IN THE UNITED STATES BANKRUPTCY COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

IN RE: )

) Bankruptcy Case No. 04-30360

RICARDO D. DLUBAK and ) Chapter 13

KIMBERLY K. DLUBAK, )

)

Debtors. )

- - -

RICARDO D. DLUBAK and )

KIMBERLY K. DLUBAK, )

)

Plaintiffs, )

)

vs. ) Adversary Proceeding No. 05-03065

)

SELECT PORTFOLIO SERVICING, )

INC., )

)

Defendants. )

MEMORANDUM ORDER

A trial on the Complaint of the Debtors Pursuant to 11 U.S.C. Section 506(a) and

Bankruptcy Rule 3012 to Determine the Value of Security and Creditor’s Allowed Secured

Claim (Document No. 1) was held on June 8, 2006.

After review of the notes of trial and the exhibits admitted into evidence, the Court

generally accepts the testimony of Debtors’ appraiser, Richard M. Greenhouse, and finds the

value of the Debtors’ residence, located at 3311 Conway Wallrose Road, Sewickley, PA 15143,

to be $70,000. 

In making this determination, the Court has reviewed the comparable sales submitted by

both appraisers. The Court agrees with both appraisers (Richard M. Greenhouse and

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Defendant’s appraiser, Neil Krepps) that Fannie Mae guidelines for adjustments to comparables

are not required for the assessment of fair market value in the circumstances of this case. 

Although the comparables submitted by both appraisers are of houses (and sometimes 

outbuildings and grounds) that are uniformly in significantly better condition and of higher value

than Debtors’ house, the Court generally accepts the testimony regarding the adjustments to the

comparable properties, as amended on the record, by Mr. Greenhouse. Nonetheless, the Court

cannot accept the adjustment of $50,000 by Mr. Greenhouse regarding the only property used as

a comparable by both appraisers, that located at 1230 Tevebaugh Road. There is insufficient

support for such a large reduction, even though the Tevebaugh Road property is clearly superior

to Debtors’ property. Similarly, the Court cannot accept a mere $1,000 net adjustment to the

same property by Mr. Krepps because of the superior condition of the house, garage and yard.

Despite the Court’s disagreement with both appraisers over the adjustments to the

Tevebaugh Road comparable, the Court finds that in terms of structure and utility it is the most

comparable to Debtors’ property. Thus, the Court adjusts the property to a comparable value of

$90,000. Despite this adjustment, the Court further finds that Debtors’ property is fairly valued

at $70,000 because of the limitation on the number of buyers who would be interested in

acquiring Debtors’ property compared to the more general marketability of the comparables.

The testimony of the appraisers is supported by photographs. Examination of the

photographs of the condition of the Debtors’ property, both exterior and interior, reveals that it

is, at best, in “average to fair” condition and that the comparables are all in better condition that

Debtors’ property. Debtors’ property requires a substantial amount of repair and remodeling

work to make it marketable to anyone other than a do-it-yourself “fixer-upper” or someone with

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sufficient resources to hire a contractor to make the repairs. Thus, the market is limited to

buyers who would be willing to spend $70,000 for a home in a location on a busy street and that

has, inter alia, missing walls and ceilings, a non-functioning bathroom, holes in the walls around

the showerhead, missing flooring in the kitchen, holes in the paneling going up the interior

stairwell, exterior siding in need of paint, roof in need of repair, gutters clogged, grounds in

disrepair and poor access into the front of the house (i.e., no sidewalk or steps from the street to

the door). Many of these repairs would undoubtedly be a condition for financing.

In addition, there is some question as to whether the house has mold due to moisture

problems in the basement, and, if so, the difficulty to be encountered in removing it. The

appraisers, both of whom viewed the property, do not agree as to the presence of mold. Based

on the photograph that purports to show mold, however, the Court concludes that the mold

problem is not serious, if it exists at all, and would not be a major deterrent to a buyer. Coupled

with the other needed repairs, however, the dampness in the basement would certainly detract

from the value of the property. Thus, the marketability of the property in interest in its current

condition is restricted to a limited pool of potential buyers. 

NOW, THEREFORE, this 9th day of June, 2006, for these reasons and for the reasons

expressed on the record following the hearing of June 8, 2006, it is hereby

ORDERED that the Court finds the fair market value of Debtor’s property to be $70,000

The interest rate to be applied to this value is 8% as stipulated to by the parties.

The Clerk shall close this Adversary.

________________________________________

Judith K. Fitzgerald

U.S. Bankruptcy Judge

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cc Clayton S. Morrow, Esquire

Morrow & Morrow, PC 

304 Ross Street 

7th Floor, Mitchell Building 

Pittsburgh, PA 15219 

Kristen D. Little, Esquire

425 Commerce Drive, Suite 100

Fort Washington, PA 19034

Ronda Winnecour

Chapter 13 Trustee

Dated: 6/12/2006 

13:46:48

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