Why is an appraisal needed during Bankruptcy?

During bankruptcy the debtor (the person or entity defaulting) is required by the court to demonstrate the worth of their assets.  Since the debtor’s real estate holdings are, oftentimes, their largest asset a real estate appraisal is required.  In Pennsylvania, a bankruptcy appraisal by a State Certified Real Estate Appraiser is the official means of verifying the true value of the debtor’s property holdings.  In New Jersey, the appraiser must be either Licensed or Certified by the State.  The appraiser is an impartial professional who is qualified to analyze the property and provide a credible opinion as the value of the real estate assets. 

Selection of the appraiser can be made by the debtor or by the debtor’s attorney.  Regardless of who engages the appraiser, it is important to be sure that the appraiser has prior experience performing bankruptcy appraisals.  Not all appraisers have the knowledge or expertise needed to competently provide these valuations.  Also, it is also beneficial to find an appraiser who is comfortable testifying before a court, if necessary. 

Just as important as selecting the right appraiser is selecting the right appraisal format.  As with many things, you get what you pay for.  Appraisals are no different.  They come in many different shapes, sizes and price points. 

There are Automated Valuation Models (AMV) and websites like Zillow that will provide you with a low cost or no-cost valuation of a property, no appraiser needed.  They are usually less accurate and will likely not stand up in court.  Thus, you get what you paid for. 

Then, there are Desktop and Drive-By Appraisals provided by Certified/Licensed Appraisers.  These are limited scope reports that are more affordable; however, they lack the detailed reporting of full appraisals.  The may also not be the strongest performers in a court situation.

Lastly, there is a Full Appraisal, either on an appropriate form or in a narrative format, completed by a duly Certified/Licensed Appraiser.  In court, a full appraisal from a reputable, qualified appraiser will demonstrate the value of the property in the most credible manner.  It may cost a little more but, it could prove invaluable during the bankruptcy proceedings.

At The Coyle Group, our appraisers work regularly with home owners and attorneys during the bankruptcy process.  We understand that bankruptcy is often an emotionally trying time.  Our appraisers are acutely aware of the unique needs and the time sensitivity of the situation, and strive to make the appraisal process to go as smooth as possible for those involved. 

Should you have any questions about our Bankruptcy appraisal services or valuation in general, please feel free to call or email us, 215.836.5500 or appraisals@coyleappraisals.com

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