Tag Archive : estate

The Cost Of Commercial Real Estate Appraisals

By George Blackburne

A borrower can expect to pay between $2,000 and $4,500 for an appraisal, if he needs a commercial loan. Multifamily appraisals are slightly less. The reason why commercial real estate appraisals are so expensive is because each commercial property is unique. In addition, the appraiser has to perform an extensive rental comparable’s analysis, an income and operating cost analysis, a comparable sales analysis, and a cost analysis.

Commercial real estate appraisals can be quite extensive, as thick as thirty to fifty pages. The appraiser needs to determine, for example, if each lease provided to the appraiser reflects the current market rent of the property or whether the rental amount is out-of-date, meaning it is too high or too low.  The lease might even be fraudulent.  This can often only be determined by checking the rents of a number of similar properties nearby.

Did the borrower provide the appraiser with his actual operating expenses or did he fraudulently slip in some understated expense numbers, in order to make his net operating income look higher?

The appraiser also has to carefully analyze the cost of the commercial building’s construction, to help determine the fair market value of the building and to determine if the rental rate is reasonable.

Image if a developer could build an office building for just $1 million and lease it out for $1 million per year.  Clearly something is wrong; otherwise, why aren’t capitalistic developers rushing to build competing office buildings?  That lease for $1 million per year smells awfully fishy.

Whether the borrower pays $2,000 to $2,500 for a commercial appraisal or $4,000 to $4,500 for the appraisal depends on the qualifications of the appraiser.

It is the commercial lender who determines the minimum qualifications of the appraiser.  If the loan amount is small, a bank may only require a General Certified Appraiser.  If the loan amount is large, or if the property type is unusual (think movie complex), the bank will likely require a MAI appraiser.

A General Certified Appraiser is one who has been extensively training in the three approaches to value – the Income Approach, the Sales Comparison Approach, and the Cost Approach.  In order to be awarded the General Certified Appraiser designation, the state will usually require a large number of training courses in the valuation of commercial property, will test the candidate extensively, and will require that he or she have a certain level of appraisal experience.

General Certified Appraisers are usually pretty good, and they typically charge between $2,000 to $2,500 for an appraisal of a commercial property valued up to $6 million or so. Small banks and hard money lenders are the commercial lenders who will most often require just a General Certified Appraiser.

Larger banks, when valuing commercial properties worth more than $6 million to $7 million or so, will usually require a MAI Appraisal.

MAI stands for Member, Appraisal Institute, a private, well-respected professional  association.  The Appraisal Institute defines a MAI Appraiser as an appraiser who is  experienced in the valuation and evaluation of commercial, industrial, residential, and other types of properties, and who advise clients on real estate investment decisions.

MAI Appraisers are like the CPA’s of the appraisal industry.  They are the top of the food chain.  They are most highly trained and experienced commercial real estate appraisers in the industry.

MAI Appraisers will typically charge between $4,000 to $10,000 for an appraisal assignment.  For most commercial property owners, borrowing from a bank, the MAI appraisal will cost you between $4,000 and $4,500.

Borrowers, brokers, and mortgage brokers should never order the appraisal themselves.  If they do, the cheapest commercial lenders will NOT be able to use it.

Do you remember the Savings and Loan Crisis back in 1986, when over 1,000 S&L’s went bankrupt?  They lost billions of dollars, in large part due to bad appraisals.  Developers were ordering the appraisals themselves from crooked MAI appraisers.  They would shop an appraisal assignment until a MAI Appraiser promised to bring in the appraisal at the value the developer wanted.  The joke back in those days was that MAI stood for “Made As Instructed.”

The law that eventually cleaned up the appraisal industry was the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 – pronounced FIRREA (like diarrhea).

After the passage of FIRREA, state laws were passed to license and regulate real estate appraiser.  The appraisal industry became far more professional and ethical, and the prestige of the Appraisal Institute itself recovered its lustrous reputation.

But let’s get back to the issue that a borrower or a broker must never order the appraisal themselves.  Under FIRREA, it is illegal for an insured bank or savings and loan association to accept and use an appraisal ordered by a borrower or a broker.

