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    Re: Misrepresentation

    Posted by Inland Empire Attorney on 2/06/07

    Your big mistake was relying on an appraiser in a multi-unit
    investment. The way properties are valued in those
    circumstances are based on net rents and application of
    a "capitalization rate". A different Capitalization Rate
    applied to the same net rents will produce a different
    value. So the first issue would be, what Capitalization rate
    was applied to the net rents in the differing market
    analysis. The next issue would be, what variables and methods
    did each appraiser use to determine net rent and vacancy rate.
    And finally, did all the rehab work do anything to increase
    rents or reduce monthly expenses? If it didn't, there is no
    reason for it to increase the value.

    Change the Cap Rate, and the "value" can swing $100,000
    instantly. And rehab work may be necessary, but it isn't
    always profitable.

    So assuming the sellers gave you or made available all the
    information needed, and you (or your appraiser, or your
    Accountant) misused that information in calculating value,
    its not really a misrepresentation case against the seller.
    It may be a negligence case against your accountant depending
    on what you asked him/her to do.

    Posts on this thread, including this one
  • Misrepresentation, 1/31/07, by Thomas.
  • Re: Misrepresentation, 2/06/07, by Inland Empire Attorney.

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