Real Effects of Real Estate Mortgage Default Revealed

The real estate mortgage default that started to reach alarming proportions in 2006 has been singled out as the trigger of this economic downward spiral that we are experiencing right now.

If we are to believe the results of the numerous economic and financial models that were formulated to understand the root cause of the problem, we would be tempted to believe that the reach of this sector is so extensive that real estate mortgage default caused all the economic woes that the world economy is experiencing right now.

Yet, nagging questions about the real effects of real estate mortgage default remained unanswered. Adding to the confusion are the differing views we get in the attempt to explain the entire mess that we are in right now.

A Closer Look at Real Estate Mortgage Default

Most people look at the problem as caused by the rising real estate mortgage payment defaults. This is like saying that the real cause of the thousands of deaths in September 11, 2001 is poor building design.

We tend to put too much credit on the issue of mortgage payment delinquencies by saying that it can bring the world economy to its knees. At this point, we can say that mortgage payments are the trigger of the economic mess that we are in right now. However, it is not the single cause of the problem. It is just one of a series of issues that transpired to bring us to this serious economic slowdown. It is the proverbial straw that broke the economic camel’s back.

Financial analysts estimate the amount of mortgage losses to reach $650 B. This amount is insignificant if paired to the vast financial resources of the government and makes no sense that it can cause an $8 trillion drop in financial wealth over 2008. This is simply unbelievable!

Real Effects of Real Estate Mortgage Default

This unmitigated rise in real estate mortgage default triggered this economic crisis which is seen as the worst since the 1930s. This is event that eventually burst the real estate bubble is an after effect of the forces in the market that moved for self correction.

Real estate properties were extremely over valued to the point that the market moved to make the adjustment. However, because of other lingering problems, it created more than a ripple in the market. The market correction and resulting mortgage defaults created a tsunami of epic proportions.

These economic woes affecting all economies can be traced to the failure to rein in financial institutions; particularly on the issue of debt to equity ration. These financial institutions with serious financial problems are now subject for bailout because they did not have a comfortable debt to assets ratio.

We now have an abnormal situation where the value of real estate properties is way below the amount of mortgage that homeowners are paying. This situation can trigger more real estate mortgage default unless all sectors join hands and come up with the appropriate solutions to the problem.

Grab a cheap deal by investing in properties that went through foreclosure process

Foreclosed homes & houses for sale are in demand due to the difficult times faced by the housing market and the nation. With many properties undergoing the foreclosure process and getting sold very cheap, people with a little amount of money are trying to make hay while the sun shines. They visit these distress sales or foreclosure auctions in order to grab a cheap deal.

Investment options are open to all

The investment option is open to all. Those individuals, who can afford to, should visit these real estate listings auctions and buy a property. It cannot get worse than the current scenario. Thus, this is the time to invest in the real estate market since the prices are low. Definitely, there would be an up turn, rather now there can only be an up turn since the prices have hit rock bottom. Those people with money should invest in real estate, if they are prepared for long-term investment.

Get the entire detail of the property in consideration

Foreclosure homes in the auctions can be visited with prior appointment. The visit would have to be arranged in consensus with the owner, lender and prospective buyer. Mostly group visits are arranged so as to give only minimum trouble to the owner residing in the home. The agents conducting the foreclosure auctions would provide you with details of the properties and their starting bids. This is very helpful in deciding your budget and making a selection.

You need not bid for all the properties, which have gone through the foreclosure process and are available for auction. Still, it is necessary to decide on a few before the day of the event.

Office Tenant’s Guide to Commercial Real Estate Tenant Representation

Unlike brokers that represent landlords and owners, Tenant Representation brokers specialize in representing the best interests of tenants and space users only on the lease and purchase of commercial real estate.

The value a business can gain from hiring a tenant representation broker to handle its corporate office space, just as it would hire a CPA for financial and an attorney for legal matters, is so significant, it’s essential every business owner understands the benefits. With real estate typically being a business’s second largest expense, companies can’t afford to overlook the benefits of professional tenant representation services when thousands of dollars are ultimately at stake.

Successful, savvy business owners either employ an in-house corporate real estate director to manage their property, or outsource their requirements to a professional tenant representation advisor. Those that don’t are missing out – on potentially thousands of dollars in lost revenue and wasted money that could quickly and easily be converted into profit!

There are no savings to be had by not hiring a tenant representation broker.

Every listing agreement compensates the landlord’s broker with an industry standard fee, which the landlord’s broker shares with the tenant’s/buyer’s tenant representation broker if they have one. This incentivizes the landlord’s broker to find a tenant that isn’t benefitting from their own tenant representation broker, because the landlord’s broker will receive the entire fee for negotiating against them! There is no discount to be had by not hiring your own tenant representation broker so you should take advantage of this service because the full commission WILL be paid on every listing whether you are represented or not. Furthermore, tenant brokers’ negotiating expertise and intimate knowledge of commercial real estate can easily save you an average of 30% in occupancy costs in today’s market, several times greater than the full listing fee!

You can quickly and easily save thousands of dollars by hiring an expert commercial real estate negotiator.

