How Paris Hilton demonstrated an age-old accounting principle and why this matters for clients

Business theory IRL

As I like to share with my MBA graduate students, the principles of our classes are not just theory. They have real-world (or, as my Gen. Z students say, IRL (in real life)) implications.

Case in point: A reporter from the Daily Mail asked me about the following.

Paris Hilton bought Mark Wahlberg’s pad for $63M in Beverly Hills in June. ⁣

Over a month later, she got a $43.75M home loan. ⁣

For background, Paris got cut out of her grandfather’s $15 billion will, so who knows how wealthy she is – and it seems unusual… why it would be over a month after purchase?⁣

My response, which was partially featured in the Daily Mail:

Not to be a Nosy Nelly, but in this investment environment, I have my MBA accounting and finance students watching investments that have “motion”. The age-old expression that accounting and finance students can quote in their sleep is that “cash is king”. And from the looks of things, Paris Hilton is proving that saying to be right. ⁣

⁣⁣

It’s not uncommon for homeowners, whether high-net-worth or not, to refinance their homes for liquidity or investment flexibility. A short one-month delay tells me that it likely may have taken some time to negotiate terms or structure the loan for tax and estate planning. But Paris and her household likely intended all along to pull out the home value in order to leverage it for another venture. 

From a distance, it seems Paris is a savvy businessperson, despite a few scandalous moments in the media that may still cloud her reputation for some.  And clearly, lenders agree, at least as far as her creditworthiness is concerned, in order for her to secure a $40+ million loan in as little as a month. Thus, for me and my MBA students, the real question is what investment opportunity has captured HER attention?

Caption: AI Generated

Personally, I bought my first apartment building by tapping the equity in the first condo I bought right out of college. I’m glad I did because within a couple of years, the stock market crash of 2007 and the subsequent recession (“The Great Recession”) meant it was almost a decade before the equity in my first condo rebounded. I learned right out of “b-school” that cash in hand beats hypothetical or potential equity. Cash is indeed “king” — the piece on a chess board that, when lost, immediately ends the game.

What are your thoughts? Have you or any of your clients ever used the equity in your home for other projects and investments? 

How did that pan out? 

What investment(s) do you think are ideal now in this market?

If you or your clients were fortunate enough to buy a home when rates and costs were lower than they have been in 2025, is there any investment worth tapping your home’s equity?

But what if you or your clients are not allowed to tap the equity in your home?

IRL: Cash is king, fair appraisals are queen

In chess, the queen is the most flexible piece, moving any number of squares horizontally, vertically, or diagonally. This means as much as you need the king piece to continue to play the game, the queen piece is indispensable for securing the desired outcome (winning!).

Similarly, there is a queen in homeownership. Although it may seem like a trite classroom refrain, IRL, “cash IS king,” (the piece you must not lose) and for many homeowners (whose biggest investment is their home), access through fair appraisals is “queen” (your ability to move in any desired direction).  In other words, while your financial foundation is paramount, the true power of homeownership as an investment lies in mobility and valuation. 

Over the last decade, as home prices have rebounded from “The Great Recession” and since skyrocketed in many areas, local, state and federal fair housing and lending laws have helped some homeowners who were initially denied the equity in their homes, the ability to report those instances (such as the now defunct site https://pave.hud.gov/gethelp), and in some instances be compensated for the missed opportunities.

In other instances, local, state, and federal legislation was developed and still remains that allows for better remedies, such as Prince George’s County, Maryland’s law specifically banning unfair appraisals. 

But, knowing that we as humans can make mistakes and AI is known to hallucinate, the home valuations necessary to refinance or sell are not yet foolproof. Do you know what to do if you or your real estate clients think that a home valuation has gone beyond a mistake to unfairness? 

Federal protections through the DOJ, CFPB, and HUD have been and are continuing to be rolled back in 2025, but you can still contact the federal appraisal complaint hotline (https://refermyappraisalcomplaint.asc.gov), your state’s attorney general, and your state’s real estate commission.  Additionally, you and your clients can even listen in and join various initiatives and meetings, while providing feedback, to The Appraisal Foundation, which sets standards and qualifications for the appraisal profession.

 Dr. Lee Davenport is an MBA graduate school professor, executive/real estate coach, and author.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the editor responsible for this piece: zeb@hwmedia.com.