Bankruptcy Valuation / Bankruptcy Appraisal

Berge Real Estate Appraisers will preform bankruptcy valuation of real property in the Los Angeles and Orange County areas of Southern California.

Why Home Value Matters

To determine whether you'll be able to protect your home, you'll need an accurate home valuation. Next, you'll deduct the mortgage balance and determine the equity. If the equity is less than the amount of the homestead protection available, your house will be protected in bankruptcy.

When you can't protect all of your equity, what happens next depends on the bankruptcy chapter you file:

• Chapter 7 bankruptcy. If the equity exceeds the available homestead protection, your house may be at risk in a Chapter 7 bankruptcy. The bankruptcy trustee would sell it, pay off the mortgage, give you your exempt equity, and distribute the remainder to creditors.

How to Value Your Home

When you fill out the bankruptcy forms, you'll be asked to provide the "current value" of your home on the date that you file for bankruptcy. Another term for current value is "fair market value," which is the amount that a seller who isn't pressured to make a purchase would agree to pay for the home.

You can use different ways to determine the value of your home before you file for bankruptcy. The most important thing to keep in mind, however, is that your valuation isn't the deciding factor. The bankruptcy trustee appointed to oversee your case will also be determining the value of your home, as well. If there's a disagreement, a bankruptcy judge will review the basis for both valuations and make a final decision.

Full House Appraisal

A full appraisal will give you the most accurate value for your property. If you refinanced your home or modified your loan, you might have a recent appraisal. What is considered a recent appraisal will depend on current housing climate.

To get a full appraisal, you hire a licensed real estate appraiser who inspects your property and prepares a lengthy report, containing information on your home and information on sales of comparable homes. Based on that information and any other factors the appraiser finds necessary, the appraiser will set a value and explain the valuation.

A full appraisal is the most expensive option. It isn't needed in most routine bankruptcy cases. They are necessary, however, if you plan to try to strip the second mortgage on your property in a Chapter 13 bankruptcy.