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Investors Are Keen On Distressed Loans

Many appraisers are becoming familiar with the problems of valuing real estate assets in a turbulent market with few actual sales taking place. Increasingly,…

By Peter Brooks - Executive Director of Ernst & Young's transaction advisory services in New York City. | Updated on December 09, 2011

Many appraisers are becoming familiar with the problems of valuing real estate assets in a turbulent market with few actual sales taking place. Increasingly, however, appraisers are being asked to step into the murky waters of loan valuation. Ernst & Young LLP recently conducted a survey on the distressed debt market. The survey included real estate investment and opportunity funds, private equity, institutional investors and real estate developers. The results may shed some light on current real estate loan valuation issues. For instance, more than half of investor respondents to the survey bid on or priced US nonperforming loan portfolios in the last year, but fewer than 20% completed the transaction. The survey portrays a US nonperforming loan market in which investors last year were eager to buy, but sellers were unwilling or unable to sell.

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