Posted by ray@lcorn on February 23, 2010 at 11:26:37:
In Reply to: Jason Gilberts Commerical Short Sale course posted by RickG on February 20, 2010 at 09:48:26:
Rick,
I haven't seen this course, so I can't comment on it specifically.
What I can share with you is that there is a radical difference between approaching lenders with short sales on commercial properties vs. residential. For the latter there are incentives to accept short sale deals. Not so for commercial.
It boils down to this... in October '09 the FDIC granted banks great latitude in dealing with troubled commercial real estate loans. The industry characterized it as "amend, extend and pretend". FDIC further loosened the rules just two weeks ago.
The net result of these policy changes is that banks are not forced to increase reserves for loans that can be modified to service the debt out of existing cash flow. They are allowed to keep these loans on their books in anticipation that within a year or two the economy will recover and they will recoup closer to par value of the loans.
That leads to what I dubbed the "white-knight" scenario (discussed here on the newsgroup in several threads down the board) to offer banks an alternative to waiting for a macro-economic recovery, essentially by changing owners. I've found a much more positive reception to that type of proposal than a short-sale.
That's not to say that short sales of ComRE don't happen. They do. In my markets the properties that the banks are willing to take their losses on have been done at the foreclosure auction with absolute sale terms rather than a reserve or bidding in their loan amount. They realize that in most cases the first loss is the best loss, and for raw land and non-income producing properties they are better off to cut bait.
Realize that in this environment there is no "one size fits all" approach... more like "one size fits one" in designing the structure and investment plan to fit the situation rather than vice versa.
ray
- Re: Jason Gilberts Commerical Short Sale course Earl Allen Boek 06:33:46 04/04/10 (0)