It is too late?  Are you stuck with a $2,000 or $4,000 appraisal that no bank will accept?  My own hard money shop, Blackburne & Sons, will often accept commercial real estate appraisals ordered by competing lenders.

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The Risk/ Reward Of Buying Investment Real Estate

Like, nearly, everything else, in life, purchasing, and owning, investment real estate, should be considered, on a risk/ reward basis/ scale! While, many have earned their fortunes, or supplemented their incomes, buying these types of properties, doing so, is not true, for all! There are many possibilities, both, positive, and negative, and a wise buyer/ investor, recognizes, understands, and analyzes, as many of these, as possible, in order to make the smartest decision! With that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, some of these types of considerations, variables, etc.

1. The purchase price: The process begins, with closely, examining, and considering, whether the price, you purchase the property at, will serve your objective! Do you know, the realistic range, of rents, you might be able to charge, for tenants’ leases, etc? How easily, should you, be able, to rent these, so there are fewer vacancies? What might be your cash flow, after considering your financial outputs, both up – front, as well as on a monthly basis? How will you determine the rents, you charge? Are you certain, you aren’t over – paying, for this investment? What rate – of – return, are you seeking, and how will you get there? How realistic are your objectives?

2. Upgrades needed: What condition is it in? Will you need to make certain repairs, upgrades, etc, at the onset? If you think you will need to upgrade, soon, what will be your strategy, and focus, and will you be disciplined, enough, to – create a realistic, workable, time – table? Remember to factor – in, any expenditures, in these areas, you will need, to make, in order to determine, your overall cost of purchase!

3. Potential upgrades: Fully consider, and budget, for future upgrades, which you, envision, will need, to be performed! When you determine these, and adjust, your projections, accordingly, you begin to better understand, the correlation between the potential rewards, versus the possible risks!

4. Cosmetic and structural: There are 2 basic forms of upgrades, to consider, cosmetic, and structural. Obviously, the latter, cannot be delayed, while, you sometimes, might be able to delay the former. However, whether it makes sense to proceed, immediately, with a cosmetic change, it’s important to weigh, whether doing so, might make, the property, more sought – out, viable, and potentially, able to generating, enough additional revenue, to make this a smart approach. Before purchasing, it’s important to have a qualified, Home Inspector, or Engineer, comprehensively, examine, the entire structure, in terms of its overall quality, and expectations!

5. Rental income: Examine, on the lower – end, what the property (unit – by – unit), might deliver, in terms of rental income. Make your projections, based on only about 75 – 80% of these figures, in order, to ensure, you are able to handle the cash flow!

Examine potential investment property, using the risk/ reward approach! Don’t do this emotionally, but, do so, in a logical, analytical manner!

Richard has owned businesses, been a COO, CEO, Director of Development, consultant, professionally run events, consulted to thousands, conducted personal development seminars, for 4 decades, and a RE Licensed Salesperson, for a decade+. Rich has written three books and thousands of articles. Website: http://PortWashingtonLongIslandHouses.com and LIKE the Facebook page for real estate: http://facebook.com/PortWashRE

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4 Main Considerations For Purchasing Smaller, Investment Real Estate!

Smaller, investment properties, often, offer, significant financial/ economic benefits, in terms of creating a combination of asset growth, return – on – investment, and some degree of safety! However, this is true, only, if, the purchaser, first, thoroughly, understands, what to seek, and why! Different potential properties, have, varying, potential, for optimal performance, etc! While, everyone, cannot, consistently, take care of, afford, or get involved, in major real estate deals/ purchases, far more, are able to take advantage of smaller properties, etc. These vehicles, often, include, one, to four, family/ unit, houses, and, while some, offer, attractive investments, others, may not, always! With, that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 4 significant, meaningful, main/ essential considerations, and evaluations.

