Have you noticed a slowdown in sales of commercial real estate in your market. Well, you certainly are not alone.
A recent report by market research at Jones Lang LaSalle in the first quarter, the U.S. Commercial Real Estate shows the volume of sales in 2008 in the first quarter of 2007. . .
A 69% reduction compared to last year!
And that’s not all. . .
Worldwide Commercial real estate transactions are enormous compared with 46% of the first quarter of ‘08 to ‘07 in the first quarter. Now these are impressive figures. We found a significant slowdown in the volume of market transactions in Texas.
I was lucky, the CEO of Investor Tours University – Monte Lee-Wen Interview – this week and asked him what he sees, especially as the main cause of decline. Here’s OBSERVATION. . . Investors Tours: “What can you do about the slowdown in transactions this article highlights CRE? Monte Lee-Wen: “The number of sales have to slow down are definitely a number of reasons: the credit markets, it is difficult to finance can be obtained. Many of pending sales to close to 2-3 again, as well. Lenders are more cautious in their underwriting, which has the lowest score LTV. The cost of the capital increase as a lender of their margins and rising costs before. All this translates into higher costs for investors and lower return on their investment. “Investor Tours are:” So are the costs and revenues. How the behavior of sellers and buyers? ” Monte Lee-Wen, “Well, creating a gap between bid and ask prices for commercial properties. In this new environment, sellers are asking too much of their properties and buyers offer less than before. Many vendors recognize they are not the prices they were 18 months ago and now can not be the right time to sell. And many buyers that the market had to be 18 months – the 1031 buyers, for example – so we see fewer transactions take place “investors Tours:” What you are watching to see, in terms of sales volume? “Monte Lee Wen:” I think the slowdown is temporary to come. credit markets once more normal conditions, and it will become progressively easier to obtain financing. sellers will eventually return to earth. For the rest of this year and in 2009 we will continue to slower sales volumes that in the past. In the meantime there is still a small number of sellers who sell in difficulty and we must at low prices. Many people now see we sell are in difficulty “Investor Tours:” What are some tips for our students which could be hastened to buy? “Monte Lee Wen:” Be patient. Build your team. Keep generators lead fetch properties to negotiate, how they present themselves. Be sure to offer what the ‘current revenue property may justify the use. Sellers and start waiting for your bid accepted soon, because it is a better understanding of what their assets are really worth today. I can not tell you how long recession. .. no one can.
And in this market, remember a number of very important things when it is funded by the transaction
- Use it in your policy of prudent underwriting forms
- Do not expect more than 75% LTV
- And in a further extension of 30 days to write your fiscal year. . . since the credits are no longer these days. “Investor Tours:” Thank you Monte. ”
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