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Although commercial properties' values often come from how much rent they produce, the same cannot be said for residential properties. If a commercial property that rents for $5,000 per month is worth twice as much as one that rents for $2,500 per month, why can't the same be said for a home that would rent for $2,000 per month versus one that would rent for $1,000 per month?
Residential brokers can encourage lenders to start using income-based valuations during the current downswing. Here are a few steps that they can take:
Work with state and local broker and banker associations to help lenders and servicers understand the benefits.
Call governmental representatives and take advantage of public comment periods on industry and legislative changes.
Talk to appraisers and encourage them to offer income-based and comparable-property analyses.
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While an income-based approach to home values won't solve the woes of every homeowner, it could help stem the ongoing slide and hasten a return to a healthy market. Brokers who help bring about this change -- even if it takes place one property at a time -- can positively affect today's market and find solutions for some of those ideal refinance situations held up by distressed values.
Bob Waun is CEO of Vacation Finance, America's first second-home lender, which specializes in vacation-ownership financing and has pioneered the condominium-hotel-finance market. Vacation Finance is a wholesale lender in key resort markets with a specialized line of vacation loan products, including condo-hotel, fractional and timeshare-receivable financing. Reach Waun at email@example.com or (248) 722-9286. The company's Web site is www.vacation-finance.com.
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