Distress Commercial Property Sales Escalate in the USA and Japan
The USA and Japan will see the sharpest rise in distressed property sales in Q-1 Y 2010, as the fallout from the global property downturn resonates, the results of a survey reported Today.
By contrast, respondents in Brazil, India, Hong Kong and Australia are more optimistic and expect fewer distressed property listings, the Royal Institution of Chartered Surveyors (RICS), which surveyed 430 of its members in 25 countries, said.
RICS, which last polled its members in Q-4 Y 2009, defines distressed properties as those with a foreclosure order or are advertised for sale by their mortgagee, and which look to to fetch a lower price than their market value.
The report said that the net balance of 85% more respondents in the United States polled during Q-4 expect distressed property sales to rise in Q-1 Y 2010, compared with about 68% in Q-3.
The turnaround was even more distinct in Japan, where the net balance of respondents predicting an increase in distressed sales this quarter jumped from 12% in the Q-3 Y 2009 poll, to 80% in the Q-4 poll.
Rounding out the Top 5 markets expected to be worst hit by distressed sales this Q are Ireland, Scandinavia, and Spain, the survey said.
It is the major real estate markets of the world,i.e., the United States and Japan, where agents expect the strongest growth in distressed sales in Q-1 Y 2010,” Oliver Gilmartin, RICS senior economist, said.
RICS also asked its members whether the levels of interest from specialist funds that buy distressed properties was rising, finding that 21 out of 25 countries saw increased interest, with interest in Spain, Ireland, UK, and US rising at a faster pace. The response: “Significantly, whilst the USA is seeing ongoing rises in interest from specialist funds, Japan is not the recipient of the same level of investor appetite for distressed property assets,” Gilmartin said.
1. Search on the world wide web for distressed or foreclosed properties as a starting point. Use a professional REALTOR to identify great foreclosure deals for you. You may be successful at searching the web on your own, but keep in mind some of the information is outdated, some may be incorrect, and some of the available properties are not even listed. A REALTOR subscribes to updated MLS listings and can offer you the most current information available.
2. If you search yourself for distressed properties and purchase from the selling agent, you are paying a commission to someone with a vested interest. Obtain objectivity in the sale by working with your own REALTOR. You won’t pay any more. Technically, everyone works for the seller, since they pay the commission.
3. With distressed or foreclosed properties, time is of the essence. Purchasers must close on the date specified by the agency, and cannot close after this without penalties of $25-200 per day.
4. It takes 1-3 weeks to qualify a loan. If you are approved for a loan, make sure you are qualified by your lender as soon as possible. If you are paying by cash, make certain funds are available. If finances are in order, the REALTOR will then submit an offer. When the offer is accepted by both seller and buyer, the REALTOR will submit the ratified contract to the lender and closing agent. These steps will begin the process of a successful real estate transaction.
5. When purchasing a distressed property, always obtain 3-4 bids from different contractors to estimate costs of repairs, if you do not plan on doing the work yourself.
6. If you are going to sell the property after rehabilitating it, ask your REALTOR to research similar properties in the neighborhood to ascertain market price.
7. Keep copious records for tax deductions. Any expenses related to the purchase, repair, or maintenance of the property may qualify. Meticulous records are key to a profitable real estate venture.
8. The title you receive after purchasing a distressed or foreclosed property is a special warranty deed rather than a general warranty deed. Some buyers are alarmed by this, but there is no need to worry. The purchase of title insurance protects the buyer. Each lender purchases insurance to protect the loan as well. Titling insurance should be obtained by the property purchaser. It is always offered by the closing agent. Consider using an attorney instead of a titling company as your closing agent. An attorney is only $50-75 more than a titling company. A real estate attorney can remedy any situation that may arise. Therefore, they are more efficient representatives on time sensitive foreclosure properties.
9. Foreclosure properties require special addendums and special contracts by the individual bank and HUD office (where applicable).
10. Foreclosure properties are potentially the most profitable, but require the most attention to detail. A REALTOR experienced in foreclosure deals is highly desirable because the paperwork must be in order to submit a proper bid, and timeliness is critical.
Paul A. Ebeling, Jnr. www.livetradingnews.com
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