REO investing

I am thinking of trying my hand at becoming an REO agent. I will be getting my NC real estate license next month and working as an agent. While I am doing that I want to be investing as well, mostly in REO's, depending on the circumstances, using a different exit strategy for each (buy and hold, rehab, wholesale).

My question is if I have a business set up for investing and my wife as a partner, through our business can she bid on the REOs I receive as an REO agent? And for that matter, can I offer on them as well if I see one I like, or are there conflicts of interest, ethics problems?

Hypothetically speaking if this is no problem as a Real Estate agent how would I sell them? because they wouldnt be through the agency would it be FSBO or do I list it with the agency and split the commission?

I am trying to put together a 5 year plan and am getting all the info I can to start on the right track, not thinking I can do something I cant.

Thanks for any help.

Edited: 06/26/2010 at 10:49AM

John Strobel

Real Estate Investor · Westminster, Colorado

29 posts
50 influence

Dec 12 '09, 10:00 AM

maybe I should make it easier to understand.

Is there a reason why myself or my wife as an investor, can invest in properties I get as a REO agent or is that a ethics problem?

Never mind about the selling. THankyou

Edited: 06/26/2010 at 10:49AM

John Strobel

Real Estate Investor · Westminster, Colorado

29 posts
50 influence

Dec 12 '09, 10:01 AM

sorry, substitute "cant invest" for can invest.

Edited: 06/26/2010 at 10:49AM

Steve L.

SFR Investor · Rancho Cucamonga, California

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Dec 12 '09, 11:17 AM

You're definitely not allowed to buy properties you represent the bank on without disclosing everything to the seller. Think of what agents could do: not submit other offers, put bad BPO's on the property, make the property inaccessible for other buyers, etc.

When you sell a property you are the listing agent and could sell the properties at a reduced or no commission. If you are not a broker, your broker will want a piece to cover their costs.

Edited: 06/26/2010 at 10:49AM

John Strobel

Real Estate Investor · Westminster, Colorado

29 posts
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Dec 12 '09, 11:20 AM

Thank you for your input Steve, much appreciated.

Edited: 06/26/2010 at 10:49AM

Anson Young

Real Estate Investor · Denver, Colorado

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Dec 13 '09, 10:15 AM

Steve is correct, out of the 35 banks we work with, not one will let the listing agent buy the asset.

I know an agent in town whose wife buys his inventory. If the bank knew this they would fire him immediately...

Edited: 06/26/2010 at 10:50AM

Will Barnard

Rehabber · Santa Clarita, California

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Dec 13 '09, 10:23 AM

You're definitely not allowed to buy properties you represent the bank on without disclosing everything to the seller. Think of what agents could do: not submit other offers, put bad BPO's on the property, make the property inaccessible for other buyers, etc.

Let me chime in here as an experienced REO investor. It is true that some unethical behavior could exist, but quite frankly, unethical behaviro happens on an hourly basis with licnesed RE agents. For example, how many agents pass on listings for their buyers with listed commissions less than 3% and only show their buyers those with full commissions first! That is certainly NOT in the clients best interest, but there own.

Steve is correct, out of the 35 banks we work with, not one will let the listing agent buy the asset.

Edited: 06/26/2010 at 10:50AM

Will Barnard, Barnard Enterprises, Inc.
E-Mail: info@barnardenterprises.com
Website: http://www.barnardenterprises.com
info@barnardenterprises.com

John Strobel

Real Estate Investor · Westminster, Colorado

29 posts
50 influence

Dec 14 '09, 12:01 AM

Anson and Will, thank you for your responses, I suppose what it boils down to is to be honest and up front with my investing. Like you said Will, if I disclose whats going on, its up to the bank to accept or deny that offer.

Thanks again

Edited: 06/26/2010 at 10:50AM

Anson Young

Real Estate Investor · Denver, Colorado

419 posts
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Dec 14 '09, 12:58 AM

Originally posted by nationwidepi

Steve is correct, out of the 35 banks we work with, not one will let the listing agent buy the asset.

Not sure which banks you deal with but I have personal knowledge of listing brokers who have bought many properties as the listing broker direct from the bank. Now that said, they did of course diclose that fact, and did not try to hide it, but as an expereinced buyer themselves, the banks know they will perform and got quick all cash closings.
The bank ultimately has the last call on either accepting and approving the submitted BPO price as well as the choice to get a full appraisal. If they choose not to, that is up to them.

Most of them cite conflict of interest, since we provided multiple bpos, we could easily be manipulating the price. Theoretically the 2nd opinion bpo should act as a checks and balances system, but I know that some of those agents can be steered into a price range. Most master agreements say neither the agent, a family member or member of their team can buy the property.

We work with the bigger usual suspects, indy, BoA, ocwen, FNMA outsourcers, reo world, GMAC, etc etc.

Edited: 06/26/2010 at 10:50AM

Will Barnard

Rehabber · Santa Clarita, California

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Dec 14 '09, 06:19 AM

I hear what you are saying Anson. Just to be clear, I was not disputing your comments, just pointing out that it does happen in the real world from time to time, but agreed that it can very well create a conflict of interest.

To John,

Disclose and disclose some more. The more CYA you do, the better off you are.

Keep in mind that there will be many opportunities out there and you do not need to buy your own listings to be a successful REO investor. Simply offer your side of the commission to the listing brokers with the most REO listings and you will see a big fat smile on the other side. The more you give, the more you get (in other words)

Edited: 06/26/2010 at 10:50AM

Will Barnard, Barnard Enterprises, Inc.
E-Mail: info@barnardenterprises.com
Website: http://www.barnardenterprises.com
info@barnardenterprises.com

John Strobel

Real Estate Investor · Westminster, Colorado

29 posts
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Dec 14 '09, 06:34 AM

Thank you Mr. Barnard, always a help.

Edited: 06/26/2010 at 10:50AM

Will Barnard

Rehabber · Santa Clarita, California

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Dec 15 '09, 05:13 AM

Originally posted by John Strobel

Thank you Mr. Barnard, always a help.

You are quite welcome John, glad to be of service. I love talking about REO investing, it is one of my specialties and your votes are always welcomed. :D

Edited: 06/26/2010 at 10:51AM

Will Barnard, Barnard Enterprises, Inc.
E-Mail: info@barnardenterprises.com
Website: http://www.barnardenterprises.com
info@barnardenterprises.com