Seller`s RE Agent Purchased the Property!

[Nir]

Hi Everyone,

A friend of mine who is also an investor, put an offer to purchase a Plex in Ontario a couple weeks ago. Then was shocked to find out that the RE agent who was supposed to represent the seller ended up buying the property from the seller! (the agent’s offer was lower than my friend’s)

Is this legal? how can he do that? If the answer is No, what can my friend do to protect his rights and prevent the agent from closing the deal?

THANKS.

 

[tbarcier]

This same thing happen to my friend`s neighbor. I inquired about it and according to my agent it is legal. They have do disclose that they are an agent, and in this case that is obvious. Is it ethical? Depends I guess. No one forced him to accept the offer. My friend`s concern was that the agent may have undervalued the home then bought it. A bunch of the neighbors were upset, I think mostly because they felt that the sale reduces the value of their homes.

 

[invst4profit]

As long as the agent gives full disclosure it is in the hands of the seller.
Did your friends agent make the seller aware of your friends offer or was he too late?

 

[ChrisDavies]

In Alberta, and I assume it`s the same out East, Realtors are strictly forbidden from buying below market. Transactions are regularly reviewed by the board, and it`s a major reason for investors NOT to become Realtors. I don`t see a problem with the transaction.

 

[RedlineBrett]

Realtors are allowed to buy property too. However, in Alberta they must follow a strict process and adhere to a code of ethics regulated by our industry watchdog RECA. I`m not sure if there is such a body in Ontario.

Some things to consider or ask your friend.

1. Did his original offer expire or was it active at the time the property went off the market? Timeline is very important and if the listing agent wanted to offer on the property while your friend`s offer was still on the table the listing brokerage would have to assign a different agent to represent the seller. But if your friend`s offer expired or rejected and communicated to the buyer agent this doesn`t matter!

2. His price might have been better but if the listing agent bought it the seller might net more due to no commissions being paid. How close was the pricing?





QUOTE (invst4profit @ Oct 15 2009, 07:24 AM) As long as the agent gives full disclosure it is in the hands of the seller.
Did your friends agent make the seller aware of your friends offer or was he too late?

 

[RedlineBrett]

QUOTE (ChrisDavies @ Oct 15 2009, 09:46 AM) In Alberta, and I assume it`s the same out East, Realtors are strictly forbidden from buying below market. Transactions are regularly reviewed by the board, and it`s a major reason for investors NOT to become Realtors. I don`t see a problem with the transaction.

This isn`t entirely correct.

Realtors are most certainly allowed to buy property they just have to disclose their status as an industry member to the buyer when they submit their offer. Most agents including myself have themselves represented by another agent to put a little distance in the deal and try and be treated like they were any other buyer.

They can also not have an agency relationship with the seller and then become the buyer. They would either have to have the seller acknowledge in writing that they are selling to someone in such a capacity or the Listing contract would have to be terminated and a deal done privately with proper disclosure.

"Market value" is a very subjective term and the board most certainly does not evaluate market value for each purchase made by a realtor. The board/council only gets involved when there is a complaint of unethical behavior and then checks to make sure that realtors are staying within the rules when doing deals.

 

[brentdavies]

Realtors must follow a code of ethics, but this does not prevent the listing realtor ( selling realtor) from purchasing.

The price may have been only 1 factor in the seller`s decision to sell to the listing realtor. Other terms and conditions are not knowen. Commision payable, inspections waived, etc are other parts of the contract that may not be disclosed. Your friend`s offer may have had a number of conditions that the sellers did not like.

However, why would I as a realtor want to show properties listing by the realtor( who buys client homes) if my client`s offers are just being shopped around. Fair and honest dealing with clients are important.

There are situations that I do buy properties that I have listed, such as "your home sold in 90 days or I buy it". or a good investment property that other investors are not interested in.

If you still confused, go the CREA website and read the code of ethics for REALTORS.

 

[gregg]

I know the situation very well, I am the friend but didn`t have time to post the question so Nir did it for me. My offer had one condition and that was `conditional upon viewing`. The view time was set up with my agent however when the day came to view he contacted me and said it had been sold to the listing agent. My agent was upset with the deal and feels uncomfortable not only for the price it sold at but also because a house next door became part of the deal and no one knew about it. The 5 plex sold for $165,000. and the house next door (a single family building) sold for $100,000. very good prices. I did go to the building and did an onsite inspection without looking at any of the units and told my agent that I would buy it without viewing the units because of my experience at inspecting buildings - I now own twenty. The price, location and my quick analysis told me this was a good deal and I wanted it.

I do feel that the listing agent had an unfair advantage. I would like to investigate this further but not sure if Ontario has a overseer to the real estate boards or if I should start out at the local real estate board. Does anyone know of such a body? Thanks

Gregg


QUOTE (brentdavies @ Oct 15 2009, 10:32 AM) Realtors must follow a code of ethics, but this does not prevent the listing realtor ( selling realtor) from purchasing.t doo

The price may have been only 1 factor in the seller`s decision to sell to the listing realtor. Other terms and conditions are not knowen. Commision payable, inspections waived, etc are other parts of the contract that may not be disclosed. Your friend`s offer may have had a number of conditions that the sellers did not like.

