There has been a significant drop in the rate of commercial real estate deals, and it has many people concerned about what they should be doing. In 2016, there was an 11 percent reduction in deals, which is the first time closed real estate loans have fallen since 2009. This is the result of a number of entities, including private equity firms and hedge funds, starting to sell assets and switching to safer investments.
The reduction in closed real estate loans and the actions of larger investors has a number of individuals wondering if they should also be divesting themselves of their real estate holdings. However, just because other investors are selling doesn’t necessarily mean that the bottom is about to fall out of the market.
There are several reasons why investors are selling that have nothing to do with expectations of a crash. One of the reasons that many investors are moving to different assets is rising interest rates. Higher interest rates are making some properties look much less appealing than those with lower risks.
If someone is interested in getting into commercial real estate, they should be aware of the importance of having contracts drawn up correctly. When contracts are unclear and one person does not believe the other held up their end of the bargain, a variety of disputes may occur. Disagreements can quickly lead things like lender disputes, accusations of seller misrepresentation and construction litigation. A lawyer could assist someone by reviewing a real estate contract, and if a person feels that the contract is not being followed, a lawyer could also let an individual know what their legal options are.