Buying, selling & determining value


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Buying, Selling & Determining Value: How are Appraisers Estimating Values with the Lack of Comparable Sales Data Today? by Scott R. Maesel | Executive Managing Director, Sperry Van Ness | Commercial Real Estate Advisors. Presented at GreenPearl Events' Distressed Real Estate Summit Chicago on May 13, 2010.

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Buying, selling & determining value

  1. 1. Moderator: Scott R. Maesel, Executive Managing Director, Sperry Van Ness, Commercial Real Estate Advisors Panelists: Gary K. DeClark, MAI, CRE, FRICS, Managing Director, Integra Realty Resources, Inc. Evan Gladstone, Executive Managing Director, NRC Realty & Capital Advisors, LLC Jules H. Marling, III, Managing Director, Real Estate Research Corporation (RERC) Cherin L. Mooradian, MAI, ASA, Director, Duff & Phelps, LLC
  2. 2. Distressed Real Estate Summit Buying, Selling & Determining Value Valuation, a Crystal Ball How are appraisers estimating values with the lack of comparable sales data today? Brokers listing prices? REO or non-performing loan prices? Are there different values, or a range of values for a seller needing to sell quickly (market price or spot sale price) versus higher price which might be obtained over a much longer timeline (intrinsic value)? What is more important in establishing value in today’s market – market value or deal transaction value? How do they interface? How much is financing or lack of it effecting value?
  3. 3. Distressed Real Estate Summit Buying, Selling & Determining Value Is it appropriate to model a rent spike in the future when preparing a discounted cash flow model today on an investment grade property when commercial rents continue to decline? To what extent, if at all, does the brokerage community contribute to a downward spiral of property pricing? To what extent, if at all, does a third party purchase of a defaulted mortgage at a discounted price influence that property value?
  4. 4. Distressed Real Estate Summit Buying, Selling & Determining Value Real Estate Taxes, They’re Killing Me! How are owners successfully obtaining real estate tax relief as the value of their properties have declined in value? How can property be reasonably valued if the real estate tax burden is many times largely unknown? Does a market value appraisal conclusion for real estate tax purposes really have any semblance to a market value conclusion in the traditional sense? If my property's assessed value goes down, why do my taxes not?
  5. 5. Distressed Real Estate Summit Buying, Selling & Determining Value What are the federal and local tax opportunities that will help me: Keep my distressed property? Survive the recent economic downturn and work through the recovery phase of the economy? Assist in bringing an acquired distressed property back to stabilization? What do experiences with tax appeals indicate relative to the perspective of tax assessors and tax appeal boards? What is the role of a tax consultant? ?
  6. 6. Distressed Real Estate Summit Buying, Selling & Determining Value When to Hold’em & When to Fold’em? Given a distressed marketplace for the foreseeable future, is 2010 a time to sell? Should this decision be different for different asset classes (hotel, multi- family, office, etc.) or asset quality (A, B or C)? Hold versus sell. Should owners in distress consider selling if their lender is willing to do a short sale or negotiate a work out if their lender agrees if the property is not cash flowing, or will not cash flow even as restructured?
  7. 7. Distressed Real Estate Summit Buying, Selling & Determining Value If the restructured loan creates some cash flow now but increases principal or requires recourse, does it makes sense? Lenders are insanely busy today. Short of missing mortgage payments or other covenants, how do owners get their lender’s attention and successfully negotiate with them?