Home appraisal too high!!!

[zeezee]

I just had an appraisal done on my house and I [I]just knew[I] that it was going to come in around $328-$340k. It came in at $500k! (At another time this would have made me ecstatic) I was so hoping to come in low enough to do a lien strip. Alas, it looks bleak. Anyway, now my concern is how is equity in the home treated when doing a ch13?
I am current and plan on keeping my home. I have a 1st that I owe $332k and a 2nd I owe $97k. I'm in VA (don't know if that makes any difference).
Thanks for any insight.

[justbroke]

I just had an appraisal done on my house and I just knew that it was going to come in around $328-$340k. It came in at $500k! (At another time this would have made me ecstatic) I was so hoping to come in low enough to do a lien strip. Alas, it looks bleak.

Eeek!

Anyway, now my concern is how is equity in the home treated when doing a ch13? I am current and plan on keeping my home. I have a 1st that I owe $332k and a 2nd I owe $97k. I'm in VA (don't know if that makes any difference).

Virginia is one of the worst States when it comes to homesteads (principal residence).

You only get a $5,000 exemption plus $500 for each dependent. Husband and wife may double, so if you're married, you get a $10,000 base plus $1,000 per dependent.

That still leaves a lot of equity.

So, in order to keep the house, you need to pay your unsecured creditors at least as much as that leftover equity (had you liquidated in a Chapter 7). The rest of Virginia's exemptions are pretty decent (for other property), so hopefully, everything else fits into those.

Depending on where your disposable monthly income (DMI) is, you may need to contribute more into your plan than your DMI suggests. However, I think you're probably looking at a plan of at least $60K (just for fun) over 60 months. That's $1,000 a month to pay to unsecured creditors, on top of all your other secured and priority unsecured debt.

If this isn't making any sense, let me know, and we can break it down.

[zeezee]

Thanks jb! It makes sense. The way I padded up extra expenses I would be looking at about $800 a month right now but if push came to shove I could probably go up to about $1200 without too much pain. Sucks to be me right now...

[justbroke]

Thanks jb! It makes sense. The way I padded up extra expenses I would be looking at about $800 a month right now but if push came to shove I could probably go up to about $1200 without too much pain. Sucks to be me right now...

I know exactly how you feel. Have you at least ran through the free on-line means test at LegalConsumer.com? At least you'll get to see what's allowable. Not all expenses are allowable when you're "over-the-median" which I assume you are.

[zeezee]

Yeah, I did that means test every which way but Sunday. I make more than 2 times the median for VA ($107k) and even with allowables I still have quite a bit left. I don't have a problem paying more a month, I just don't want to be in a plan with zero wiggle room. My unsecured debt (minus school loans of $36k) is at $87k. I think my lawyer is going to put my car note into the plan because it way over the allowed $489 a month. So that will push my pay back up too. Maybe I'll end up doing a 100% pay back.

[justbroke]

Sounds like a 100% plan... unfortunately. Hopefully you can work with your lawyer to get the best possible plan with that comfort built in.

[jadams]

Make sure you request a copy of the appraisal (if you paid for it) and read it carefully.

They may have used out dated or improper comps -- especially if you're in a rough market and nothing similar around you has been moving. If nothing sold recently, I've seen cases where they either use several year old sales, or houses far away in a completely different circumstance.

It's not easy to fight an appraisal, but if it's that much over what you were expecting I would definitely look into it.

You could have a realtor do a market analysis on it. The appraisal trumps a CMA, but if the CMA also comes in around $500k I'd feel better about saying you were mistaken. If it comes in around your estimate, you should feel better armed in fighting the appraisal.

[zeezee]

jadams, thanks. The whole reason I even went with the appraisal is because I couldn't seem to get any realtors get a cma to me. I tried at least 4 and never heard back. Homes don't go up for sale in my area too often and the appraiser even had a hard time finding comparables. I looked at the report and the homes that have sold were recently sold (like within the last couple of months) so he is probably correct. I'm stuck. I have already come to that conclusion, just trying to figure the least painful route to go on this 13.

[justbroke]

It's not easy to fight an appraisal, but if it's that much over what you were expecting I would definitely look into it.

I tried to fight one, and the appraiser basically laughed at me over the phone. I was trying to get a higher appraisal value and directly challenged the comps he used.

[zeezee]

I tried to fight one, and the appraiser basically laughed at me over the phone. I was trying to get a higher appraisal value and directly challenged the comps he used.

See, that was my issue. When my house was 1st built 9 years ago, I got an appraisal and they used the homes behind me in a subdivision that was built at the same time. Since those are brick and mines is vinyl the comps came in way higher than it should have. That was great then because I was trying to get a pool put in. Now that the market tanked they are using sales of homes close to mines but to me they still are not really comparable because every single home he used was all brick (in this area brick is more).

Like I said, we don't get homes on the market too often. Looking at his report he basically used the sq footage as a driver rather than actually trying to find a real comp.

[BigJohn]

zeezee, get a hold of a bankruptcy lawyer and ask the lawyer for a name of an appraiser. When the appraiser shows up, tell the appraiser the appraisal is needed for a bankruptcy. The appraiser just might ask you what range you need to be in.

[Flamingo]

I look at it this way, if you can afford to keep your home which it appears you can, do what you can to keep it if that is what you want to do. As BigJohn stated, you can try to get another appraisal done and advise the appraiser it is for BK purposes, but in your situation it may not do much good. Realize that while you are paying your mortgage and Plan payments, your home equity will also increase as the market recovers and you will be paying down both mortgages.

[zeezee]

bigjohn, thanks that's a good idea (I wish I had posted this before I already paid $375 to get the appraisal)! I think I'm gonna just bite the bullet on this one. I'm ready to go on and file...

flamingo, your right. I guess it is a positive for the long term.