Is it legal/ethical for your realtor to purchase a property he/she is listing?

**timkitch** · 08-26-2010, 07:31 AM

I've had my West Virginia land listed with a particular realtor for the past year, with one showing. The realtor mentioned to me several months back that he may wish to purchase the land himself and build a house for resale. My contract with the realtor is due to expire in about a week and he just offered to buy the land under an "owner financing" plan. Aside from my purely "ethical" concerns (conflict of interest when your selling realtor has an interest in flipping your property for himself), I'm wondering whether he now has a legal right to the sales commission on the property, should he and I go forward with his proposal, but the deal happens AFTER our realtor-seller contract expires? Seems a little fishy. I'm also wondering whether the realtor is operating within the law, based on these actions.

Keep in mind that the realtor only offered to purchase my property after listing it for nearly a year. He stated that he was just finishing another such deal and was ready to build his next cabin for flipping. He did the exact same thing (bought from a client, got him to do owner financing and charged him the realtor's commission for the sale).

**Greg** · 08-26-2010, 08:20 AM

If the agent is being honest with you then it is ethical.

If the agent listed your property but hindered it's sale so they could buy it themselves then it would be unethical/dishonest.

Check with some other agents to see if your property has been actively marketed and what it is actually worth.

If you do the owner financing just make sure you hold on to the first place lien and do not subordinate your loan. If this agent needs to borrow money to build the cabin his lender might require a first mortgage on the land in which case your loan to him would be subordinated and become the second loan. A second loan is the weak spot and you don't want to be in it.

**White Bear Lake MN Homes** · 08-26-2010, 08:54 PM

I agree with Greg here. As long as your real estate agent was not sandbagging your listing, he could be viewed as a normal buyer of the land who will be representing himself/herself in the sale. If he still wants to charge you full commission on this transaction (i.e. charge you both the buyer's and seller's agent commission, you can always agree to a price, but have another agent come in to represent you as the seller. This may also alleviate some of your ethics concerns. Good luck!

**ankurkr** · 09-04-2010, 01:47 AM

thank you for providing me the great info.

i think Realtors should do it to make a good impression.

**timkitch** · 11-08-2010, 07:50 AM

So, I notified the realtor via email and phone that I would NOT be extending my contract with him, which expired on Sept 3, 2010. He continued to try to convince me to enter into an "owner's financing" agreement with him, so that he could build a cabin on the land. I refused and he or someone from his office went out to the lot and took down the sign. No more communications with the realtor since September. So, one of the residents in the community where the lot is located told me last week that the realtor himself (they said they saw him do this himself - they know him) came out and put his sign back up. I did a Google search and found that, sure enough in mid-October he reactivated the listing (it appears on several sites as reactivated in October), which coincides with when I'm told he replaced the sign. So, let's recap:

- the realtor had a 12-month contract (my bad) and showed the property once
- 6 months in he emailed me that he'd like to make me an offer himself, if the property did not sell, so he and his brother could build a cabin to sell on the land
- no word from him for several months, until a week before our listing expired (Sept 3), at which point he offered to enter into an "owner's financing" arrangement
- I declined and email'd him that I would NOT be extending our contract (I re-re-re-read the contract and there's clearly nothing that indicates that the contract can be extended without my written consent)
- about a month after the contract expired, he re-lists the property and makes a trip out to the lot and replaced the sign
- I've written to him, insisting that he remove his sign immediately and threatening to file for formal complaint

Common sense tells me this guy's way out of line. Seems he's trying to secretly put things in place to make a case for commission, knowing that I live nearly 2 hours away from the property, but probably not realizing that I know the folks that live next door to and across from the lot. However, thought I'd run this past the good people on this list to see what your thoughts are on this behavior.

Thanks