1. Cash flow: Cash flow, when it comes to these, usually, refers to, the difference, between, the funds/ revenues, received, and the monthly costs. It is important to consider these, in a conservative manner, by, basing evaluations, not, on the highest, potential rent – rolls, but, by market – based rents, and, no more than 75% occupancy (to avoid, a potential, cash – crush, if there are any interruptions, due to a variety of possibilities/ contingencies). In addition, the investor, must, be careful, to ensure, his personal cash flow, doesn’t suffer, by using too high a percentage of his reserves, for up – front costs, as well as creating reserves, etc!

2. Area/ neighborhood/ local market: Before, making – the – leap, thoroughly, consider, and evaluate, local real estate market conditions, and discover, the marketplace, for rentals, in terms of, availability, demand, advantages, and/ or, disadvantages! Thoroughly, know the specific area, and determine, if it offers, the best scenario, for you, and your priorities and purposes!

3. The 6% Rule: Many pay close attention to, what is often, referred to, as the 6% Rule, when it comes, to purchasing, smaller, investment properties. This means, three – quarters, of a realistic rent – roll, must achieve, at least, a six percent profit. Expenses, must include: mortgage – related expenses, including principal, interest, taxes, and escrow; landlord – paid utilities; repairs; renovations; upgrades, and reserves, etc.

4. Property condition: Understand, the existing condition, of the subject property, and, what, will need to be addressed, immediately, on an intermediate – basis, and in the longer – run. Reserve funds, must be used, and prepared, for as many contingencies, as foreseeable, etc! On the other hand, don’t be, overly – influenced, by staging, and overestimating, rent – rolls!

After, over 15 years, as a Real Estate Licensed Salesperson, in the State of New York, I believe, strongly, in the possibilities, and advantages of investing in smaller, investment properties, but, only, when, this is done, carefully, and in a focused manner! The smarter, you proceed, the better – off, you will be!

Richard has owned businesses, been a COO, CEO, Director of Development, consultant, professionally run events, consulted to thousands, conducted personal development seminars, for 4 decades, and a RE Licensed Salesperson, for 15+ years. Rich has written three books and thousands of articles. Website: http://PortWashingtonLongIslandHouses.com and LIKE the Facebook page for real estate: http://facebook.com/PortWashRE

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How To Market Your Commercial Real Estate Loan Business

All too often I see small business owners missing the mark with their marketing. Sure, it’s easy to do when you specialize in a specific industry niche and you spend your time engulfed in industry sector jargon. However, it’s best to put yourself in your potential customer’s shoes and think your marketing through from their perspective, addressing their most important questions. Your customers want to be able to trust you, to know you are looking out for their interests and that you don’t just see them with Dollar Signs in your sunglasses.

Below is a sample page, perhaps good for a website, brochure, email, or letter. Why not look this over and consider how you might form your own message. Use your own voice, your own style and remember you are talking to your customer across the table for the first time. You know what questions they will ask. Show that you care, that you are working for them, and will go out of your way to get them the best rates, and great service. Here is the sample:

Commercial Real Estate Loans

Are you looking to purchase an income property such as an apartment building, small office building, or retail center? Would you like to put several rental properties in your real estate portfolio into one commercial mortgage? Wish to find a suitable piece of land and develop that property? Do you need a loan for acquisition and construction?

Do you want to buy a business property with a business on it; a restaurant, carwash, service station, laundry mat, hotel, etc.? Are you looking for a commercially zoned property with a warehouse or industrial building on it? Are you expanding an existing business and/or want to own the property under your business rather than paying the monthly lease?

Are you in the agricultural sector, looking for specifically zoned farming property; land for a vineyard, orchard, or crop such as berries, vegetables, or flowers? We have significant experience to make this happen. Our area in Southern CA has one of the best climates in the world, and incredible top soil for growing almost anything.

We can assist with all types of commercial real estate loans including government-guaranteed loans such as FHA, USDA, and HUD. If you are looking for an SBA 7(a) loan or a CDC/SBA 504 loan for commercial real estate we can get it done.

We can assist you with traditional commercial mortgages, commercial bridge loans, or commercial hard money loans. We also have lines on non-traditional sources for hard money commercial real estate loans, which are custom tailored to you needs for complicated projects outside the normal scope of typical commercial real estate loans and mortgage offerings.

