Riverside Bankruptcy Chapter 7 Trustee Arturo Cisneros asks the debtors at the meetings of creditors “How did you value your real property?” The operative word is “value”. This question is not “how much is your real property worth?” The question is how did you come up with the “value” that you placed in your petition? Mr. Cisneros knows the “value” your client placed in the petition. What he wants to know is the thought processes that went into determining that value. The typical answer is that the value comes from sales in the neighborhood, or comparable sales or from the internet like Zillow.com.
From time to time, Trustee Cisneros will ask for copy of the “comps” that the debtor used to value his property. This information will help the trustee make a determination of the value of the real property. If need be, the trustee will contact his real estate broker to make a determination of the value of any real property.
When valuing real property in preparation of filing a bankruptcy petition, keep copies of the documents that you use. If the debtor consults a realtor, then get a copy of the realtor’s opinion of value. Or if the realtor ran comparable sales in the neighborhood, this is the evidence Mr. Cisneros may ask for. In addition a printout from Zillow.com will be helpful to have in your file.
As we have stated before, house prices in the Inland Empire and in Southern California are increasing as the region emerges from the Recession. The value of real property is becoming an issue in cases. Mr. Cisneros told me recently that he had not sold a piece of real property as a Chapter 7 Trustee in five years, now he has five houses up for sale due to the increases in property values.