All Forum Posts by: Jonathan Napper

 Jonathan.  We all agree with different parts of what you said, but we are talking about different parts.  The underlined truth here, as @Bill G says, seasoning is going to be the issue...as it pertains to the rules.  The rules state it is worth what you PAID for it until whatever the seasoning period is for the lender.  Mine is 6 months, but most are 12.  You wait 6/12 months...and you have your wish...based on the appraisal.

You can run all the what ifs you like, you can have any opinion you like, but in reality, there are rules and regulations you'll be dealing with, they may not be logical to you or fit with your thinking but that becomes irrelevant in the reality of real estate.

I agree with Pierce as to his appraisal techniques, but your negotiation skills are not a value that reduces a lender's risk, if you could buy it at that price does that mean that no one else could buy it at that price if it went to a foreclosure auction? Lenders don't lend on intrinsic values.

And, there are distressed sellers. Such transactions may not meet the requirements of a market value sale, but then you have issues of your borrower having "skin in the game" a real financial interest that was paid for, not some windfall equity they have no risk in.

These aspects are not just some banker's opinion, they are anchored in economics and accounting rules as well as regulations banks must abide by. Prudent lending practices that go to the safety and the confidence of the banking system and the economy. So, all that doesn't go out the window because someone got a better deal, banks don't buy perceived equities or lend on them.

The rule is, within the first year, a transaction is valued at the appraised value or the price, whichever is less, after one year, it is the appraised value. You'll find this in legal and accounting assessments, you might buy a bag of diamonds, the value is that paid if the sale meet requirements as an arm's length transaction meeting other requirements, not a distressed situation, and that value will be the book value to the buyer for 12 months, then the book value will be changed to its market value. Holding the asset will be worth what was actually paid, then depreciated.

Hearing some guru say he "made" 50K on a property after he bout it at a lower price is pure horsefeathers, it's Enron accounting, claiming nonexistent perceived equities as a profit. People go to jail doing that in some situations. :)   

@Jonathan Napper Yes, you want to find a desperate seller.  But, it doesn't matter to them if the $50k comes out of your bank account, or if you borrow the money, it's still $50 k cash to them either way.