REO investing

REO investing

Real Estate Investor · Westminster, CO · Member since 2008 · 29 posts · 5 votes

Hi, I had a couple of questions,

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.

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Anson YoungBusiness Member
Flipper/Rehabber · Denver, CO · Member since 2009 · 1k+ posts · 726 votes
16y

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...

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  • Real Estate Investor · Westminster, CO · Member since 2008 · 29 posts · 5 votes
    16y

    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

  • Real Estate Investor · Westminster, CO · Member since 2008 · 29 posts · 5 votes
    16y

    sorry, substitute "cant invest" for can invest.

  • Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes
    16y

    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.

  • Real Estate Investor · Westminster, CO · Member since 2008 · 29 posts · 5 votes
    16y

    Thank you for your input Steve, much appreciated.

  • Anson YoungBusiness Member
    Flipper/Rehabber · Denver, CO · Member since 2009 · 1k+ posts · 726 votes
    16y

    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...

  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    16y
    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. 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.
  • Real Estate Investor · Westminster, CO · Member since 2008 · 29 posts · 5 votes
    16y

    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

  • Anson YoungBusiness Member
    Flipper/Rehabber · Denver, CO · Member since 2009 · 1k+ posts · 726 votes
    16y
    Originally posted by nationwidepi:


    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.

  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    16y

    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)

  • Real Estate Investor · Westminster, CO · Member since 2008 · 29 posts · 5 votes
    16y

    Thank you Mr. Barnard, always a help.

  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    16y
    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

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