An experienced tenant representation broker’s negotiating expertise can typically reduce your occupancy costs by approximately 30%, several times the total commission paid on a commercial lease transaction! The office leasing and buying process is complicated and risky and should only be handled by an experienced professional. Just as you hire a CPA for financial and an attorney for legal matters, hiring an expert tenant representation negotiator to navigate the complicated and risky commercial real estate process is essential to achieve the maximum money and time savings, protection and benefits for your business.

Avoid conflicts of interest unlike a landlord’s broker, your tenant representation broker is 100% committed and accountable to you only.

Just as a landlord’s broker’s obligation is to represent their client’s best interests, not that of a tenant’s, your tenant representation broker’s obligation is to represent your best interests only. Hence, you expose yourself to a huge conflict of interest when you use one or several landlord brokers to “negotiate” for you on their own listings, and you are far less likely to receive the level of service you would from a tenant representation broker who is committed and accountable to you only as their client. Unlike a landlord’s broker, your exclusive tenant representation broker is 100% accountable and committed to you because they have a legal responsibility to represent your best interests, not those of a landlord.

Unlike brokers that represent landlords and owners, tenant representation brokers avoid conflicts of interest by specializing in exclusively representing commercial tenants and space users. The best way to avoid a conflict of interest and ensure your broker is representing your best interests is to execute an agreement acknowledging their legal obligation and duty as your representative. By doing this, you can also expect a higher level of service, commitment and accountability as the broker knows he will ultimately be rewarded for his efforts. Owners and landlords exclusively engage their own brokers to guarantee the best possible terms and you should too!

Save hours of your valuable time and thousands in company dollars by hiring a professional to manage the real estate process for you.

When you’re running a business, time is money, and searching for space and negotiating office lease transactions often takes longer than expected! The commercial office leasing and buying process is extremely time consuming and can place a huge drain on company time, money and resources. Not only do tenant brokers advise you on the best strategy so you don’t head off in the wrong direction, they’ll save you huge amounts of time by preparing property listing reports, scheduling and conducting property tours, submitting proposals, negotiating and reviewing leases and managing tenant improvement and relocation projects. Outsource everything but the decision making to your tenant representation broker and benefit from the peace of mind that they will professionally manage the process and save you a huge amount of personal time and money while you focus on running your business. Your exclusive tenant representation broker will of course also save you thousands of dollars in occupancy costs by negotiating the maximum concessions on every transaction.

Protect yourself from exposure to real estate risk.

The office leasing and buying process is complicated and risky. Just as you would hire a CPA to manage your taxes and an attorney to represent you on legal matters, the real estate process should only be managed by an experienced professional that understands all the pitfalls and intricacies of the transaction. We take risk out of the equation by professionally and expertly managing the process down to the smallest detail and advising you on the most risk-free strategy for achieving your objectives and protecting your business from unexpected real estate risk.

Benefit from professional tenant representation to achieve the best results for your business.  

Due to the relatively inert nature of real estate, maximizing the operational efficiency of your office space can be a challenge, especially if your business and your space needs are evolving. Opportunities for businesses to grow and change are often hindered due to the restrictions placed upon them by their office space. Don’t let your office space hold you back! Find a tenant representation broker with the expertise you need when expanding, consolidating, or relocating facilities, renewing or restructuring existing leases or purchasing a commercial property  for your business.

A tenant broker’s role is is to provide you with the comprehensive data and impartial advice you need to make the right corporate real estate decisions and, in turn, provide the most economical, operationally effective and risk free real estate solutions for your business.

Get instant access to every available real estate listing and opportunity.

The most important phase of the real estate process is identifying and qualifying suitable opportunities to lease or purchase. Without a tenant representation broker it would be extremely time consuming and futile to attempt to thoroughly survey your target market as, unlike the residential market, the vast majority of commercial office space listings are not available online. Furthermore, searching for commercial space through landlord/listing broker is unlikely to give you exposure to every available opportunity as they may only introduce their listings, and calling numerous brokers is extremely time consuming. A landlord broker is encouraged to steer tenants to their own listings as they receive double the fee if they represent their client, the landlord, as well as the tenant. Tenant representation brokers have no incentive whatsoever to steer you to particular listings and are completely impartial as they are representing you, the tenant, and are subject to the same listing fee structure regardless of the property.

By hiring a tenant representation broker, you can be guaranteed exposure to every available listing opportunity and also receive impartial, objective advice on the suitability of the space to your business needs. A good tenant broker will go to great lengths to assist clients in determining their specific real estate requirements and locate and evaluate properties that meet their exact needs. Not only should they have access to all the commercial real estate multiple listing services, but their in-depth knowledge of specific commercial real estate submarkets will give you access to all off-market availabilities and pocket listings to guarantee you access to every opportunity. They will also prepare a comprehensive survey of every commercial MLS database, leverage their intimate knowledge of the marketplace to research every suitable off-market property and aggressively market your requirement to every owner and listing broker. This creates powerful negotiating leverage as multiple landlords compete for your business!