Commercial Loans and Fun Blog

Commercial REO's Must be Deeply Discounted to Finally Sell

Take the very same commercial property. If you sell it retail - the normal kind of sale to another investor - the commercial property may sell for $1 million. Ahhh, but if the lender unwisely let's word slip out to the real estate brokers in town that the property is a foreclosure, the commercial lender will be lucky to fetch $600,000 for the exact same property. Why? As soon as the investing world learns that the property is an REO, every potential buyer wants a 40% discount.

There is a price, however, at which every commercial property can be sold. It's the price where the commercial property finally clears the market. "Clearing the market" is a price so low that a buyer can finally be found.

Liquidation is a term that is very similar to clearing the market. Liquidation means taking an asset and reducing it to cash. For example, let's suppose a finance company repossesses a living room set sold on an installment sale (sold for 12 or 24 monthly payments). The finance company will then liquidate the used furniture; in other words, sell it, in order to pay off its unpaid debt.

Hard money commercial lenders are taking a terrible beating during the Great Recession because first commercial real estate fell by 40%. Then every potential buyer of the property wants an additional 40% discount off the already-discounted fair market value of the property because the property is an REO.

As the owner of a commercial hard money lender, Blackburne & Sons, I can tell you that it's maddening.

Are you a potential commercial borrower? You should download our important, free, whitepaper, How to Close a Commercial Loan During the Great Commercial Lending Drought.

Are you a mortgage broker? Download our free Commercial Loan Placement Kit that includes a list of 200 hungry commercial lenders, a Commercial Loan Placement Checklist, an important whitepaper entitled, How to Place a Commercial Loan When Banks Are Too Terrified to Lend, and our webinar on Structured Finance. This kit is free!

Are you commercial borrower? Wish you too could get a copy of this free list of 200 commercial lenders?

Are you an accredited investor? If so, what are you doing with your IRA? Accredited investors are earning 11% to 13% in first trust deed investments.

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The More Commercial Mortgages a Bank Has in Its Portfolio, the Higher Its Chances of Being Closed By the Feds

I read today a terrifying statistic about commercial real estate loans. Of the 100 commercial banks with the highest percentage of commercial real estate loans in their portfolios, 42 of them have already failed. In the eyes of the regulators, commercial real estate exposure has become a frighteningly accurate predictor of bank health.

No wonder its so hard to get a commercial loan from a bank these days!

So what should a borrower or a commercial mortgage broker do?  He will probably have to submit his commercial loan request to scores and scores of banks before finding a commercial lender willing to make the loan.

The easiest way to submit a single commercial loan application to scores of banks is to use C-Loans.com. C-Loans is a commercial mortgage portal with 750 participating commercial lenders. The user simply completes a four-minute mini-app and then asks the system to display suitable commercial lenders.

He then puts a check mark next to six banks and presses, "Submit." Within minutes bankers will be calling him or emailing him offers.  And C-Loans.com is free!

Stalking Horse Bids Arise in Connection with Bankruptcy Sales

Today I received an email announcing the bankruptcy court-ordered auction of a beautiful office tower in San Francisco. The flyer said the auction was subject to a $35 million stalking horse bid. What on earth is a stalking horse bid?

A stalking horse bid is an initial bid on a bankrupt company's assets from an interested buyer chosen by the bankrupt company. From a pool of bidders, the bankrupt company chooses the stalking horse to make the first bid.

This method allows the distressed company to avoid low bids on its assets. Once the stalking horse has made its bid, other potential buyers may submit competing bids for the bankrupt company's assets. In essence, the stalking horse sets the bar so that other bidders can't low-ball the purchase price.

Do you need a commercial loan to buy a commercial REO? Do you need to refinance your existing commercial mortgage? You can apply to 750 commercial real estate lenders in just four minutes using C-Loans.com. And C-Loans is free!  Click here to apply for a commercial mortgage loan.