Ignoring the Experts

Ignoring the Experts

Ignoring the Experts

Dear Alt-funding List Member:

One thing I can tell you about private money is that the regular rules don’t work there.  And in fact, there aren’t really any rules that you can count on.  At best, there are guidelines and these vary greatly depending on the broad spectrum of particulars that define a particularly loan request.

With private money, it is the entire story that matters.  In general, it is not possible to say that one thing isn’t relevant or another is always a critical factor.  When making a decision about a private money loan request, it is necessary to assimilate all of the relevant information, and what’s more, this information must be assimilated by a curious, creative, thinking individual--not a robot or a decision machine.  There is no equivalent of the lender matrix in the world of private money.

The analytical process is powerful—particularly in contrast with the black and white criteria based “thinking” of the banking world.  In order to demonstrate, I’m going to tell you about two occasions during the past three months when we did what no bank would ever do.  We listened to the experts, and then proceeded to ignore their advice.

On the first occasion, we were approached by a land developer in Oregon with a somewhat unusual loan request.  This man is an ongoing client of ours, and we respect him immensely for his knowledge and his ability to get things done.  Let’s call him Mr. C.  Mr. C wanted to borrow on a subdivision in process on the southern coast, and his request had an unusual aspect.  It based the lot configuration of the site, and thus the appropriate current valuation, on a very obscure reading of the legal code.  Mr. C showed me the code and explained to me what it meant, and I said that I tended to agree with his reading, but didn’t trust myself to interpret code in such a critical matter.  I suggested that we run it by my attorney and get a conclusion in writing.  My attorney came back with a view that appeared to be contrary to the conclusion of Mr. c, and so I took the conclusion back to Mr. C and he looked it over and said, “this is a county matter not a statewide matter; if I get a planner at the county to affirm my position in writing, will you go along with me?”  I said that I would so long as the position was clear.  About a week later, Mr. C forwarded an e-mail to me from one of the top land planners at the county and this e-mail quite clearly stated a position in line with that put forth by Mr. C.  We went ahead and made the loan.

On a more recent occasion, we were approached by a broker representing a builder in Montana.  The builder sought funding to build a large single family spec home.  The builder looked good to us and the proposal made sense.  An appraisal was already in process, so we said that we would go forward with the loan subject to the appraisal supporting the borrower’s opinion of value.  When the appraisal was finished, everyone was a bit surprised: the appraisal came in significantly under value.  We asked the borrower for their opinion on this and they said that it was very clear to them that the appraiser had failed to adequately value the daylight basement of the subject property and that this was the reason for the reduction in value.  So we here at Fairfield read carefully through the appraisal and did some checking with realtors in the subject property area, and it was quite easy to conclude that our borrower was correct.  We re-analyzed the value, based on a sensible square foot figure for daylight basement footage, and came up with a value of our own (a bit less than what the borrower expected, but a good $30,000 more than the face value of the appraisal).  Again, we went ahead and made the loan.

The point I’m trying to make is that you need to think about private money in a different way.  The making of a private money loan is a search for the truth.  You won’t always get the answer you want from us, but I can assure you that listening, logic, and a broad understanding of the facts will ultimately determine our conclusion.

On another note, Fairfield is proud to announce a 30% growth in gross revenues during calendar year 2004.  We are progressing nicely and need help with our expansion in 2005.  We are seeking a special individual to help coordinate loan decision making and placement, and would like to re-print our ad here in case anyone out there knows someone who might be a good candidate.  (If you do know someone, please ask them to respond to the contact given in the ad.)


Fast paced private money lender/broker

seeks ambitious individual for rare opportunity

to learn the private money sector.  Experience

not as critical as good analytical and people skills.

Excellent income potential.  E-mail resume to

Sarah Corbin at sarahcorbin@comcast.net.

Fairfield Financial Services, Inc

If you would like to discuss private money loans further or run a particular scenario by us, contact Clay via phone at 503-348-7011 (or 800-510-2120 out of area), or e-mail him at spark@teleport.com. Otherwise, if you would like to get a better feel for our company and the types of programs we do, please browse our web site at http://www.privatemoneysource.com.

Clay Sparkman
Vice President
Fairfield Financial Services, Inc
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