— — — —

Why not try something like this? Just because the Federal Reserve has raised rates doesn’t mean you have to let new deals and new clients move to your competitors. I hope you will please consider all this and think on it.

Lance Winslow has launched a new provocative series of eBooks on Innovation in America. Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank; http://www.worldthinktank.net.

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Commercial Loans and the Leased Fee Estate

When underwriting commercial loans, commercial lenders need to be very careful about properties that are leased out for far more than their fair market value.  A story will make this clear.

GrandpaJack was a brilliant man.  He was also a darned fool.   Forty-five years ago, he spotted the fact that Silicon Valley on the San Francisco Peninsula was inching southward towards the cheaper land in San Jose.

Grandpa Jack therefore bought a large, vacant lot on the corner of First Street and Trimble Road, where it approached Milpitas, figuring it would be great location someday for R&D and flex space.

Thirty years later, the world was beating a path to his doorstep, begging to build and lease back a 200,000 square foot high-tech manufacturing facility.  Anxious to provide for his family for several generations into the future, Grandpa Jack leased the entire facility in 2004 to Oracle Corporation for a flat fee of $1.92 million per year ($9.6 per square foot per year).

When discussing commercial lease rates, it is customary to always speak in terms of rent per square foot per year.

Judging by his vision, Grandpa Jack was brilliant.  Judging by his choice of Oracle as his tenant, Grandpa Jack showed even more brilliance.  Oracle Corporation, the financial behemoth, sailed comfortably through the Great Recession.  Grandpa Jack’s three children got every single rent payment on time.

But Grandpa Jack made one bonehead mistake.  He leased his massive R&D building at a fixed rental rate for a whopping thirty years.  He didn’t even build in an annual CPI increase.  Today the market rent for R&D space in San Jose is $20 per square foot (per year).

We are now finally able to discuss a leased fee estate.  A leased fee estate is the ownership interest that the landlord or lessor maintains in a property under a lease, with the rights of use and occupancy being conveyed or granted to a tenant or lessee. In other words, it is the ownership interest in a leased property.

In plain interest, the property you own is leased out to someone.  What is your property worth when it is burdened or blessed with the existing lease?

Now the concept of a leased fee estate comes up most often in MAI appraisals.  A good MAI appraiser will usually only bring up the concept of a leased fee estate when the property is leased out for a long term at far under the market rate or at far over the market rent.

Now Back to Grandpa Jack:

Let’s suppose the huge R&D building was not burdened with the below-market, long-term lease to Oracle.  If it was rented out at $20 per square foot (pop quiz:  per month or per year?), the building would be worth – at a 7.5% cap rate – $40.5 million.

But the property is NOT leased out at $20 per square foot.  It is burdened with a long-term lease of just $9.60 per sf, which is less than half the market rate.  At a 7.5% cap rate, the leased fee value of the property is just $19.5 million.

“But George, what about the fact that in 15 more years the lease expires, and the owners can renegotiate the rental rate to market?”

A good MAI appraiser will take out his trusty Hewlett Packard 12C hand-held calculator and will perform a discounted present value calculation, taking into account a rental rate of $9.60 sf for 15 years and $20 sf thereafter.

Unfortunately for the heirs (Grandpa Jack passed away in 2006), the reversionary value of the property fifteen years hence, when the old lease expires, does not affect the present value of the leased fee estate as much as you might think.  It has to do with the fact that the big pop in value doesn’t happen for a long period of time.  By the way, reversionary value refers to the value of property upon the expiration of a given time period.

Another Example – It Works Both Ways

Sun-Mei Chang is a dynamic, Chinese-American woman.  Sun-Mei is always on the move, and she could sell anything to anyone.  She is a bona fide Alaskan icebox saleswoman.

She buys a closed elementary school (30,000 sf) from the county for pennies on the dollar, and then she spends just $25,000 sprucing it up a little.  Next she convinces a state-sponsored trade school to rent the property for a whopping $15 per sf.  The market rent is just $6 per sf – but like I said, Sun-Mei is a world-class saleswoman.

