EDITORIAL:Savannah's port: We're No. 2!

From: http://savannahnow.com/opinion/2011-09-29/editorialsavannahs-port-were-no-2

SOMETIMES IT feels good to be No. 2. Such is the case with the Georgia Ports Authority, which now operates the second-busiest container port for exports in the United States.

Only Los Angeles handles more of those metal boxes than Savannah does. And Georgia now moves more than New York-Newark, which is now fifth. So that makes Savannah the busiest export port on the East Coast.

But when you’re No. 2, you still have to try harder — especially since much of these gains could erode if
Savannah doesn’t deepen its harbor.

The current 42-foot depth of the shipping channel is the shallowest of 24 of the world’s major ports, according to the U.S. Army Corps of Engineers. The depth for most of those ports is in the 48- to 52-foot range.

Size matters in the shipping business. And time is money. An enlarged Panama Canal means bigger ships carrying more containers to places that can handle them most efficiently. That’s why port deepening is critical to the future here and the rest of Georgia.

But it’s not just about boats and trucks. It’s about trains, too.

The stacks of containers streaming in and out of the booming Savannah port atop rail cars have jumped 21 percent during fiscal year 2011. The total also represents a whopping 191-percent gain over the past decade. CSX now has eight trains a week serving the port. Norfork Southern has 11.

Thus the investments made in intermodal rail service are paying off, which helps keep Georgia’s economy moving forward. And watch out, L.A. Once the harbor is deepened, the title for No. 1 will be on the line.

Reposted by A. Joseph Marshall
Commercial Real Estate Agent
Savannah, Ga.

Sweepstakes Cafe...legal or illegal?

I can't wait until these are made illegal. They open next to poor neighborhoods, siphon money away from the lottery and generally bad tenants.

From: http://www2.wsav.com/news/2011/sep/26/sweepstakes-cafelegal-or-illegal-ar-2468421/

SAVANNAH, GA --
Have you heard of sweepstakes cafes?

They are popping up all around the state and right here in our back yard but a lot of state leaders think they're simply covers for gambling and the Governor, Attorney General, and Georgia Bureau of Investigation are taking a closer look and so is News Three Community Reporter Alice Massimi.

The City of Savannah has issued a 180-day moratorium on accepting new zoning permits for sweepstakes cafes.

One of the suspected cafes News Three was told about by city staff is located on DeRenne Avenue, another off of Abercorn. From the outside, it appears to be an office supply store.

Inside, however, it's set up like an internet cafe, where patrons participate in sweepstakes and some claim cash prizes are awarded.

Here's how they generally work around the country -- customers pay for internet time loaded on a card and get "free" sweepstakes entries.  Customers can use the internet time to do whatever they please.

Most use the sweepstake entries and play slot-style computer games that can have up to 30,000 dollar jackpots.

Owners of the cafes claim it's legal because people are not paying for a chance to win; they're paying for computer time -- a technicality that's being debated in Florida and Georgia

"The concern is it's really a form of gambling that's not sanctioned. They are using a loophole and you see them popping up all over the community. The problem that I have with it is you see the folks sitting in there all night long, and they don't need to be sitting in there all night long spending their money," says Alderman Tony Thomas whose district some of the cafes are located in.

The two cafes we checked out today were not open.

One had a sign saying it was closed until further notice, another saying it was updating the computers.

Depending on how current investigations go, it may become an issue in the state legislature in 2012.

A. Joseph Marshall
Commercial Real Estate Agent
Savannah, Ga.

Savannah Port to Expand Refrigerated Storage Space

SAVANNAH, Ga. -- The Georgia Ports Authority is expanding the Port of Savannah's refrigerated storage space for poultry and other cargo that needs to be kept cold.

The agency's board approved the $4.75 million project Monday. It will consist of 20 container racks, each four stories tall, that will power refrigerated containers.

The new racks will expand the Savannah port's refrigerated storage by 45 percent, with total space for 1,536 cargo containers.

 

Port officials say poultry was the Georgia ports' fourth largest export commodity in fiscal 2011, with 1.6 billion pounds shipped overseas in cargo containers.

The Port of Savannah is the fourth busiest container port in the U.S.

Read more: http://www.thesunnews.com/2011/09/26/2411492/savannah-port-to-expand-refrigerated.html#ixzz1ZReJBjzH

A. Joseph Marshall
Commercial Real Estate Agent
Savannah, Ga.

5 Real Estate Trends to Watch for

RISMEDIA, Thursday, September 22, 2011— If the housing market were human, it would look like it just wrestled a few alligators after running an obstacle course through a snake pit.

