How To Find Foreclosures Commercial Property & Short Sales
In the commercial real estate industry, we are currently facing a time of adversity and distress. Plain and simple, there has not been a lot of business circulating in the past year or so. There are not many buyers out there, and the buyers that do exist are looking for commercial property foreclosures and short sales. We call them "vultural buyers". So, if someone wants to buy, they want to get a "deal", and there's no better deal than a heavily discounted piece of commercial real estate. Especially one that has been foreclosed-on or one that a lender is willing to short sale. These opportunities are out there waiting for us to capitalize on them, but the problem is most buyers just wait and hope something great pops-up on their door step, instead of taking initiative and going finding it. The big question is how can one find these opportunities?
The majority of buyers are still using the traditional methods of finding property, such as going to the city and searching through the Notice of Default (NOD) records, visiting the REO websites of the major lenders, talking to property owners, talking to property managers and speaking directly to lenders. These are just a few ways of looking for foreclosures and short sales, but they are the most common. To find the perfect opportunity, you have to look outside the box, expand your horizons, and use other alternative methods of looking for commercial property to buy. In these economic times, you have to use all of your resources to pick-up great "deals."
Going to the city and reviewing the Notice of Defaults is a good way, but the problem is that residential and commercial properties are lumped together, so if you don't know the address of the commercial property you are interested in, you will have a hard time identifying which are commercial properties and which are residential. This makes searching seem like you're searching for a needle in a haystack. You can also visit a lender's REO website and you can find a few opportunities, however, you will notice that there will not be many in your market. This is because lenders don't update their REO inventory websites often.
Another way is, if you are interested in a particular area, speaking with the existing property owners about their situation is a good way to try to uncover any potential foreclosures or short sales. You can also speak to property managers, and some will tell you about a borrower who may be in trouble with their lenders, but some property managers are bound by confidentiality relationships and will not divulge any information. Finally, speaking with lenders is a great source of information about possible foreclosures and short sales. The only problem is that they are called by so many people; they are now starting to ignore calls.
So, all of the above does not work out for you, what do you do? Well, you can subscribe to a website called www.realtytrac.com. This website tells you about properties that may be going into foreclosure. It is mainly focused on residential properties, but there are some commercial properties available. Also, you can become an expert in the market in which you want to purchase your commercial property, and go to the city to identify if any of the commercial properties of interest have filed a Notice of Default.
In closing, if you are a very busy individual and do not have the time or energy to do the above, you may consider hiring a commercial foreclosure and short sale expert agent. Not only will they know about all of the upcoming possible commercial foreclosures and short sales, but they will also present them to you before they hit the market. In addition, foreclosure and short sale purchases are much more complicated and riskier than a standard commercial property purchase. It is highly advised that you use an agent who has done them before and has experience dealing with the title, escrow Company and the lender. One error or omission and you could end up with a sour transaction.
Believe me, we've been doing short sales and foreclosures for quite some time now, and it is sad to see how some agents fail to identify great opportunities or protect their buyers in the foreclosure or short sale purchase process.
Andrew Bermudez is Vice President and Partner at Lee & Associates in Irvine, California. He has been in the commercial real estate brokerage field for 10 years and is an expert in the different facets of office space brokerage including leasing, sales and Tenant/Buyer Representation. He also is a founder of the Building Solutions Group team at Lee & Associates-Irvine, which operates a business model similar to eHarmony, in the office space search user and availability search mission, by helping
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