Then Sun-Mei applies for a loan against this property.  If the property was valued solely on an income approach, this former school would be worth a fortune.  If the appraiser is a good MAI appraiser, he should quickly spot the fact that the existing lease rate is much higher than the market.

A competent MAI appraiser would therefore submit his finished report with two different values, the value of the leased fee estate and the fair market value – assuming the big lease did not exist.  The value of the leased fee estate would be on the order of $3.8 million, but the fair market value might only be $1.52 million.

When underwriting commercial loans, commercial lenders need to be very careful about properties leased for far more than their fair market value.  Not every MAI appraiser is well-trained enough to produce a report with two different values.  The lender has to be careful not to make too large of a commercial loan because if the property comes back in foreclosure, the lender will probably only be able to lease it back out at $6 per sf.

Please Pay Special Attention Commercial Real Estate Brokers

Why do almost all gas stations now have convenience stores?  Answer:  A convenience store is an extra profit center.  The gas pumps pull in the customers, and while they are waiting for their tanks to fill, the convenience store sell them sodas, snacks, lotto tickets, and hot dogs.

Right now your real estate web site is like a gas station without a convenience store.  You are leaving all kinds of dough on the table.  Over the next five to six years, C-Loans.com could pay you enough dough to pay for a year of college for one of your kids.

But what I am asking you to do is a lot of hard work.  You might have to spend up to… gasp… two whole minutes on this project.  It’s exhausting work earning that kind of money.  Phew.

Just send an email to your web site guru.  “Hey [Steve], please create three new hyperlinks on my home page.  Please find a place to put one at the top, one in the middle, and one at the bottom.  The top link should say, ‘Commercial Loans’.  The middle link should say, ‘Commercial Real Estate Loans’.  The bottom link should say, ‘Commercial Financing’.  Please point all three links to C-Loans.com.”

Just cut and paste the above paragraph and send it to your webmaster.  Voila.  You’re done.  You’ve just added a convenience store to your gas station – a new profit center.

Now here is what happens:  C-Loans is programmed to automatically capture the URL of the referring site and print it at the bottom of our loan application.  It’s automatic.  We don’t have to think.  Bam!  Right there at the bottom of our loan application are the words, “This loan was referred by billsmithrealty.com.”

When the deal closes, we look up the owner of Bill Smith Realty and send him a check for 12.5 basis points.  That’s what happened a few years ago with Alan Dunn, the owner of a site named SpyderCube.  We ended up closing a $17 million commercial loan for Alan’s customer, so we sent Alan a check for a whopping $21,250.

Alan was even asleep when he made that $21,250.  The deal came in late at night.  Can you imagine the thrill of getting a call, “Hey, Alan, I have some good news for you.”  Hot snot, I’ll bet that we made his whole day.

And here’s the thing.  That potential borrower is your referral forever.  Maybe the first deal falls out, but the borrower comes back and applies for a different loan two years later.  You still get paid.  He’s your guy.

Here is another wonderful thing.  C-Loans is not a commercial real estate lender, limited to its own lending programs.  C-Loans does not make loans.  C-Loans.com is merely a  commercial mortgage portal where borrowers can submit their deals to 750 different lenders.  We have life companies, conduits, banks, credit unions, savings banks (S&L’s), REIT’s, hard money lenders, SBA lenders and USDA business and industry specialty lenders.

C-Loans lenders will make permanent loans, construction loans, bridge loans, SBA loans, USDA B&I loans, mezzanine loans, preferred equity investments, SBA construction loans, and USDA construction loans.  A link to C-Loans gives you a chance to earn a big referral fee on ANY kind and size of commercial real estate loan, from $100,000 to $500 million.  Yes, our conduit lenders have made loans of this size on chains of major hotel franchises or portfolios of office buildings.

