4 ms·

"Last value" is pretty meaningless when it's stale though. Suppose there is a building that was built in 1970, last rented out in 1975 and then bought by a com

"Last value" is pretty meaningless when it's stale though. Suppose there is a building that was built in 1970, last rented out in 1975 and then bought by a company that has used it as their own offices until now. The last transaction was in 1975, what's the value if they apply for a mortgage today? Surely they have some formula to use for this based on e.g. other buildings in the area. Moreover, "failure to find a tenant" is also a type of transaction. It's the landlord acting as the high bidder for the space, essentially the involuntary edition of imputed rent, and implies something negative about the financial prospects of the building when it continues for a significant period of time or large percentage of units. Ignoring that it is either incompetence or some kind of perverse incentive.

embedding-shape 4mo ago
> "Last value" is pretty meaningless when it's stale though. For who and in what way though? Every entity involved wants to keep the price high, except the renter/new buyer, so with that in mind, "Last Value" seems optimal for achieving that. Maybe it's different in the US, but in Spain there is a ton of properties that sit completely empty and unused, even since earlier than 2008, just because the owners don't think the value is enough to sell yet, and they wouldn't earn enough renting it out, so everyone (except renters/new buyers) seems to prefer it just sits empty for decades.
- AnthonyMouse 4mo ago
  > For who and in what way though? For anyone who wants an accurate accounting. Suppose the building is supposed to be worth $20M, has an existing $10M mortgage and is actually only worth $10M. The landlord comes to you and wants to borrow another $5M against the building. Pretty important to the lender at this point that they're not overvaluing it, right? Or the same if they go to a different bank trying to refinance an existing mortgage they're already underwater on when using an accurate accounting.
  - grebc 4mo ago
    Commercial borrowers have to pay for a valuation report by a bank approved valuer.
    - AnthonyMouse 4mo ago
      Then why does anybody care if they rent out some of the units for a lower rent?
      - grebc 4mo ago
        You keep asking the same question and the answer is the same in all these. You don’t like it. We get it. No one is doing anything illegal. If the bank thought a customer couldn’t pay, they’d get foreclosed, end of story.
        AnthonyMouse 4mo ago
        It's not a matter of whether I like it. It's a question of why the bank, unless required to do so by some kind of absurd perverse regulatory incentive, would do something which is not only harming others but also increasing the default risk for the bank by reducing the income of a borrower who, if they can't make the payments, will cause the bank to have to write off millions of dollars by foreclosing on an underwater building.
        grebc 4mo ago
        Harming others is a stretch. You’re also assuming every vacancy has this pigeon holed financial setup. A LOT of commercial property is freehold. I’m honestly at a bit of a loss that people feel they can tell others what to do with their property because it’s vacant. That’s not how society works, and it won’t change to that either.
        em-bee 4mo ago
        if the society decides that they don't want properties to stay empty, then that's exactly how it works. and yes, it will change to that if people want it. german cities are already discussing options how to motivate owners to fill their properties through various incentives including legal ones.
- bluedino 4mo ago
  There are buildings in my town that haven't been used in 20-30 years. And that's in the 'modern' shopping area. In the old 'downtown' area there are some that have been empty for 40+ years.
  - throwburn202605 4mo ago
    There's a building near my office. Never technically finished so empty for 10+ years. I believe the two owners had a disagreement. One day a crew turns up and starts jack hammering away a gangway. Its technically now two buildings; one of them is still unfinished and empty, the other has now been finished and is up for rent. In terms of my utility I would prefer things renovated, changed, or rented out to funky things than have ghastly empty buildings
- wewtyflakes 4mo ago
  This sounds like the worst case outcome for society; real estate permanently allotted to some entity that chooses not to use it. It is not an envious model; it is a model that should be eliminated.

embedding-shape 4mo ago

> "Last value" is pretty meaningless when it's stale though. For who and in what way though? Every entity involved wants to keep the price high, except the renter/new buyer, so with that in mind, "Last Value" seems optimal for achieving that. Maybe it's different in the US, but in Spain there is a ton of properties that sit completely empty and unused, even since earlier than 2008, just because the owners don't think the value is enough to sell yet, and they wouldn't earn enough renting it out, so everyone (except renters/new buyers) seems to prefer it just sits empty for decades.

AnthonyMouse 4mo ago
> For who and in what way though? For anyone who wants an accurate accounting. Suppose the building is supposed to be worth $20M, has an existing $10M mortgage and is actually only worth $10M. The landlord comes to you and wants to borrow another $5M against the building. Pretty important to the lender at this point that they're not overvaluing it, right? Or the same if they go to a different bank trying to refinance an existing mortgage they're already underwater on when using an accurate accounting.
- grebc 4mo ago
  Commercial borrowers have to pay for a valuation report by a bank approved valuer.
  - AnthonyMouse 4mo ago
    Then why does anybody care if they rent out some of the units for a lower rent?
    - grebc 4mo ago
      You keep asking the same question and the answer is the same in all these. You don’t like it. We get it. No one is doing anything illegal. If the bank thought a customer couldn’t pay, they’d get foreclosed, end of story.
      - AnthonyMouse 4mo ago
        It's not a matter of whether I like it. It's a question of why the bank, unless required to do so by some kind of absurd perverse regulatory incentive, would do something which is not only harming others but also increasing the default risk for the bank by reducing the income of a borrower who, if they can't make the payments, will cause the bank to have to write off millions of dollars by foreclosing on an underwater building.
        grebc 4mo ago
        Harming others is a stretch. You’re also assuming every vacancy has this pigeon holed financial setup. A LOT of commercial property is freehold. I’m honestly at a bit of a loss that people feel they can tell others what to do with their property because it’s vacant. That’s not how society works, and it won’t change to that either.
        em-bee 4mo ago
        if the society decides that they don't want properties to stay empty, then that's exactly how it works. and yes, it will change to that if people want it. german cities are already discussing options how to motivate owners to fill their properties through various incentives including legal ones.
bluedino 4mo ago
There are buildings in my town that haven't been used in 20-30 years. And that's in the 'modern' shopping area. In the old 'downtown' area there are some that have been empty for 40+ years.
- throwburn202605 4mo ago
  There's a building near my office. Never technically finished so empty for 10+ years. I believe the two owners had a disagreement. One day a crew turns up and starts jack hammering away a gangway. Its technically now two buildings; one of them is still unfinished and empty, the other has now been finished and is up for rent. In terms of my utility I would prefer things renovated, changed, or rented out to funky things than have ghastly empty buildings
wewtyflakes 4mo ago
This sounds like the worst case outcome for society; real estate permanently allotted to some entity that chooses not to use it. It is not an envious model; it is a model that should be eliminated.