Why Being an REO Broker and Investor Don’t Always Work Well Together

2529My main job is as a Realtor and I specialize in 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.

I am able to make over 24% 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.

As an 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 purchase 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.

I work with HUD and because of that I am not allowed to buy any HUD homes period.  On top of that, no one in my office or immediate family is allowed to purchase a HUD home either. If you are a Realtor and an investor, pay close attention to what office you join.  If you join an office with a Local Listing Broker for HUD, you will no longer be able to purchase HUD homes as investments or a principle residence.

Bank of America does not allow me to purchase any REO or short sale approved by 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.

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 offer if they disclose their office also sells Fannie Mae.

If you have visions of becoming a high volume REO broker and you are also a serious investor, be aware of these issues.  My inventory of properties I can choose from is greatly reduced, but don’t get me wrong–I love my job and the income it provides.

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3 responses to “Why Being an REO Broker and Investor Don’t Always Work Well Together

  1. Pingback: How You Can Save Thousands Every Year on Your Investment Property by Becoming a Real Estate Agent. | Invest Four More

  2. Hey Mark, been reading a ton of your stuff lately and I love it. Have me really debating attaining my license! Thanks for all your info!

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