Important note:  C-Loans usually earns at least 37.5 bps. per closing, so we can afford to pay you 12.5 bps.  On deals of greater than $5 million, our best-rate lenders only pay us 25 bps., so your referral fee would be 8.33 bps.

“Gee, George, this all sounds great and everything, but how do I know that you won’t cheat me?”  For one thing, we didn’t cheat Alan Dunn, and there was no way he would have known that we had closed that big deal.  I am also an attorney, licensed in both California and Indiana.

Lastly, my hard money commercial lending shop, Blackburne & Sons, has been in business for 40 years now.  The average daily balance in our trust accounts is $400,000; and after a loan payoff, there could be several million dollars in that account.  If I ever decide to go bad, I am gonna steal the millions in that trust account, not your stinky ‘ole referral fee.  🙂  Fortunately, I have managed to resist the temptation for 40 years.  I am proud to say that both of my sons and I are Eagle Scouts.  There was a time when that mattered.

But hey, while 100,000 people in this industry may know me, I might be a complete stranger to you.  Trust but verify, some would say.  So here is my proposition:  If you create five or more commercial financing links across your real estate web site, we will create for you a special partner link.  With a special partner link, you will get a copy of every deal that comes from your site.  Just create the five (or fifteen) commercial loans links on your real estate website, and we will create this special partner link for you.  It takes us about 30 minutes to create such as a partner link, so we obviously don’t want to have to create the link unless we are getting some really good visibility.

Now back to the good stuff.  After awhile, you are going to have several hundred of your loan clients registered on C-Loans as your guys, and you are likely to close two or three deals every year going forward.  Every year going forward – think about that.  You will have your old referrals and then you will add to that base of potential referral fees even more clients every year.

And if you create at least five links on your website to C-Loans, you can also use your partner link to imbed commercial real estate loan links in your regular newsletters to your clients.  Remember, with a partner link, you get a copy of every commercial loan application generated by your site or one of your newsletters.

I could see a time when one of your clients applies for a purchase money loan using C-Loans, and you suddenly realize that he is looking to buy another apartment building.  (Please read that last sentence again.)

Important note:  We cannot track links inside of newsletters because there is no referring URL.  To embed commercial financing links in your newsletters, you will need for us to prepare a partner link for you.  Therefore, please create your five referral links to C-Loans.com right away and then contact Tom Blackburne at 574-210-6686.

Now some real estate brokers only like a little bit of referral income, so they only create one Commercial Loans link to C-Loans.com on their home page.  Smarter real estate brokers like to make a TON of referral fee income, so they put three links to C-Loans on every one of their interior web pages.

The way you can easily do this is to have your website guru edit the template of your pages to add these three links.  Then, whenever your webmaster creates a new web page for you, the links automatically appear on the new page, without anyone having to think about adding them.  The more links to C-Loans, the more chances you have have of earning a $21,250 referral fee.

In conclusion, I urge you to add a convenience store to your gas station.  Just cut and paste the following message into an email to your webmaster:

“Hey, [Steve], please create three new hyperlinks on my home page. Please find a place to put a link at the top, one in the middle, and one at the bottom. The top link should say, ‘Commercial Loans’.  The middle link should say, ‘Commercial Real Estate Loans’.  The bottom link should say, ‘Commercial Financing’.  Please point all three links to C-Loans.com.”

Now, the really, really smart guys will add the following:

“In addition, [Steve], would you please edit the template you use to create new web pages for our site to add these three links (top, middle, bottom)?  This way, the next time you create a new web page for us, the new page will automatically contain these three links.”

Voila!  You have now added a convenience store to your gas station.  I said it would take a whopping two minutes, and you did it in just 97 seconds.  🙂

By George Blackburne

Questions:  Call Tom Blackburne at 574-210-6686.


U.S. Real Estate Predictions For 2021

Heck of a year, to say the least. In the interest in brevity, let me keep it short n’ sweet. Here’s my 2021 predictions.

