REO Agent

6 Replies

I recently met with an REO agent. We discussed real estate in general and my plan in particular. I am going to find REO properties to buy at a discount, rehab and sell.

He mentioned he had some investors that he knew and used when he had a REO he wanted to sell quickly. At that point I was just thinking, how do I become someone he calls when has a REO. He mentioned that investors he likes are those that have a reputation of moving quickly and decisively. Nothing new to me since I have been reading these forums and learning a ton.

Now, I got a little interested because we began talking about a REO he had just been out to see and wasn't on the market yet. It is in a slightly lower income part of the city but that was no shocker, and it's not that bad an area. The bank is working with the current occupants to get the keys which he said should be done in the next couple days.

He actually showed me some pictures and told me that there were probably some un-permitted bedrooms but the overall structure seems to be permitted. Basically meaning someone had added some interior walls at some point without telling the city. He said how it seemed like it could be a good deal and seemed interested in giving me a shot at it.

I know the Realtor's role in this transaction is to represent the bank and that's where he gets paid. He also gets paid more if the property sells for more. These are the reasons I have for not trusting him. I did actually know him before this. We had met at a function completely unrelated to real estate. He seemed like a good, honest person then and he still does now. We also have some mutual friends. Those were my reasons for trusting him.

My questions:
Why would he give me a shot at this instead of an investor he has worked with before? (He probably is giving it to them too isnt he?)
What are your experiences with REO agents?
Do they tend to be more honest because they are hoping to get the listing once the house is rehabbed?

Anyway, I'm not really looking for someone to tell me what to do or what to think. I'm checking up on him and the deal to make sure both are on the up and up. It's just therapeutic to write it all down.

Hey YoungREI:

I don't think there's any right or wrong answer here. I've used one guy for all my REO purchases. I did all the work though, and that was ok with me. I happened to stumple upon a home on-line on a realtor website. All the realtors are basically working with the same listings. I went through the home with this particular realtor ( who was the listing agent) and got the home about a week later. This gave me great credibility with the realtor because he saw that I was serious. One thing that will mean a lot to the realtor is their sense that you're serious, pre-financed, and you stick to your word and do what you said you would do. After that first home, he knew he could trust me, had faith in me, and eventually did almost zero work for me. I did all the searching for the homes on-line, called him for the lockbox codes ( yes that's not completely Kosher , but he new I am totally trustworthy) and he simply meets me at his office for the paperwork and potential closing.

All in all, build a close honest relationship with one or two REO realtors (or just realtors in general ) and you'll do well.

Good luck!!

youngREI,

about your question regarding why would the reo give you a shot... i don't think those guys are withholding deals strictly for their investor "buddies." sure, there's a bunch of guys that have done business with them in the past, and they know these guys are going to stick to their word and get the deal done (if it's a good deal). these reo guys just want to get rid of the properties, and they're balancing holding time with price, and holding time is winning. if they know that johhny buysalot is probably going to buy it with a minimum of fuss, it's just easier for them to deal with johnny and a few other guys. after they give them the initial courtesy call, they throw it out to everyone. they're not trying to keep people out of the "club," and i'm sure the more serious investors they have, the happier they are.

There is a right answer to this scenario, I am an REO agent and have been for six years. I was lucky that I worked as an assistant to an REO Broker for many years prior. There are two sides to the story. We do have a few good investors we contact immediatly when we a have a property that might interest them. However, we are also swamped with "wanna be investors" who waste our time, who are not qualified to buy and want to make offers for .50 on the dollar. So, sometimes it is hard for us to tell who is serious and who is not.

The bottom line is we want to sell the home as quickly as possible, if we can get our investors in touch with a good deal, there is a chance they will use us again. It is an ongoing relationship for serious investors who don't submit tons of offers for pennies on the dollar of the list price.

We are bound by our listing agreements with our clients "the bank", If we receive an offer, we have to submit it to them regardless of who we feel should get first crack at it. One thing to consider is, Most banks will not even look at an offer before the home is actually listed. But what I advise my investors to do is go ahead and submit the offer, and request the agent hold it until the bank is willing to look at it. In any event, even if he does call his preferred investors, then that would call for a multiple offer situation and that way everyone has a fair crack at it. I would suggest getting in touch with an REO agent and building a relationship with them. Ask any seasoned investor and they will tell it is a very good contact to have. Most are fimiliar with the banks procedures and can get things done quickly. Most all banks work the same way with very few variances.
As for us making more if we can sell it for more...absolutley. We work on commission typically 2.5 to 3. %. Our main goal however is to sell the property as quickly as possible to a qualified buyer. So if you arec seriously interested, get your paperwork together, call him to make an offer and if he is not willing to work wiht you, there is an REO agent out there who is. ....good luck

Originally posted by "Johnny Mac":
Hey YoungREI:

I don't think there's any right or wrong answer here. I've used one guy for all my REO purchases. I did all the work though, and that was ok with me. I happened to stumple upon a home on-line on a realtor website. All the realtors are basically working with the same listings. I went through the home with this particular realtor ( who was the listing agent) and got the home about a week later. This gave me great credibility with the realtor because he saw that I was serious. One thing that will mean a lot to the realtor is their sense that you're serious, pre-financed, and you stick to your word and do what you said you would do. After that first home, he knew he could trust me, had faith in me, and eventually did almost zero work for me. I did all the searching for the homes on-line, called him for the lockbox codes ( yes that's not completely Kosher , but he new I am totally trustworthy) and he simply meets me at his office for the paperwork and potential closing.

All in all, build a close honest relationship with one or two REO realtors (or just realtors in general ) and you'll do well.

Good luck!!

Thanks for everyone taking the time to put all your thoughts down. They have helped me quite a bit. In my meeting with the REO agent he did ask me some questions that were designed to see if I was a serious, capable buyer and I believe I had the right answers.

My main source for private financing won't be available for 4-5 weeks. Is there any disadvantage I can't see in making him aware of this? I know the key is to establish a reputation as reliable so I want to be able to come through on a deal with him so that I can establish that relationship. As long as the numbers work ofcourse.

your reo agent would probably like to settle it as a cash deal with a quick closing, contingencies on financing present alot of problems with the bank and agent. if your going with financing and a longer closing then you will have to show the bank your well qualified and pretty much play by their rules (their conditions, timeline, etc.) if they don't have any other offers or any cash offers (the bank i work with will take deep discounts for cash and fast closings (2 weeks or less)) you may make a higher offer but if the bank can get it off the books before the end of the month with a deep discounted cash offer then they will seriously look at it, even if they lose some money. (remember they have holding costs also)

I have to say, I really enjoyed the responses to this forum. I work with Xtreme Holdings in Maryland, which is generally a really different market than Florida or California, but I'm learning so much from biggerpockets. We are just starting to get into REO's, and I want to learn more about working with the agents, so thanks for the help!