Financial institutions are saddled with a potential loss of over $300 billion or more in commercial loans that will be coming due over the next several years. These enormous losses could actually cause banks to fail and create enormous challenges for cities that will be left with abandoned buildings and empty storefronts.
Smaller banks are actually much more vulnerable than large Wall Street firms since smaller banks make up a large percentage of commercial lenders and lack the loan loss reserves to meet such a challenging downturn in the commercial markets
Commercial values have fallen as much as 40% over the past 3 years. This will create dire consequences for the smaller community banks as the owners of these properties stop paying mortgages, loan defaults increase and these properties fall into disrepair.
In my opinion, lenders and community banks that are holding a significant portion of commercial loans need to take proactive measures now, as values will continue to fall or remain flat and borrowers will begin defaulting more and more.
Short Sale Auctions can offer both the owner and the lender an opportunity to partner together and work with an experienced auctioneer to create an effective sales strategy that will create interest and bids on an otherwise troubled property.
This option can allow both the lender and the seller to liquidate the property and hopefully minimize losses in a market with many troubles yet to come.