this but things have panned out differently.

I don't think a trustee would touch this house with a ten foot pole.

[jdcat]

The only thing the appraiser mentions on the appraisal is the unfinished siding which he states would cost about $1K to finish. No mention of the mold on the basement walls or the missing plaster wall behind the kitchen sink and so on and so forth. He didn't look in the attic to see the crumbling chimney, things like that.

I can see this place selling for around $107K in an "as is" sale, and that's pushing it, but not $125K. I don't know if the house would even sell because of the mold issue.

[LadyInTheRed]

Did the appraiser take the needed repairs into account? He should.

[newbie2]

I'm considering having a home inspection done now.

I can scrape up the money for this. I just don't know if this would hold any weight with a trustee.

It may help. If the trustee can see that it needs $X amount in repairs to fetch the appraisal price they may back off on it. (Repairs + Realtor Commission + any other closing costs may not equal money for the unsecureds.)

[jdcat]

I'm considering having a home inspection done now.

I can scrape up the money for this. I just don't know if this would hold any weight with a trustee.

[jdcat]

The ironic thing is that this house needs way over $18K in repairs. All of the electrical is home made, grandpa put it in himself years ago and he was no electrician. The chimney in the attic is crumbling and when it rains we get water in the attic and down inside the walls through the center of the house.

We get water that comes up through the basement floor when we get a hard rain so we also have a mold problem which gets worse in the summer when it gets humid. Actually the whole basement needs to be sealed. Most of the plaster walls are crumbling and some of the walls are missing and are covered by faux brick and wood paneling so we don't have to look at it.

The wood floor in the dining room is splintering. The vinyl siding was never finished. We have an old barn out back the size of two story two car garage that literally sways with a strong wind. We haven't torn it down because we use it for storage.

There is just a lot of work that needs to be done. We sometimes think it would be better to dump this place because of the shape it's in but we stay because we can't afford a newer house the same size. We either stay and pay less than $700 a month or we rent for more and have a lot less space.

I wonder if documenting the shape of this place with photos and maybe even some written estimates would help us deter the trustee from wanting to sell.

[jdcat]

I'm gonna cry or crawl under a rock. Our house appraised for $125K. That puts us over our exemption by $18K.