Financial institutions here are resorting to a variety of tactics to unload real estate they've acquired due to a continuing swell of foreclosures and defaulted loans.

Such strategies include renegotiating loans, listing bank-owned properties on their websites, contracting with real estate professionals, and auctioning properties through trustees.

Scott Southwick, chief credit officer for Spokane-based Inland Northwest Bank, says banks remain under pressure from regulators to reduce foreclosed and repossessed properties, which are classified under nonperforming assets.

"Even banks that don't have an excessive amount are always trying to reduce nonperforming assets," Southwick says.

Banks generally are prepared to take losses to remove such real estate from their books and avoid ongoing expenses, such as paying for maintenance, utilities, taxes, property association dues, and appraisals, he says.

"Banks never sell real estate for retail value," Southwick says.

People who buy bank-owned properties are always looking for bargains, he says.

"If it were easy to sell, the owner would have sold it before the bank foreclosed," Southwick says. "Typically we get an appraisal and a broker's opinion of the value, and price accordingly. It has nothing to do with the loan amount."

Foreclosed and repossessed real estate owned by Spokane-based AmericanWest Bank are being handled by a mix of real estate agents and bank officers, its website shows.

AmericanWest had 35 bank-owned commercial and residential properties posted on its website as of last week. Some of those listings include multiple lots or living units, and most are located in Eastern Washington, North Idaho, and north central Utah.

James Claffee, AmericanWest's chief operating officer, says the bank has been able to reduce its repossessed real estate without taking losses on bundles of loans, as some banks are being forced by regulators to do.

"Overall, we're seeing improvements in pricing and velocity of sales," Claffee says.

Perhaps AmericanWest's most highly visible bank-owned properties here are in the Legacy Ridge residential development in Liberty Lake. The bank took over unsold portions of the development from developer Marshall Chesrown in lieu of foreclosure.

Copper Basin Construction Inc., of Hayden, has capitalized on bank-repossessed developments, including portions of Legacy Ridge.

Steve White, a principal in Copper Basin, says about a third of the company's current developments are formerly bank-owned properties.

At Legacy Ridge, the company is developing the 70-lot residential subdivision it calls Parkside at Legacy Ridge.

Copper Basin has sold 13 homes there so far, White says. Its website says the homes there range in price from $170,000 to $250,000.

Copper Basin also intends to buy from AmericanWest a 9-acre parcel called Legacy Ridge Phase 4, pending approval from the city of Liberty Lake to subdivide the parcel into 31 lots, he says.

AmericanWest doesn't disclose property values or the amount owed by individual borrowers, says bank spokeswoman Kelly McPhee.

Last week, however, the bank sold to Spokane County for $1.2 million a 552-acre parcel of undeveloped land known as Saltese Uplands, near Liberty Lake that was appraised in December at $2.5 million, McPhee says. It will be paid for through the county's Conservation Futures, a property-tax funded program that's intended to keep land with significant recreational, social, or scenic values in its natural state.

AmericanWest had held that property as collateral for the original Legacy Ridge development. AmericanWest also owns another 200 acres of land at Legacy Ridge that's in various stages of development, McPhee says.

"That's still on the market," she says.

Cara Coon, a spokeswoman for Spokane-based Sterling Savings Bank, says that bank's website is its primary vehicle for creating public awareness of properties it has available.

"We continually work with Realtors, brokers, and people interested in short sales to find best solutions for all parties involved," Coon adds.

Sterling's website listed 106 bank-owned properties in seven states as of last week, down from 130 properties a year ago. Sales are pending on 31 of the current property listings, according to the website.

Of the current listings, 14 were priced at more than $1 million, most of them located in California, with the highest listed at $8.8 million.

Sterling is scheduled to release its second quarter earnings results today, July 28.

Its first-quarter earnings release showed it had cut total nonperforming assets to $628.8 million as of March 31 from $1.07 billion a year earlier.

INB doesn't post its bank-owned properties on its website.

"Fortunately, we don't have a particularly long list," Southwick says.

INB usually contracts with real estate companies to market the bank-owned properties through multiple listing services, he says.

"We've been fairly successful in selling properties," he says.

INB turns to trustee sales, in which the property is offered in a public auction, as a last resort.

"We always prefer to find a solution before foreclosure," he says.

Southwick says INB hasn't foreclosed on many residential properties lately.

"We do have a couple of deals we're pressing into foreclosure," he says. "Those properties now tend to be more commercial." In one such foreclosure action, a trustee has filed notice to auction off in September a property in Post Falls occupied by an America's Best Value Inn motel.

The legal notice of the action alleges the owner, Washington state-based Five Star Enterprises LLC., has failed to make monthly payments to INB this year on a loan with an outstanding balance of $2.7 million.

Larry Soehren, an executive with Spokane-based commercial real estate brokerage Kiemle & Hagood Co., says he's working with a few bank-owned commercial properties.

As a custodial receiver in two foreclosure actions, Soehren says it's his duty to protect assets while lenders and borrowers attempt to renegotiate loans.

That's a relatively new aspect of the commercial real estate business for him.

"Three years ago, we weren't doing any receiverships or distressed-property management," he says.

Still, he says he hasn't seen a surge of requests to manage bank-owned properties that he had expected when the economic downturn started.

"It seems banks and borrowers are trying to find ways to work out deals," Soehren says. "Owners don't want to give up property any more than the bank wants to take it back."

Southwick says INB expects some improvement in its immediate outlook for bank-owned properties.

"The leading indicator for future foreclosures is the loan delinquency rate," he says. "Fortunately for us, our delinquency rate for the second quarter was very favorable."

Lenders and borrowers, however, aren't out of the woods yet as far as nonperforming assets and foreclosures are concerned, Southwick says.

"I don't think it's going to be a quick turnaround," he says. "I think we're still in for an extended period before things get notably better."