When you file for bankruptcy, one of the required steps is furnishing the court with a complete overview of your current financial situation. This summary must include information about your current income, your outstanding debts, and the value of the assets that you own. If you own a home, it is likely your largest asset. As such, it is especially important to determine the current value of your home in a fair and precise fashion. A bankruptcy appraisal is a service meant to accomplish just that.
Why a Bankruptcy Appraisal Is Important
A bankruptcy appraisal is very similar to a mortgage financing appraisal. Both types of assessment are meant to establish an on-the-record opinion of your home’s current fair market value. In the case of a mortgage appraisal, this process is necessary to obtain loan approval from the bank. If the estimate comes back at significantly lower than what the buyer is planning to pay for the house, the bank will often not approve the loan.
With a bankruptcy appraisal, an approval process once again, hangs in the balance. If you are applying for Chapter 7 bankruptcy, then your goal is to liquidate your assets—the house included—to repay and settle your debts. Your bankruptcy judge will pay very close attention to the appraised value of your home in deciding whether to approve your application for bankruptcy.
Your bankruptcy appraisal can influence whether you get approved for Chapter 7 or are required to apply for Chapter 13 bankruptcy instead. Chapter 13 requires you to establish repayment plans with your creditors to settle your debts, rather than allowing you to liquidate your assets. In some cases, Chapter 13 is preferable, as it increases your chances of keeping your home throughout the process.
Regardless, the appraised value of your home and the accuracy and reputability of the appraisal itself will affect the direction your bankruptcy proceedings take.
Hiring the Right Bankruptcy Appraiser
In bankruptcy court, the judge has the authority to decide whether to accept or reject the opinion of value provided by your appraiser. In fact, many bankruptcy judges will not even recognize appraisals from professionals who are not state-licensed or do not have a strong track record of providing accurate, detailed assessments. Hiring a trustworthy appraisal professional to conduct your bankruptcy appraisal is one of the most vital decisions you will make during your bankruptcy proceedings.
As with other appraisals, your appraiser should prepare a detailed and well-documented report about how they came to the reported opinion of value. The appraiser should look at the size and condition of the home, as well as factual data about comparable homes, to determine the current market value of the property. ‘Comp’ homes are typically houses in the same area or neighborhood that have recently sold. Looking at these sales prices can help appraisers determine how much a home would likely sell for on the open market.
At Authority Appraisals, we have the experience and expertise that you need in your corner during a bankruptcy. We can provide accurate and trustworthy appraisals that bankruptcy courts will accept. To take the first steps towards an bankruptcy appraisal or for additional information please Contact Us . If you are ready to get started please complete our Order an Appraisal form and we will be in touch with your free appraisal quote.