Confusion about Homestead Exemption

[Broke1]

I'm a little confused regarding how the homestead exemption works. The exemption in my state is 20k. Let's say that the equity is around 23-25k, what happens? Do I lose the house? Do I pay the amount over the exemption to keep the house? My tax assessment is at the mortgage balance. Zillow says I'm 3-5k over the exemption amount. A realtor said that in order to sell at the 20k limit, I would be waiting 8-12 months to find the right buyer, if at all. He also said that he could sell the house for approximately 10k above the mortgage balance in about 3-5 months, but I wouldn't receive any money from the sale due to realtor fees and closing costs. Can someone explain how this will work for me? I want to keep my house becuase the mortgage payment would be the same amount as renting a smaller apartment.

[HHM]

First, don't use a zillow valuation, if you are close on the exemption, get a Realtor to do a current market analysis. Odds are, you really don't have equity above the exemption so this is really a moot point. When you file BK, the value you put on your house is the price it would take to sell your home in the NEXT 30 DAYS.

However, in the off chance you have equity above the exemption...
1. You can be over, but close. The trustee still incurs cost of sale, so if you are only over by a little bit and the closing costs and Realtor commissions would eat up the difference, the trustee won't sell the house.
2. If you really are over the exemption, you basically have 2 choices (a) trustee sells your home, (b) you pay the difference to the trustee.

[merlotwaytogo]

as a side note. when the realtor does come out don't go out of your way to point out the best things about your house. remember you want it to be as low as possible, without being dishonest. Honesty really is the best policy when it comes to bankruptcy.

[HHM]

as a side note. when the realtor does come out don't go out of your way to point out the best things about your house. remember you want it to be as low as possible, without being dishonest. Honesty really is the best policy when it comes to bankruptcy.

Actually, the Realtor should not even come out, the Realtor should just pull comps and base the analysis on county data and the comps.

[Broke1]

When the realtor did come to my house, he told me what I could expect. He's sells the most homes in my area, so he knows what the market is. He thought he was hurting my feelings by telling me what the situation was. It hurt to know that the house value dropped dramatically, but on the other hand I'm not upside down like most of the other houses since I still have a little equity left.

With that said, he never gave me an actual written report. Will I need a written report when I file or will the value he told me suffice? Will the tax assessment be sufficient since it is close to the value he told me?

[HHM]

Tax assessed values are never a good source.

If this value is simply for fitting into the exemption, a report is probably not necessary. Simply list the value he gave you, it would be up to the trustee to dispute it, and I doubt he/she would. If the value was for a 2nd mortgage lien strip in a chapter 13, then you would need the CMA report.

[StartingOver08]

Actually, the Realtor should not even come out, the Realtor should just pull comps and base the analysis on county data and the comps.

As a Realtor, I have to disagree here about not coming out to the property. Certainly it is easier for us if we just use the figures for the closed recent sales, but condition plays a large part. Not so much for upgrades (upgrades are never worth what the seller thinks!), but for the opposite situation - poor condition. Poor condition will bring down the property value even further - and most properties begin to exhibit "deferred maintenance issues" when the sellers get into financial difficulties. Some properties have severe issues (roof, plumbing, landscaping etc). For a more accurate valuation, have the realtor come to your home.

Also, if your home is newer it does not mean there are no maintenance issues - I've seen plenty of homes less than 5 yrs old that are in poor condition. It can be many things not related to the current owner - like Chinese Drywall for example. Take that extra step to have the Realtor come out and supply a written CMA.

As to getting a report from the realtor that came out: he can email one to you. It is best to have something in writing that is close to the filing date just in case you need to provide it to the Trustee. JMO.

[HHM]

As a Realtor, I have to disagree here about not coming out to the property. Certainly it is easier for us if we just use the figures for the closed recent sales, but condition plays a large part. Not so much for upgrades (upgrades are never worth what the seller thinks!), but for the opposite situation - poor condition. Poor condition will bring down the property value even further - and most properties begin to exhibit "deferred maintenance issues" when the sellers get into financial difficulties. Some properties have severe issues (roof, plumbing, landscaping etc). For a more accurate valuation, have the realtor come to your home.

Also, if your home is newer it does not mean there are no maintenance issues - I've seen plenty of homes less than 5 yrs old that are in poor condition. It can be many things not related to the current owner - like Chinese Drywall for example. Take that extra step to have the Realtor come out and supply a written CMA.

As to getting a report from the realtor that came out: he can email one to you. It is best to have something in writing that is close to the filing date just in case you need to provide it to the Trustee. JMO.

Here is the problem, you don't know the condition of the house before you go out. Let me put it this way, the Realtor should be prepared to testify in court about the value. If you go out to the house and it is actually in very good condition, it is harder for you to maintain creditability on a low valuation. Trust me, you don't want the Realtor to come out UNLESS/UNTIL it is necessary. If the BASIC CMA (w/comps) doesn't get you the numbers you need, then you can have the Realtor come out (assuming the house is in below average condition) or pay for a full blown appraisal.