Since its inception in 1971, the Atlanta-based Jordan Co. has brokered the sale of more than $600 million in land and commercial assets throughout metro Atlanta, including more than $150 million in real estate owned (REO) and non-performing real estate. As the Federal Deposit Insurance Corp. (FDIC) works diligently to dispose of the bad assets of failed banks, many of them in Georgia, the Jordan Co. finds itself in the right spot at the right time.

After working as a corporate banker and commercial real estate lender for a decade, Robert Jordan Jr. in 1999 joined the company his father, Robert Jordan Sr., founded. As company president, he oversees the management and acquisition of the company's land holdings and he is an active broker. The firm's principals own more than 650 acres of raw land in metro Atlanta. NREI recently interviewed Jordan to gain more insight into the REO world.

NREI: How does the FDIC dispose of assets and what is Jordan's role?

Jordan: If a bank in metro Atlanta fails and does not get purchased by another bank in a loss-share agreement, the REO assets will be disposed of by the FDIC. In order to do that, it will utilize an asset management firm such as Prescient Asset Management, with whom we have a relationship. Prescient will ask us to assess the quality of the assets. We'll provide a lot of granular information, such as civil engineering data. Prescient will order an appraisal, and when that's complete we take it to the market with a list price.

NREI: What misconceptions do buyers have about buying REO properties?

Jordan: I think the misconception is that it's a fire sale. The idea that when the federal government takes over a bank and that it is going to absolutely unload the assets [at any price] is just not the case. The FDIC has a fiduciary responsibility to the taxpayers. It wants to sell the assets at a fair price.

NREI: Is there a sale you recently closed that surprised you in any way?

Jordan: We closed a sale in March on a partially completed condo development, Dresden Heights, at I-85 and I-285 in Atlanta. It was a lower-density project, 36 units. It was not a Buckhead-type condo tower. It was as if a crew of 100 were working with hammers and nails and all of a sudden somebody came in and said, “It's over, go ahead and get out of here,” and everyone walked off the site. The materials were still on the site. The project was not secured by the elements. Some windows hadn't been completed.

On the surface, someone might say, ‘That's a really tough one to sell because it's partially finished and somebody's got to complete it to the exact architectural standards as the original developer.’ Yet, believe it or not, we had a better reception in the market to that property than almost all others. The money that's out there today bidding for these assets feels like if something is partially completed, it can finish it better, cheaper, and faster.

NREI: How are you compensated for your REO work?

Jordan: We get paid only when the sale closes. The commission ranges from 3.5% to 6% of the sale price. In 2005 and 2006, commission rates ranged from 5% to 8%. In some cases, an asset that sold for $10 million in 2005 is now worth $2 million, so commissions have come down dramatically. It's become a volume business.