How does a bankruptcy debtor accurately calculate the value of their home? If you own real estate, you will be asked by your lawyer to estimate a value - and you need to be as accurate as possible.

In many situations, a lawyer will recommend, to their clients, that they contact a local real estate appraiser to request a “drive by” appraisal and in most cases a full appraisal of their property is recommended. A full home appraisal provides reliable information to help you discover the value of your home

Significant discrepancies in the value of a home can create problems in bankruptcy. If a value listed is too low, the client runs the risk of a trustee objecting to their scheduled valuation and asking the Court for permission to seize the home. In addition an obvious under-value will call a client's honesty, truthfulness and credibility into question in future dealings with the Bankruptcy Judge, trustee and opposing counsel. If a value listed is too high, a client may miss out on the availability of Chapter 7 or pay back more than is necessary in a Chapter 13.

Real estate appraisers perform an integral function in the bankruptcy process. Appraisers typically estimate asset collateral values of secured creditors and debtor-in-possession (DIP) financings; help to identify and value sale/leaseback, spin-offs, licensing and other reorganization opportunities; and are often involved in structuring and valuing restructured debt and equity instruments and in assessing/opining on the fairness of proposed reorganization plans.

For these reasons, bankruptcy professionals frequently need to hire, work with and rely on valuation analysts/appraisers. It is important for bankruptcy professionals to be aware of the various membership associations that train and accredit appraisers. One of these organizations is the Appraisal Institute (AI).