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Critical Strategies For Lenders to Increase Values

Few financial institutions recognize essential ways they can protect and maximize the value of nonperforming developments and/or raw land for which they become reluctant owners, according to Patrick Vedra, managing director of Carwin Advisors, Dallas.

Often, lenders want to get REO or nonperforming real estate developments "off the books at any price."

In many cases, he says applying critical but little-known strategies can significantly increase a distressed project's value and eventual sales price.

"Acting quickly can create significant opportunities to recover and preserve value, so treat the foreclosed property the same way you would a potential purchase," Vedra advises lenders. "Gather due diligence information to help understand all the sources of a foreclosed property's value, future expenses and risks."

Until you know exactly what you own and its condition, and take appropriate steps, market value will likely deteriorate every day, adds Vedra.

"Not to mention that potential liability and PR nightmares could be lurking in uncompleted buildings, open trenches and unfinished utilities or improvements."

Lenders must watch out for hidden obligations. "Land may be empty, but that doesn't mean you can ignore it."

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