Question

Johnson bought a nursing home from Gonzales. The price was $15,000,000 and included a purchase money mortgage from Johnson for $12,000,000 at 5 3⁄4 % for 25 years when market interest rates were 9 %. Shortly after his purchase, Johnson had his property appraised because he thought his new real estate taxes were too high. The appraiser concluded the property was worth $12,000,000. Johnson was very upset. What is going on?

Answer 1

Johnson had been tricked to believe that $ 15000000 , to be the fair value of the property,when he bought it along with the 5 & 3/4% mortgage , worth 12000000.He bought the property for $15000000 , along with the mortgage worth $ 12000000 --so he paid $ 3000000 , in addition to taking the mortgage liability, in his name.

But, it now seems, the property's worth $ 12000000 , after some time , down in the time-line.

If real estate taxes were high, where is the possibility of property value, coming down , after he purchased , for a higher value.

So. Johnson feels , he might have been cheated , by the seller , to the extent of atleast $ 3000000, by quoting above the 100% mortgage-backed property.