Real Estate Agent's Café

Interest Rates Threatening the Recovery

Hitler Loses His House!

Be Careful What You Wish

Commentary:

I was reading an article in the Wall Street Journal  about the billions of losses locals banks may experience on the potential default of commercial real estate loans

Another article in the National Real Estate Investor  talked about how the major commercial real estate brokerage companies were wringing hands waiting and hoping for a new business line of distressed property work to come their way.

It reminded me of the late 80s and early 90s during the savings and loan crises when the Fed set up the Resolution Trust Corporation (RTC). Many property owners and developers lost their properties through foreclosure during that time. Although some developers formed REITs.

I don't think we'll have another RTC. Although, I do think what some people are forgetting, or what some of the newer real estate agents out there may not realize, is that in all probability some troubled property owners will file for Chapter 11 Bankruptcy prior to foreclosure. This will most certainly delay the distressed property work from coming down the pipeline as it works through bankruptcy court.

But more importantly, brokers that are owed leasing commissions will be relegated to the status of an unsecured ceditor, and in all likelihood may never collect the commissions that they've earned. This was the case for many leasing brokers during the days of the RTC.

I can't help but wonder if the brokerage companies that are fortunate enough to eventually get this distressed property work, will actually be working twice for the same amount of money.

 

Recession Turns Malls Into Ghost Towns

 

Do you go to a shopping mall? Does anyone anymore? If I need something, and if I don't know where to find it locally, I buy it on-line. Article in the WSJ, Recession Turns Malls Into Ghost Towns talks about the demise of the Mall.

The only problem I have with buying on-line is that I don't know what I need until I find it.

Also, check out Deadmalls.com. I like this site. 

GL

Full Disclosure

   

^{This story was submitted by Anonymous from PA}

We were experiencing a dry spell during the time I was negotiating the sale of this house for my Buyer. The Seller had disclosed that "on occasion" they got some water leaks through one wall in the basement.

My Buyer was particularly nit-picky throughout the course of this sale, but surprisingly made no issue of it when it was brought to their attention.  Although my Buyer had driven the Seller to the point of threatening to pull the sale several times.

I was finally getting to the end with the final inspection scheduled.  

Of course, the day of the inspection the heavens opened up with torrential thunderstorms. As I walked into the house with the inspector and buyer, I could hear considerable activity coming from the basement. My heart sunk. Down in the basement the Seller was operating a shop-vac and standing in about six inches of water. The water was cascading in over the top of the foundation wall. I've never seen anything like it! Apparently, the Seller had laid down wood chips in the backyard right outside the basement wall, and the water sheeted over it into the basement.

The Seller came over to my Buyer before we could reach the bottom of the stairs and said, to my horror "I'm sorry. As you can see I can't sell you this house".

My Buyer reacted with "You have to sell me my house!". I never breathed such a sigh of relief. I could also see that the Seller knew exactly what he was doing.

Later after the closing, the Seller said to me; You know the timing of that couldn't have been more perfect. Should all of that water have poured in sometime after we closed, the Buyer could have come after me with a legal claim. But, with all of those witnesses, no worries.

 

 

 

Bankruptcy Epitaphs 2009

I caught this on The Deal

Bankruptcy Epitaphs 2009 

Enjoy!

GL 

Commercial Real Estate Market Conditions

From: National Accociation of Realtors NAR

NAR conducts a quarterly survey of commercial practitioners asking them about current and potential developments in commercial real estate. The latest Commercial Market Survey Report looks at the state of commercial real estate in the first quarter of 2009. And as our Commercial Research Economist George Ratiu reports, while things aren’t great, there are some encouraging signs. Read More

GL

11th Commandment

Add your 11th Commandment in the Comments section below.

• Thou shalt not go around the listing broker and contact the owner.
• Thou shall go around the listing broker to the owner after numerous attempts to reach the listing broker fail.
• Thou shalt not go around the listing broker saying that numerous attempts to contact the listing broker failed when in actuality no attempts were made.
• Thou shalt not blame the broker for your miscommunication.
• Thou shall turn your cell phone off before going into a meeting.
• Thou shall keep your shoes polished.
• Thou shalt not kick down or deface your competitor's signs.
• Thou shalt not bring fast food into the office. It stinks!
• Thou shall keep the tassels on your loafers neatly pressed.
• Thou shalt not chew gum in a meeting.
• Thou shalt not play BrickBreaker while driving.
• Thou shall keep your car clean.
• Thou shall, at least once, actually meet the person your working with in person.
• Thou shalt not hide behind email.
• Thou shalt not text.
• Thou shall dress professionally.
• Thou shall know what you're doing.
• Thou shall know what business you're in.
• Thou shalt not tell your partner that the "client doesn't like him/her" just to keep control.
• Thou shalt not overprice a property just to get the listing.
• Thou shall tell the truth.
• Thou shalt not start every introduction stating "how long you've been in the business".
• Thou shalt not start every introduction with "don't I know you?" or "have'nt we met?".
• Thou shalt not ramble on about all of the deals you've made. (Nobody cares)
• Thou shalt not disservice the prospect by operating outside of your discipline or expertise.
• Thou shall know when to get out of the way.
• Thou shalt not canvas thy neighbor's desk.
• Thou shalt not eat garlic.
• Thou shalt not represent that you have a client when the prospect is actually a customer.
• Thou shalt not be late.
• Thou shall be early.
• Thou shall show evidence of a pulse.

 

Something's Better Than Nothing

I've lost count of how many times I've come across the wise guy that listens to all of the real estate market gloom and doom that the media spews out and expects to "steal" a deal.

Case-in-point; I'm speaking with a lawyer (of course) who is looking to relocate his office. In the market he's considering, space is ranging between $21-$23 per sq. ft. As we go through the candidate buildings, he, naturally, zeros in on the most expensive building in the market. He then instructs me to submit a proposal to the Landlord for $12.00 per sq. ft.

I explained to him that the offer is too low to be taken seriously and I didn't think $12.00 would even cover the landlord's mortgage payment. He snapped back saying that he didn't care and that the "Landlord should go to his lender and renegotiate his loan". "The market's in the tank". "Something's better than nothing".

Yeah right! Go through all of that brain damage just for the honor of having this wise-ass as a tenant. Or run the building at a loss just to accommodate (subsidize) his business.

If a rational person thought it through, a landlord willing to take a steeply discounted deal would, in my mind at least, be suspicious. I'd wonder if he was already planning to let the building go into default and pocket the rent money for as long as he can.

What's it mean for the tenant? Services to the building get cut.

• Landscaping goes to pot.
• The building starts to look tired.
• Cut back on cleaning service.
• The parking lot isn't maintained.

• Heat and air conditioning doesn't function properly, and on-and-on it goes.

But, the tenant got what he wished for: Cheap space in what used to be a class building.

I think on the flip side of this is when you meet a property owner who says that he's interested in selling his building, and when you ask him what price he has in mind, he says "bring me an offer".

Reverse Psychology

O...k.  Here's one (counter) marketing strategy.