Chapter 7 Riverside Bankruptcy Trustee
In a previous post for Trustee Howard Grobstein, we discussed when a trustee’s uses a real estate broker to value a debtor’s real property. The information gathered by the real estate broker is first found on the internet and then if need be, the real estate broker goes to the real property to form her “Broker’s Opinion of Value”. The Bankruptcy Trustee then relies on that information to determine a possible sale of the property.
If Bankruptcy Trustee Howard Grobstein sees value in the real property over and above the exemption amount listed, then the trustee may list the property for sale on the real estate market. If the Trustee lists and sells the real property, the Trustee will apply to employ a real estate broker and then ask the Bankruptcy Court for permission to sell the real property. (The Debtor may object to this appointment and sale, but ultimately the question must be decided by a Judge).
If the Judge approves the sale, then the property can be sold on the open market. The Trustee however must pay the real estate broker her commission. This sales commission must be paid from the proceeds of the sale. So this calculation has to be taken into account when the Trustee estimates if there is value to administer the estate.
Trustee Grobstein uses the Cost of Sale of 6.50%. For example if the house is sold for $100,000, the trustee estimates he would pay $6,500.00 in broker’s fees and costs on the sale of that property. Other Chapter 7 Trustee’s use a different cost of sale estimate.
Ask the Bankruptcy Trustee( if he is planning to sell your client’s real property) what “Cost of Sale” he estimates. This number can help you if you want to negotiate on behalf of your client on the equity that is not exempt.