The Plague
The very obvious question is if there will be a negative impact on real estate because of the Covid-19/Coronavirus. Short answer, Yes. Long answer, Yes again. This especially so in the shopping center retail space. Restaurants are dependent on the residual income of an affluent society. America is an affluent society. The per capita for nearly every societal accoutrement is off the charts. The overabundance of restaurants, gyms, spas, grocery stores, and even tire repair shops pale in comparison to other societies, and even Western Democracies. Ergo, America has suddenly realized it doesn’t need as many restaurants as it thinks it needs, when you consider eating at home is more economically sane – in a time of uncertainty.

My informational sources, such as quarterly reports from Deloitte & Touché and the CCIM (Certified Commercial Investment Managers), all indicate that office space (for very obvious reasons), retail, multi-family are in for a rough patch the next 18 months to mid-2022. But for industrial and warehouse space, life is exceptional great. The need to stockpile resources and provisions for consumers is fairly apparent.

On a miscellaneous note, home sales – which is not connected to commercial real estate, but is residential real estate, is doing exceptionally well. This robust disposition is a result of many Americans with abundant resources (and job stability), that enables the purchase of homes and/or an upgraded home. This is also part-and-parcel in a fear of raising interest rates; the need for ownership, personal space and solitude; and likely a bunker mentality – wherein existentially some fear that hordes of people will desperately roam for food in a Dawn of the Dead fake realism (and from the overload of cable news) – but superficially there is no threat, but only in one’s own psyche. It’s important to keep in mind, that despite the chaos, the unemployment rate is still only 6.7% as of November 2020.

Interest Rates
As I correctly predicted last year, rates hit a new low, spurring an increase in market activity. Based on the economists’ predictions I’ve read for 2021 – because there is some dissension within their mindsets, interest rates will fluctuate back and forth, but should be about a fifth of a point lower then where they were at year end 2020. That calculates to about 2.90% for the 30 year fixed rate.

Sellers’ Market
In most localities in the US, it will be a Sellers’ market, which has an inverse relationship with demand. Meaning, when you have higher buyer demand, it will result in an increase in house prices, which will result in a Sellers’ market.

Broker Productivity
This revelation is actually dear and near to my heart, given I was previously a commercial real estate broker dating back twenty years ago before I started to buy homes on my own account. The fusion of technology for residential brokerage has been in the making for a long time and will see a more efficient – perhaps proficient as well, number of brokers emerge as the number of closed transactions is expected to increase in 2021. This is due in part as a result of technology advances. As a contrast, in 2019 the average number of sold homes per residential brokerage was 50.7 homes. In 2021, there is expected to be marked improvement on that number, with in addition the average broker taking less time to close transactions.

Article Source: https://EzineArticles.com/expert/D_Sidney_Potter/1117997

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Commercial Real Estate Lending Case Looking For an Expert Witness

The opposing side is claiming that obtaining an MAI appraisal is not enough when making a commercial real estate loan.  They are claiming that every commercial lender should obtain two additional broker’s professional opinions, in addition to the expensive MAI appraisal.

If you currently work as a commercial real estate loan officer or as a senior commercial real estate lending executive for either (1) a commercial bank; (2) a credit union; (3) a nonprime ABS/Wall Street lender, such as Silverhill, Cherrywood, Velocity, etc.; or (4) a hard money commercial lending shop, you might be a good candidate to testify in this case as an expert.

Sorry, guys, but the testimony of a typical commercial loan broker might not help, unless have been an unusually successful commercial loan broker for more than twenty years.

The good news is that you will almost certainly not have to travel anywhere.  In this time of COVID, the entire case will probably be held using Zoom, so we are just talking about three or four hours of depositions and testimony before a computer screen.

Obviously you will receive an expert witness fee for your time, and having testified as an expert witness looks great on a resume and your website.

Will you serve a good cause?  If so, would you kindly write to me at the email address below, telling me of your current employment, your commercial real estate lending experience, and to what you might testify on the subject of the standard of care for commercial real estate lenders in connection with MAI appraisals.

I receive on average 1,350 emails per day, so it is critical that your Subject line please read exactly as follows, “Expert Witness.”

Thank you.

George Blackburne III, Esq.

By George Blackburne