Summary

The Resolution Trust Corporation (RTC) classifies land as hard-to-sell when the following factors come into play: weak demand for undeveloped land, lack of financing sources, and property generating a negative cash flow. In many cases, brokers are more inclined to include developed real estate in multiple listings because they have greater confidence that such real estate sells more quickly than undeveloped land. As a result, fewer brokers get involved trying to sell raw land. In January 1993, RTC had about $17.5 billion, in book value, in land and loans secured by land under its control. At that time, RTC began to intensify its efforts to sell these assets. This report (1) reviews RTC's land disposition efforts and how the agency has dealt with the challenges posed by those assets and (2) discusses RTC's strategy for disposing of its land assets and whether RTC had assessed the results of its land sales to identify the most cost-effective disposition methods and best practices.

GAO found that RTC: (1) adopted a land disposition strategy in May 1992 and formed a land task force to analyze its land inventory; (2) disposed of about $16 billion in land and loans between January 1993 and June 1994, although it had about $850 million in these assets remaining unsold as of February 1995; (3) was unable to identify the most effective land disposition methods because it failed to develop a formal procedure to collect all the actual expense data related to each land sales initiative or establish a methodology for evaluating the results of each initiative; and (4) issued a directive requiring that the expenses for each multiasset sales initiative be documented, which should allow it to identify the most effective marketing and sales techniques and best practices.