While the commercial real estate market in South Florida appears to be improving, lenders are still hesitant to finance a number of real estate transactions. A number of critics feel that federal regulators and lenders are in fact slowing down recovery by turning away borrowers that are creditworthy.
The tighter restrictions came about in part due to the loose lending standards that in part led to the housing bubble. However, there is now concern that restrictions are too tight. One Florida County reportedly had 65 percent of commercial transactions involve “all cash.” “That really narrows the pool of buyers, which means it narrows the speed of the recovery,” stated one real estate broker.
Many developers' credit scores had taken hits during the recession. While credit has become more available, it is still mainly only for a few creditors. Larger home builders are able to obtain credit, but this isn't necessarily true of smaller ones.
We will need to wait and see as to whether restrictions will lighten in the coming years. It will also likely take time before credit ratings for many borrowers will go back up. In the meantime, developers are often forced to find financing through what are considered non-traditional sources.
Under such circumstances commercial buyers are in need of real estate solutions that certain attorneys can offer. This is especially true when borrowers are faced with tight restrictions placed upon financing. Attorneys can be involved in negotiations concerning commercial closings or disputes. They can also provide additional options for getting a new real estate development underway.
Source: News-Press, “Credit Catc-22 hampers Southwest Florida real estate market,” Dick Hogan, March 1, 2014