Post a new topic
    9 Replies Latest reply on Jan 22, 2009 2:20 PM by sdanil

    Commercial real estate values

    camgan Newbie
      We are planning to move to buy a medical office space, as the current lease at the current location is expiring in April.
      Is the commercial real estate value affected for the worse or not, by the economic crisis, the same way as housing market is?
      We made an offer to the owner of a Professional Office Condominiums, for an office space on sale, in April 2008. It was turned down at the time. That space is still available for sale. I am thinking the value must have gone down with the economy, so we can make another, but lower bid and try again. My realtor said the commercial real estate values have not been affected by the economy. Actually, they have gone up, as the demand for such properties grew, for the very reason that their values were stable in a bad economy.
      In order to negotiate the price, I need to verify how the commercial real estate values are doing currently. Does anyone have expertise in this matter?
      We have a good credit standing, can I also get advice where to turn for mortgage ?
        • Re: Commercial real estate values
          moneyresource Newbie
          Financing of a commercial property does work quite differently from a regular residential mortgage. Where are you located? How much do you have to put down on the property? What do you feel the appraisal value would come in at? You may contact me at moneyresources@hotmail.com
          1 of 1 people found this helpful
          • Re: Commercial real estate values
            LUCKIEST Guide
            Commercial real estate values, Welcome

            WHO are YOU?? WHERE are YOU??
            I do NOT want to give advice to someone who does not give us info.
            Go to Members page and share some info.
            In order to talk about real estate values, it would be nice to know City and State, Just like you need to know how the real estate vales are doing currently WHERE?????

            LUCKIEST
            • Re: Commercial real estate values
              sdanil Scout
              FYI...Now is the time to get deals here...so if you live in a cold climate and you don't like long winters there...Vegas holds exceptional opportunitities for you...do what you need to do to relocate here...you'll be happy here...so will your family...the weather is beautiful today...it's like a beautiful spring day here...and the deals here right now are awesome!
              • Re: Commercial real estate values
                bmt2008 Adventurer

                Of course a realtor will tell you that property values are not down. They represent the seller and work off commissions.

                 


                All property values are down. Even though they might not have dropped on the listings, there is plenty of room to negotiate - like you stated, that office space is STILL available - meaning that it is not earning revenue for anyone and someone is still paying taxes on it - probably utilities too.

                 


                Think about this. Gone are the days of fast mortgages (commercial or otherwise). If less people can get mortgages, then less demand. Further, more businesses closing their doors or downsizing their space. Means more supply. Less demand, higher supply - prices drop.

                 


                There are all types of non-bank commercial mortgage companies that are still lending. They require either large down payments (usually 20% to 30%) or the same amount in equity in the property (purchase price 20% to 30% below appraised or tax value). They also require good to excellent credit of the owner(s) or partner(s). Exception would be a corporation with three years tax returns and established business credit. Lastly, they need to see enough income (actually or potential) to service the debt.

                 


                I would suggest making a low ball offer for two reasons: 1) you can always go up - but never down - on price. 2) You will get a feel for how much they want to play. Just keep in mind that your realtor will try to talk you out of a low offer - usually stating that they will never accept it. But, write it anyways - it will only provide you more information.

                 


                Plus, from what you stated, does not seem that the property is going anywhere and if you are not looking to move until April, you have some time to ensure you get the best deal.
                1 of 1 people found this helpful
                  • Re: Commercial real estate values
                    sdanil Scout
                    yes, propery values are down + inventories are up + interest rates are down = great deals...especially here in Las Vegas
                    • Re: Commercial real estate values
                      sdanil Scout
                      Are you under the impression that the only effective way to sell or buy real estate is through a member of the Association of Realtors? I recall a time when there were 28,000 supposedly active Realtors in Las Vegas....in speaking with my accountant...he advised me that they generally make an average of $21,000 per year or less. Many of these Realtors boasted that they sold over $1,000,000 of real estate annually...now let's do the math. Several years ago there wasn't a single home in Vegas that was priced under $300,000 and I'm talking shoe box house that quite frankly were never deals and should have never been sold at those prices. There were literally folks standing in the living room bidding up the prices above what homes appraised for knowing that by the time the house closed it would be worth that much with the huge demand by investors. Banks made a fortune on the flippers coming and going.

                      Those Realtors that boasted sales of $1,000,000 plus annually in effect sold 3 homes per year shared a 3% commision with their broker...and for that priviledge they paid the association of Realtors $1400 annually and $1,000 per month to the broker who held their license...this often does not cover additional fees for transactions and advertising expenses. Foreclosures are also not part of the MLS. I have met quite a few Realtors and I'm sad to say that many of them should go back to raising their children as they have little if any sales ability. Now I am not speaking about everyone as there are some good agents here in town.

                      There isn't a single listing agent that wouldn't gladly open the door for me and my buyer without me being a Realtor. Having the priviledge of doing business as a Realtor I am well aware of the benefits of this association and the benefits to them of me being one. When I sold in NYC, we never listed one of our exclusives in the MLS and there were plenty of buyers, we never had to share our listings with anyone. One does need a license however if you wish to be compensated. I am licensed in two states and i recently gave up a third license feeling i will not be living there again. as i got tired of paying my renewal fees and continuing education.
                      • Re: Commercial real estate values
                        camgan Newbie
                        Thanks a lot. That makes sense.
                      • Re: Commercial real estate values
                        Creditbuilder Scout

                        Good credit with DNB is essential in todays marketplace where we are surrounded by risk. DNB is a great way to mitigate that risk. You should have no trouble finding great deals, but i have to agree, nevada is where you want to be -- or wyoming, although not as great.
                        • Re: Commercial real estate values
                          sdanil Scout
                          latest stats for Clark county... currently there are only 13383 licensed active agents in Vegas...Hooray

                          14,000 agents have left the building...so much for the assistance and support of the NAR!