Carl Cronan is editor of Real Estate Florida, from which this article is excerpted.

MIAMI-Two top South Florida real estate executives made their case on national television early Friday morning, saying lenders and investors should differentiate between commercial and residential when it comes to sizing up their market.

“South Florida, for some reason, gets painted with one big brush,” Terry Stiles, chairman and CEO of Ft. Lauderdale-based Stiles Corp., told CNBC’s “Squawk Box” program during its live broadcast from Miami Beach. He says financial institutions make no differentiation between real estate types, even as the office sector shows strength amid the ongoing housing downturn.

Despite estimates of at least 20,000 unsold residential condominium units in Downtown Miami, with even more under construction, Stiles says the surplus is a positive for the city’s central business district because no living units were there a decade ago and current discounts from original asking prices will make urban living more affordable.

Lenders and prospective buyers alike need to gain a better understanding of the difference between residential and commercial real estate, says Seth Werner, chairman and CEO of Ft. Lauderdale-based Cypress Creek Capital, who appeared with Stiles on CNBC.

“There’s a tremendous overreaction on the part of the lending community,” Werner says, noting that banks have done a complete reversal from the worry-free loans they made just a few years ago. He adds that lenders appear to be redlining all sorts of real estate financing, even though the biggest troubles are concentrated in housing lately.

The executives say buying opportunities are tremendous in South Florida, but only for seasoned professionals: “This is not a market that should be dabbled in by people who really don’t know what they’re doing or what they’re up against,” Werner says.

Stiles points out a new cottage industry of sorts arising from the condo downturn: lawyers representing buyers of pre-construction units who now want out of their contracts after sustaining value plunges of 25% or more.

“Our largest growth partner right now is litigation,” he says. “[Buyers are] better off to walk away than they are to go forward with their contracts.”

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