Realty Check

In the last few years commercial property values have decreased by as much as 60%. Remember that appraisals in 2005/06 were done at the height of the one of the hottest commercial real estate markets of all times.

Commercial real estate values are based on the economic value to the purchaser. Will market rents provide me with the returns I want? Will the price of this land and construction costs allow me to rent or sell at a profit commensurate with my profit objectives and with the risk of development?

Also, many appraisals done in 2005/06, were up dated several years later before the decreases in values were understood. Many of these updated appraisals did not reflect the decreases in value - true market value. Individual owners and banks continued and still do carry these properties at "old" inflated values.

Investors are not willing to pay these inflated prices and lenders are not willing to finance them. Investors cannot get the return they need. Lenders do not want or need more non-performing loans.

POINT - If you want to sell your property, be aware of the current market conditions. Do not be offended if your property which was appraised in 2006 for $3 million and updated in 2009 for the same price brings an offer of $1.6 million.
The $1.6 million offer is the amount the investor is willing to pay to get the return he/she seeks - regardless of whether they are buying to stock pile for later sale or plan to develop immediately.

In selling your property, you need to assess the price you are willing to accept within your time frame and see if your objectives are in line with the realities of the market. If not,you must make adjustments or wait until the market does.

We can help you with this assessment.