There is a real concern over "cherry picking" the best deals with the remaining national commercial real estate lenders. Business is booming for these guys and no plans in increasing personnel to cover the new loan submissions. This is affecting CRE agents across the nation according to the latest CB Ellis survey. New purchase sales are down over 70% in many areas with local and national lenders passing on many deals. All income streams for the agents are under pressure.
Some of our agent partners still believe this is a down cycle which has been seen before and will come back sooner rather than later. However, this isn't just a down cycle. It is a catastrophic meltdown of the financial markets that now includes local banks. It's a good move to examine the business model and seek more opportunities for income.
Our attitude is to control what we can and move forward with the new rules of the game. Deals will not be highly leveraged with the exception of multifamily at 80%. The rest are almost case by case scenarios but generally are averaging 70% LTV for the remaining property types. There is 75% LTV with higher pricing for general purpose investment properties in good shape. Owner occupied properties even with SBA financing is at best 80%. But don't count your chickens before they close. Private lending is in hog heaven and may be the best opportunity for some. Be careful of companies and do your home work. A few are under federal investigation for taking up front money with no intentions of lending. Commercial rates vary widely but many are just glad to close any more.
Speaking of business models. Very few of our agent partners mine their database for refinancing opportunities. Many of those past clients will have or are having cash problems. Those past clients need their agent and a good mortgage professional to help. We work with agents to help those clients.
We don't yet see the bottom of the financing meltdown as the residential mortgage securities market still hasn't figured out what to do. The new law isn't any help at all but is designed to promote confidence within the investment market. All agents should take a close look at that as it will affect the entire market shortly.
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