The market is beaten and bruised, but still emerging from the recession, which is why Greg Rand, a real estate veteran and author of Crash Boom! from Career Press, wants people to know about five new trends that could help them beat the housing blues.

"The market is made up of buyers and sellers," Rand says. "It's just people who are trying to figure out how to buy low and sell high. The secret to making sure your real estate doesn't turn into a money pit is to watch the trends so you can predict where the prices will rise and where they won't."

Rand's five trends to watch include:

Short-Term Pain - Show me a market where home prices are back to 2002 levels, and I will show you a market that is overcorrecting.

Overdevelopment - One of the reasons the market is overcorrecting is overdevelopment and speculation, as is the case in Florida. Another reason is that the job base has eroded, like in Detroit. Isolated, explainable, short-term distress is the secret. Find your Florida.

Jobs, Jobs, Jobs - Track employment trends to see where companies are moving, and you will see a harbinger for long-term housing demand.

Lifestyle - Nothing drives migration patterns long-term more than the pursuit of happiness. Look at climate (the Carolinas), leisure trends (Colorado) and cost of living (Texas) for triggers on where the market may shift.

Responsible Government - Look at the state government. Does the state and city in question reward or punish risk-takers? Are you likely to suffer if you succeed there? If so, find somewhere that appreciates entrepreneurs. There's nothing worse than putting your money on the table, only to have it redistributed.

Greg Rand is the CEO of OwnAmerica, a regular Fox TV news contributor, host of Rand on Real Estate on 77 WABC Radio, popular media commentator and author of Crash Boom! from Career Press.
A. Joseph Marshall
Commercial Real Estate agent
Savannah, Ga.

Why Banks Aren’t Lending or Why Should Banks Be Lending

By John Mason Sep 23, 2011, 11:41 AM Author's Website  

Remember the old story about commercial banks? Commercial banks only lend to people who don’t need to borrow.

Well, that seems to be the “truth” about bank lending now. The story going around is that the larger banks have increased their business lending, but the lending is really only going to those institutions that have a lot of cash on hand. Otherwise, the commercial banks will sit on their excess reserves.

This also seems to be the story in Europe: commercial banks are just not lending anywhere. (link)
And, the relevant question is not “Why aren’t commercial banks lending?” The relevant question is “Why should commercial banks be lending at this time?”

The first reason why many banks shouldn’t be lending right now is that there is still a large number of banks who may be severely undercapitalized or insolvent. Many commercial banks have assets on their balance sheets whose economic value is substantially below the value the asset is accounted for on that balance sheet.

The most notorious case of this is the sovereign debt issues carried on the balance sheets of many European banks. The values that many of these banks have on their balance sheets for these assets have the credibility that the recent “stress tests” administered to more than 90 banks by European banking authorities. (Note that the European Union moved today to recapitalize 16 banks).

But, the problem is not limited to Europe. How many assets on the books of American banks have values that need to be written down to more realistic market values. For example, small- and medium-sized commercial banks in the United States have a large portion of their loan portfolios in commercial real estate loans. The commercial real estate market is still experiencing a depression and market values continue to decline in many areas. The write off of these loans can take large chunks out of the capital these banks are still reporting.

The bottom line here is that commercial banks that still have problems are not willing to take on any more risk than they have to while they still have to “work out” these depreciated assets, or, at least, wait until the markets recover and asset values rise once again to former levels. If you don’t make another loan…it will not go bad on you…so why take the risk of making a new loan.

And there are 865 commercial banks on the FDIC’s list of problem banks and many more surrounding that total that have not met the specific criteria of the FDIC to be considered a problem bank.

The second reason why many banks shouldn’t be lending right now it that the net interest margin they can earn on loans is hardly sufficient to cover expense costs. I have talked with many bankers now that say the only way to make any money through bank operations is to charge for transactions. That is, to generate fee income.

A general figure that represents the expense ratio of a bank is by taking expenses and dividing them by total assets. Recent data indicate that this expense ratio is in excess of 3 percent, being around 3.15 percent to be more exact. This means that on basic lending operations a commercial bank must earn a net interest margin of 3.15 percent in order to “break even”.

Is there a problem here? You betcha’!

