MIAMI—There's a new trend on the investment sales scene—and David Duckworth, vice president with Avison Young, has his finger on its pulse.
“We are seeing a trend in private client transactions where the most aggressive buyers are willing to put up hard deposits at contract execution,” Duckworth tells GlobeSt.com. “The Auction.com platform has shifted market expectations because all of their transactions require a 10% hard money deposit upon winning the bid.”
From where he sits, Duckworth sees many sellers are now seeking similar terms on deals done outside of Auction.com in order to avoid the retrade. That, he said, is putting local buyers with better market knowledge and building intelligence at an advantage over outsiders—and they are getting much more due diligence done during the bidding process in order to position themselves to win the bid.
“In terms of interest rates, we are at historic lows, and pending increases are not expected to be dramatic enough shift the market in the short term,” Duckworth says. “In the long-term increased interest rates would be a result of a more stimulated economy and rental rate increases should offset interest rate risk in a growing economy.”
What about sales volume? According to Duckworth, it should be very strong through
the end of the year because there is so much investor demand for quality assets that volume will only be limited by the supply of available properties.
“Cap rates have compressed and the competition for product is fierce,” Duckworth says. “When we are conducting competitive bids we see as much as a 10% jump from the initial bid to the best and final bid. Buyers are putting hard money up day one, and compressing due diligence and closing periods in order to beat out competitors.”
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