The Real Estate Nightmare I Found In Las Vegas

It’s Friday night about 8:00 and I just returned from the IMN Distressed Real Estate Conference in Las Vegas. I want to give you some initial impressions this evening, basically just a skeleton outline and over the weekend and probably into next week I will try and add some flesh to these bones.

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No one has any idea when we will reach a bottom simply because no one knows how many classes of real estate are going down. The most optimistic guess was 2010 but most wouldn’t even hazard a guess. Some of the grey hairs think 5 or 6 years.

The problems in the residential side are quickly spilling over to the commercial real estate market.

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The Indy Mac performing loan sale that was reported to have been done at about 60% of asking price has fallen apart. Most of the bids at the 60% level were withdrawn after further due diligence. The actual prices the stuff went for is between 20% and 45%. By the way Indy Mac had current appraisals supporting their asking price.

The Wall Street Wizards are proving to be particularly inept at working out real estate problems. Essentially, they don’t know anything about operating real estate. On top of that, many of the banks don’t have expertise so there seem to be a lot of bad decisions going down (much more about this later).

Things are going downhill so fast that deals that were struck 3 months ago need to be restructured.