Adding to this dilemma is the fact that the Federal Reserve has added on a new “operation twist” to the mix.
All these banks need is a flatter yield curve. (link)

There are two ways to respond to a flatter yield curve. First, one can take on more risk in their lending. (link)

Or, commercial banks can attempt to earn more money through additional fees, or principal investments (private equity or venture capital), or through the assumption of systematic risk taking. (link)

Is this what the Fed wants? The Fed seems to be caught in the bind that it must be seen as doing something, even though that something may not be very productive (QE2) or even counter productive (leading to bubbles and other speculative activity).

The take on Fed behavior during the Great Depression has been that the central bank did not do enough. Hence, Mr. Bernanke and crew are taking the position that history will not brand them with the same interpretation. For the past three years they have operated so as to avoid the claim that they did not do everything in their power to counteract the forces causing a great recession, slow economic growth, or economic stagnation.

And, here they face the possibility of “unintended consequences”. If the flattening of the yield curve results in even less bank lending than would have occurred otherwise, the Fed could actually be exacerbating the situation. The stock market declined upon hearing the Fed’s policy.

The third reason why banks may not be lending now is the absence of loan demand. Fifty years of government created credit inflation has resulted in excessive debt loads being carried by individuals, families, businesses, governments (at all levels) and not-for-profit institutions. People, faced with under-employment, declining asset values, and income/wealth inequities, are attempting to de-leverage. This de-leveraging will continue until people feel more comfortable with their debt loads, or, the Fed creates sufficient inflation so that people will start to take on more debt again.

If the Fed achieves the latter, then we have returned to the credit inflation situation that has existed for the past fifty years. This period of credit inflation has resulted in an 85 percent decline in the purchasing power of the dollar, more and more under-employment of labor, and greater income/wealth discrepancies within the society.

The fourth reason is the uncertainty created in “the rules of the game.” The Dodd-Frank financial reform act has created a great deal of uncertainty within the financial community. For one, only about 25 percent of the regulations have actually been written and only a portion of these have passed. As a consequence, commercial banks don’t know what rules they will have to follow…or, even more important, what rules they will have to find ways to circumvent. Another new set of rules, these on taxation, were introduced by President Obama this week. George Shultz, former Secretary of the Treasury, has argued that new, complex tax proposals not only lead to short-term uncertainty about what must be dealt with, but that over time “the wealthy and GE” will find ways to manipulate the tax laws in their favor. But, unfortunately, people, families and businesses, will devote time and resources to dealing with these “rules of the game” and not allocate this time and resources to more productive activities.

Again, I raise the question “Why should banks be lending?”, not the question “Why aren’t banks lending?”

