My focus as a Realtor is listing REO and HUD properties. Many people may think this would give me an inside track to many investment opportunities, however that is not the case. Being a REO broker and investor is not always an ideal situation, because there are many homes I cannot buy. 99 percent of the time a REO agent is not allowed to purchase their own REO listings, and many times they are not allowed to purchase other agents REO listings as well.
I am able to make over 20 percent cash on cash return on my rental properties, but I never buy my own listings. I detail how I get these returns on my complete guide to investing in long-term rentals.
Also for more information on how to buy the best rentals which will make the most money, check out my book: Build a Rental Property Empire: The no-nonsense book on finding deals, financing the right way, and managing wisely. The book is 374 pages long, comes in paperback or as an eBook and is an Amazon best seller.
Why can’t REO agents buy their own listings?
As a REO broker, I list properties for over 35 banks, asset management companies, and hedge funds. It is considered a conflict of interest for me or my immediate family to buy any of the homes I list for those clients. I could greatly influence the list price and marketing of a property in my favor if I was allowed to buy my own listings. Going one step beyond that, I am not allowed to purchase any properties that some companies list, no matter who the listing agent is. For more information on how to become a REO agent check out this article.
Can HUD listing agents buy HUD homes?
I am a listing broker with HUD and I am not allowed to buy any HUD homes period. No one in my office or immediate family is allowed to buy a HUD home either. If you are a Realtor and investor, pay close attention to what office you join if you ever want to buy HUD homes. If you join an office that lists HUD homes, you will no longer be able to purchase HUD homes as investments or as a principle residence.
Can Bank of America listing agents purchase Bank of America REO or short sales?
Bank of America does not allow me to purchase any REO or short sale with a loan through Bank of America because I list homes for them as well. Bank of America has had a lot of great deals in the last year, and just about 1/4 of all short sales I see are Bank of America. Unfortunately I cannot purchase any of those homes!
Can Fannie Mae listing agents purchase Fannie Mae listings?
Fannie Mae just implemented a policy that no real estate agent or their family can buy a Fannie Mae property listed in that agent’s office. An agent could buy a Fannie Mae property listed by another office if they disclose their office also lists Fannie Mae properties in writing.
Can a REO agent become a successful real estate investor?
If you want to become a high volume REO broker and a successful real estate investor, it is possible. I do it myself having sold over 190 homes in 2013 and purchased 14 houses. There are definitely some challenges involved due to the restrictions on what houses I can buy, but I can still buy homes below market value. You may have to work a little harder as a REO broker, but there are still deals to be had on short sales, fair market sales, estate sales, trustee sales and REO listings that I am allowed to buy.
If you want to be a real estate investor, or you want to be a real estate agent, who specializes in REO listings, they do not have to be mutually exclusive. You will not be able to buy your own listings, but you can buy some types of other listings, and there are many properties which are not REOs and great deals as well. Do not expect to get an inside track on investment properties, because you are a REO agent.