Banks often set end-of-month and end-of-quarter dates for their REO personnel. Often, bonuses are tied to an REO officer's ability to unload a certain number of properties in a given time period, and when the end of the month or quarter rolls around, the REO officer is highly motivated to make a deal.
A bank's fiscal and calendar years may differ, so coordinate your activities with each bank's fiscal calendar. Keep a record of each bank's fiscal year, so you have a better idea of how to time your offers for optimum success.
In the sidebar earlier in this chapter called "The exclusive REO insiders club," I reveal that the REO circuit is often shady. REO brokers are often in a position of power, and as Lord Acton once said, "Power corrupts, and absolute power corrupts absolutely."
I once had lunch with an REO broker I had known over the years. He wanted to sell me his business. I asked him what I would have to do to guarantee my continued success with his business, and he replied that every once in awhile he sells a house at a good price to the asset manager at a different bank. He would sell them properties that would guarantee a 830,000 profit per property, which is an obviously illegal kickback.
This same REO broker would sell houses to his girlfriend. She would simply buy the property well below market value and then turn around and sell it at market value to earn what's called a pass through profit. My staff and private investigating team discovered that the girlfriend had "earned" over 890,000 in pass through profits. That money really belonged to the lender that the REO broker represented.
Another REO broker (scoundrel) I know lists only half the properties he sells. Instead of listing all the properties on the MLS, as he should do, he lists the worst half of them and then sells the listings with the most profit potential to his buddies. We call these pocket listings, because the broker puts the listing in his pocket and then transfers it to his friend's pocket. In a matter of days, the listing is sold and closed, and the seller scores a huge profit for doing nothing.
I tell these stories for two reasons. First, don't get involved in these scams. I'm getting the word out about real estate fraud on my site FlippingFrenzy.com, and real estate professionals are joining forces across the country to bust the bad guys. Second, I want you to realize, as an investor, that these sorts of underhanded deals seriously jeopardize your access to the best deals. REO investing isn't easy, and these types of scams make it even more difficult.
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