I recently completed my first stint as an appraisal expert witness in federal court for a personal bankruptcy. It was an interesting experience for me and was a lot less intimidating than I expected. My client was the lender for a second mortgage. The question was whether there was enough equity in the home for my client to receive any proceeds in the bankruptcy plan.

Here are some takeaways from my first experience:

• Dress professionally. I wore a suit and tie. My lawyer was pleased to be able to call me again. The appraiser on the other side wore jeans with no tie.
• Don’t use lending forms for non-lender work. The other appraiser used a 1004 URAR form plus included the 1004MC in his bankruptcy appraisal. Not a match for the assignment and possibly an issue for our licensing board.
• That said, neither of the lawyers nor the judge cared that his report was on a lending form.
• Chose your comps with care. Pay attention to neighborhood boundaries, school district boundaries, and flood zones. There are no good reasons to use a radius search today given the robust search tools available with most MLS systems. The subject was near a neighborhood boundary and the other appraiser crossed that boundary for two comparables. Both were in an inferior market and really were poor comparables.
• Verify your comparables. One of the two comps from the opposing appraiser had $40,000 in foundation damage reported in the prior listing. The opposing appraiser missed this.
• If you’re going to be an expert witness, have some game. Be able to run a trendline and be able to report market conditions. And be able to explain your appraisal model. I teach a class on this.
• Our side lost despite the issues with the other side’s appraisal. Variance between my value and the other side’s value was about 10%-I was on the high side. To forgo payments, value had to be within 2% of my value. The judge thanked me for my professionalism and split the difference, eliminating the debt owed from the debtor’s bankruptcy plan.
• However, I won. My side’s lawyer was very pleased with my work and plans to hire me again. He explained that in bankruptcies, it is very common for outcomes to favor the debtor.

I hope my next case goes as well.