How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Dr. Fiona Chen Your Own Question
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 482
Experience:  Former IRS Revenue Agent
Type Your Finance Question Here...
Dr. Fiona Chen is online now
A new question is answered every 9 seconds

I am restructuring a loan in a bankruptcy. The lender and I

Customer Question

I am restructuring a loan in a bankruptcy. The lender and I have to agree on a value.My rental house was appraised by an appraiser I hired, and by one my lender hired.Mine came in at $605,000. Theirs came in at $720,000.The main differences were in the location of comps, the price per square foot, and the amounts used for value per square foot when adjusting comps that were smaller or larger in house size and lot size. My appraiser used $30/sf and $1/sf. Theirs used $60/sf and $2/sf.Neither appraiser mentioned that my house shares a driveway with the house next door or that there are apartments to the left.Does the lender's appraisal seem inflated, or was mine "deflated"?I attached the pages of the reports with the comps, and a map showing where they were drawn from.
Submitted: 11 months ago.
Category: Finance
Expert:  DrakeLAW replied 11 months ago.

Hello and welcome to JustAnswer, my name is ***** ***** I am an attorney. Please note:This is general information for educational purposes only and is not legal advice. No specific course of action is proposed herein, and no attorney-client relationship or privilege is formed by speaking to an expert on this site. This question and response may be viewed by other parties as noted in JA’s terms of service. By continuing, you confirm that you understand and agree to these terms.

Thank you for your question. You can still ask clarifying questions if needed until you are satisfied, there is no charge for follow-up questions. It has been my pleasure to assist you and I welcome you to request my assistance in any future legal questions you may have, by simply placing my name in the first sentence of your new question. It is important that you are 100% satisfied with my courtesy and professionalism. Finally, please be so kind as to promptly rate this answer favorably so that I may be compensated and the question may be closed in the system. I wish you the best in your endeavors! –Rich

This is such a common occurrence, I rarely have seen where the debtor and lender agree on a valuation. You can either agree on something in the middle or you have a valuation hearing before the court and the judge will decide which one of you is correct.

Customer: replied 11 months ago.
Thank you. I believe that my question would be best answered by a real estate appraiser. I already know that this happens and I know that one is expected to negotiate. I want to know what an unbiased appraiser would use for comps, and what price per sf would be used for the adjustments by an unbiased appraiser. So I would like this question release for an answer from a real estate appraiser.
Expert:  DrakeLAW replied 11 months ago.

Oh I see, then yes, legal is definitely not the right category. I will release it for re-categorization and see if there is such an expert for that.

Expert:  Dr. Fiona Chen replied 11 months ago.

Dear Appraiser,

Technically speaking, when you are in bankruptcy, your trustee should have power in the decision making and not you.

From your perspective, I would think that the higher the amount, the better it is for your loan restructure. Don't you think so?

As to you have a question, or you would like to have the value changed, I would suggest you to communicate with the Trustee to get his/her permission. Just submit your questions (or challenges) to the two appraisers you already have. They can fit the factors to their formula and model and recalculate the values easily. I am not sure anyone on line can do the calculation. Also, the authority for this new amount in court or in your proceeding is not established. The appraiser I believe has to have some type of credential in your state. And usually, they are retained by the attorneys in this type of case.

p.s. Just between you and I, consider the value between the two alternatives and lean towards the one that is beneficial to you and your plan.


Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP

Customer: replied 11 months ago.
Hi Dr. Chen, this is Chapter 11, in which the debtor remains in possession and in control of her assets. The trustee has no role unless the debtor is not handling the obligations of the bankruptcy well.Because a new balance owing will be based on the agreed-upon value, the debtor normally wants a lower value.I would like to know how appraisers decide how many dollars per square foot to ascribe to square footage when adjusting comps thy are meaningfully larger than the subject property.
Expert:  Dr. Fiona Chen replied 11 months ago.

Dear Appraiser,

The appraisers usually use the comparison method to compare to comparable sales in the neighborhood. If you read the report, the report will cite the method and compare the values of different methods used.

Ask your appraiser to criticize the bank's appraisal. You can ask him/her to do this. They may charge you extra. He probably is also be the expert witness in your hearing anyway. Then, you finally fight out in court.

It is not possible for this website or whoever reviewing the reports here to answer you whether one is inflated or deflated.

What is the original loan remaining? What is the draw back for you to lose the whole thing? Do you have any professionals who are advising you on this deal or you are only doing this on your own?

Because it is a negotiation, the final amount may not be the value of the place but your ability to pay and the rental income potentially from the property. Can you argue that because the market or the location, the potential rental income estimate is unrealistic in the bank's report? That is an easier argument to make.


Fiona Chen