ATLANTA-Batson-Cook Realty is pressing into REO real estate sales. The firm has helped investors snap up more than 130 assets from six different banks—and brokered the purchase of nearly 1,300 residential lots in the Atlanta metro area—this year. The Batson-Cook also has 700 more lots under contract.

Batson-Cook’s Andy Ulsh and Norm Richie are leading the charge. Despite reports of a slow pipeline, the Georgia duo is getting it done. Ulsh tells GlobeSt.com the emergence of sophisticated investor groups has created a new generation level between the banks and end users, which is driving more transactions.

“The banks have finally been able to sell the assets at a price the market will pay, due to two primary reasons,” Ulsh says. “First, the banks’ balance sheets have strengthened to the point they can take the necessary losses. Second, the appraisals have finally come down to factor in the true state of the market.”

Batson-Cook Realty has sold more than 20 bank-owned subdivisions over the last 18 months. In addition to brokerage, the firm offers property management and sales and leasing services.

Of course, there are still challenges to getting these REO deals done. Ulsh says the hardest part of deal underwriting is trying to predict the exit timing—when investors will be able to sell the lots to the builders. Although there have been some builders buying lots, the majority of the REO lots Batson-Cook is selling go to investors backed by equity funds that are betting the market has hit bottom and now is the right time to scoop up distressed assets.

“There is still a lot of uncertainty in the marketplace, so home buyers are still sitting on the fence,” Ulsh says. “Regarding the deals themselves, working through the various entitlement and HOA issues are tough as every one of these deals is a broken one.”

In Ulsh’s experience, quantifying cost to complete the development and carrying budgets related to property management are also challenges. Local government requirements can also present obstacles. He says one key to success is conducting forensic due diligence to determine “the real story” behind the project.  

“Bank records are generally pretty thin and only so much material is available through public records,” Ulsh says. “We try to determine four things: What do we have? What work, if any, needs to be done to sell it? When can we sell it?  How much can we sell it for? What carry costs can we expect while waiting to sell it?”