SAM News
Short Selling- An Assets Management Strategy
10/03/2008: Fred West
Today, as we all know, bankers and real estate professionals-homebuilders and developers- across the country are dealing with unprecedented deflationary housing markets-wreaking financial havoc on both banker and client and many American households.
Real estate professionals counted on last spring’s selling season to reduce their standing housing and lot inventories and replenish cash reserves. For the most part, it didn’t happen. And, consequently, many builders and developers are on a countdown to insolvency. Banks that were actively involved in residential real estate lending are now dealing with non-performing loans in droves causing adversarial and contentious relations among bankers and clients.
Consider these observations. Historically, regional banks have participated in real estate lending as one of its best profit centers- the opportunity to put substantial funds to work with relatively little overhead. When times are good, bankers fight each other to gain real estate professionals as clients. Today’s housing crisis was caused by systemic overheated, inflationary markets- not the bankers and their real estate clients. Sometime, in the near future, housing markets will stabilize and bankers and real estate professionals will once again need to work together. During these challenging times, bankers and clients should make every effort to find civil and constructive solutions to their common problems and avoid contentious and expensive legal contests.
Short Selling is a smart, cost-saving and responsible approach to managing non-performing real estate assets. For example, banker and client would enter into a formal agreement to discount the sales prices of non-performing assets (builder’s inventory of unsold new houses) with specific terms and conditions as;
Ø The listing Realtor would submit an updated comparative market analysis (CMA) and recommend discount pricing that would motivate prospective buyers.
Ø The banker may elect to provide attractive interim financing to qualified buyers to give the properties a market advantage over competition.
Ø The client would agree to contribute a finite amount of funds to offset any deficiency. It may be necessary for the client to offer collateral or sign a note in lieu of contributing funds.
Ø The client would agree to maintain the properties including ongoing landscape maintenance, security, payment of taxes, insurance,
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Short Selling- An Assets Management Strategy
10/03/2008: Fred West
Today, as we all know, bankers and real estate professionals-homebuilders and developers- across the country are dealing with unprecedented deflationary housing markets-wreaking financial havoc on both banker and client and many American households.
Real estate professionals counted on last spring’s selling season to reduce their standing housing and lot inventories and replenish cash reserves. For the most part, it didn’t happen. And, consequently, many builders and developers are on a countdown to insolvency. Banks that were actively involved in residential real estate lending are now dealing with non-performing loans in droves causing adversarial and contentious relations among bankers and clients.
Consider these observations. Historically, regional banks have participated in real estate lending as one of its best profit centers- the opportunity to put substantial funds to work with relatively little overhead. When times are good, bankers fight each other to gain real estate professionals as clients. Today’s housing crisis was caused by systemic overheated, inflationary markets- not the bankers and their real estate clients. Sometime, in the near future, housing markets will stabilize and bankers and real estate professionals will once again need to work together. During these challenging times, bankers and clients should make every effort to find civil and constructive solutions to their common problems and avoid contentious and expensive legal contests.
Short Selling is a smart, cost-saving and responsible approach to managing non-performing real estate assets. For example, banker and client would enter into a formal agreement to discount the sales prices of non-performing assets (builder’s inventory of unsold new houses) with specific terms and conditions as;
Ø The listing Realtor would submit an updated comparative market analysis (CMA) and recommend discount pricing that would motivate prospective buyers.
Ø The banker may elect to provide attractive interim financing to qualified buyers to give the properties a market advantage over competition.
Ø The client would agree to contribute a finite amount of funds to offset any deficiency. It may be necessary for the client to offer collateral or sign a note in lieu of contributing funds.
Ø The client would agree to maintain the properties including ongoing landscape maintenance, security, payment of taxes, insurance,
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