Five Ways to Fight a Low Appraisal

By Steve Cook
RISMEDIA, Thursday, September 08, 2011— What do you do when the appraisal on the dream home you want to buy comes in below the price in the offer the seller has accepted—even as much as 10 to 20 percent below? Chances are that raising the cash for your down payment and closing cost has tapped you out. Finding thousands more to make up the difference between the appraised value and the contracted amount is out of the question. You’re not the only buyer who has hit the low appraisal snag. This past June and July, 16 percent of real estate pros reported a cancelation in a sale, mostly due to a large number of low appraisals. However, you don’t have to walk away. In fact, some real estate professionals and economists say that low-ball appraisals are pushing home values down and undermining the housing recovery. You can fight back. You have options, and chances are you can find a way to make the deal work without increasing your down payment. Appraisals are largely based on prices recently paid for comparable local properties. Over the past decade, finding “comps” that accurately reflect values has been a challenge as values rose quickly during the boom and fell just as fast during the bust. Discounts paid for foreclosures and short sales have created a dual price structure between “normal” and distress sales. Finally, today many buyers rely on popular online valuation tools, called AVMs or automated valuation models, instead of a comparable market analysis from a real estate professional. AVMs give fast property value estimates, but they often differ greatly from appraised values because they are determined by algorithms using available local price data, not actual inspections of the property. During this time of record low home values, it’s no wonder that more and more appraisals are coming in below prices that buyers and sellers have agreed on. It may seem ironic that buyers would want the homes they want to buy to appraise for as much or more than they are willing to pay. Remember, the purpose of the appraisal is not to help you get a better price, but to protect your lender should you default. The lender wants assurance that your home will be worth enough to recoup their investment. Even if you have a great job, sterling credit, an adequate down payment and money in the bank, your lender will still want a conservative appraisal. In light of losses they have taken on the millions of foreclosures in recent years and the tough times many banks have had on Wall Street, lenders are taking no chances these days. They are more interested in protecting themselves from a loss than they are in giving you a loan. Here are five steps you can take to save your dream home: 1. Get the seller to lower the price. By far, this is the easiest solution, especially if your appraisal comes in less than 10 percent of the contract price. Obviously, a lower price is a great idea for the buyer, but why would a seller go along? In July, 2011 the average home in America took about 88 days to sell. Demand is soft and time is money. Your seller, particularly if they are selling to buy another home, could be in a real bind if you are forced to back out and they have to put the house on the market again. After all, there is no guarantee that if you walk away, the seller won’t receive a low or even lower appraisal from the next buyer’s lender. Today, many buyers are offering incentives to sellers, such as payment of some or all closing costs. Lowering the price might be a cheaper option for the seller in order to get the deal done on time. Sometimes a bird in the hand is best. 2. Ask the seller to offer to carry a second mortgage for the difference. This solution doesn’t cost the seller anything but the buyer incurs greater debt. If the buyer really wants the home but cannot come up with the difference in cash, making payments or a lump sum payment at a later date to the seller is an option. After the escrow closes, sellers often retain the right to discount the second mortgage, and can sell it for less than face value to an investor. 3. Do your research and dispute the appraisal. Is the contract sales price a fair assessment of the property value based on a well-prepared comparable market analysis (CMA) from your real estate agent as opposed to an online AVM? Was the appraisal done by an appraisal management company that may have used a less-than-expert or out-of-town appraiser? Disputing the appraisal may sound a little aggressive but you might be the victim of a poorly prepared appraisal. Do some research first and go to war if you have the ammunition. You have the right to get a copy of the appraisal from your lender and to find out who did it. What is the appraiser’s reputation? Have any complaints been filed with your state appraisal licensing agency? Where is the appraiser based? Did they perform an appraisal in a housing market that they may not know well? Did the appraiser have adequate information about the subject property? If your appraisal was conducted by an out-of-town appraiser unfamiliar with your market, you have every right to demand a new appraisal. What comparables did they use? Ask your agent and the seller’s agent to put together a list of recent comparable sales that justify the agreed-to sales price. Submit that list to the underwriter and ask for a review of the appraisal. Also, ask the agents to call the listing agents of pending sales to try to find out the actual sales price of those properties. Listing agents do not have to disclose the sales price, but many are happy to help because they could find themselves in the same situation. Pending sales are more current and are not closed, so the original appraiser would not have access to them. The key to a successful dispute is data. You will need as much data you can get to back up your dispute. 4. Ask the lender for a new appraisal. Should you find that you have a good case that the appraisal wasn’t fair or accurate, ask your lender for a new appraisal, which you may be charged for. Another strategy is to get two additional, unbiased appraisals and use the average of all three to arrive at a fair price. This is a risky strategy, in light of the fact that another appraisal might not come in higher than your first; it might even be lower if values have fallen. Depending on how convincing your argument is, your lender has the ability to override the appraisal estimate, which is unlikely, or to order a new appraisal, which is more likely. If a new appraisal is ordered, talk with your agent about somehow splitting the cost with the seller. Perhaps the listing agent and selling agent will split the fee so the buyer does not have to incur additional costs associated with the transaction. Appraisals cost around $400 or so. 5. Get your own, independent appraisal. If you order your own appraisal and your loan is an FHA loan, ask the lender for a list of approved appraisers. Usually the bank will review your appraisal and ask the previous appraiser if they agree or disagree with the newly submitted one. If the first appraiser disputes your appraisal, the bank may request a third appraisal done by another appraiser, or they may just reject your appraisal. However, if the first appraiser agrees with the disputes you present, they may adjust their original appraisal and you may get a better price. If these tactics fail and you cannot make up the shortfall in the appraised value, you may find yourself moving on. If so, be sure that you were protected by a contingency clause in the sales contract, stating that the transaction can be terminated if the home doesn’t appraise at, or above, the sales price. For more information visit www.realestateeconomywatch.com.

Real Estate Question of the Week

As a commercial Realtor, I get asked a lot of unrelated real estate questions (such as, do you know a good plumber, how do I clean HVAC duct work, how do I find the razor blades the prior tenant threw in the yard, etc...) But I don't mind. It sort of goes with the territory.

Last week I was asked, "How do I ship this to Europe?"

I can't imagine selling this machine. Well, the car is on it's way!

A. Joseph Marshall
Commercial Real Estate Agent
Savannah, Ga.