However, why would I as a realtor want to show properties listing by the realtor( who buymes) if my client`s offers are just being shopped around. Fair and honest dealing with clients are important.

There are situations that I do buy properties that I have listed, such as "your home sold in 90 days or I buy it". or a good investment property that other investors are not interested in.

If you still confused, go the CREA website and read the code of ethics for REALTORS.

 

[RedlineBrett]

If the seller accepted your conditional offer and the time had not expired before they accepted another offer then you can likely go after the vendor not just the listing agent.

As a seller once you accept a conditional offer you have an obligation to sell and cannot sell to anyone else unless the first offer expires.

Ontario does have a real estate council. Here is the website. Call, submit your complaint and see where it goes. Good luck!

I know the situation very well, I am the friend but didn`t have time to post the question so Nir did it for me. My offer had one condition and that was `conditional upon viewing`. The view time was set up with my agent however when the day came to view he contacted me and said it had been sold to the listing agent. My agent was upset with the deal and feels uncomfortable not only for the price it sold at but also because a house next door became part of the deal and no one knew about it. The 5 plex sold for $165,000. and the house next door (a single family building) sold for $100,000. very good prices. I did go to the building and did an onsite inspection without looking at any of the units and told my agent that I would buy it without viewing the units because of my experience at inspecting buildings - I now own twenty. The price, location and my quick analysis told me this was a good deal and I wanted it.

I do feel that the listing agent had an unfair advantage. I would like to investigate this further but not sure if Ontario has a overseer to the real estate boards or if I should start out at the local real estate board. Does anyone know of such a body? Thanks

Gregg

 

[gregg]

Thank you Brett, I will let you know how I make out and I want to thank Nir for starting this thread for me.

Gregg

QUOTE (RedlineBrett @ Oct 16 2009, 11:31 AM) If the seller accepted your conditional offer and the time had not expired before they accepted another offer then you can likely go after the vendor not just the listing agent.

As a seller once you accept a conditional offer you have an obligation to sell and cannot sell to anyone else unless the first offer expires.

Ontario does have a real estate council. Here is the website. Call, submit your complaint and see where it goes. Good luck!

http://www.reco.on.ca/

 

[Nir]

Hey Gregg, my pleasure. You got some good advice here. Cheers.

 

[WJW]

QUOTE (investmart @ Oct 14 2009, 09:50 PM) Hi Everyone,

A friend of mine who is also an investor, put an offer to purchase a Plex in Ontario a couple weeks ago. Then was shocked to find out that the RE agent who was supposed to represent the seller ended up buying the property from the seller! (the agent`s offer was lower than my friend`s)

Is this legal? how can he do that? If the answer is No, what can my friend do to protect his rights and prevent the agent from closing the deal?

THANKS.

If there was an accepted offer then you do have a case unless your condition expired. One thing I would check is to make sure the offer was even presented by the listing agent to his client.
I`ve seen this happen before where the listing agent didn`t even show the client any offers because they wanted to purchase the property for themself.
There is a form in Ontario that realtors can give the listing agent to have their sellers fill out and sign to indicate they have actually seen the offer. I`ve used this many times particularly in multiple offer situations when the listing agent also has a client bringing an offer.
Let me know if you need the form and I can email it to you.

 

[gwasser]

QUOTE (WJW @ Oct 23 2009, 01:34 PM) If there was an accepted offer then you do have a case unless your condition expired. One thing I would check is to make sure the offer was even presented by the listing agent to his client.
I`ve seen this happen before where the listing agent didn`t even show the client any offers because they wanted to purchase the property for themself.
There is a form in Ontario that realtors can give the listing agent to have their sellers fill out and sign to indicate they have actually seen the offer. I`ve used this many times particularly in multiple offer situations when the listing agent also has a client bringing an offer.
Let me know if you need the form and I can email it to you.

In Alberta, the seller`s realtor has the legal and fiduciary obligation to present every offer made on the property for sale to the seller for consideration. The realtor is also required to give the seller of property fair, capable and honest advice regarding any offer. As such, if taken to RECA and/or court, the realtor would lose in a hard beat if he did not meet these standards. Even better, the onus of prove regarding appropriate behavior in a hearing with RECA lies with the seller`s realtor not with the potential buyer.

I would check whether similar arrangements exists in Ontario, specifically any laws regarding agent-client relationships.

Hope this helps

 

[gregg]

Yes, I would appreciate you emailing the forms, thanks - my email address is [email protected]


QUOTE (WJW @ Oct 23 2009, 12:34 PM) If there was an accepted offer then you do have a case unless your condition expired. One thing I would check is to make sure the offer was even presented by the listing agent to his client.
I`ve seen this happen before where the listing agent didn`t even show the client any offers because they wanted to purchase the property for themself.
There is a form in Ontario that realtors can give the listing agent to have their sellers fill out and sign to indicate they have actually seen the offer. I`ve used this many times particularly in multiple offer situations when the listing agent also has a client bringing an offer.
Let me know if you need the form and I can email it to you.

 

[markl]

Hi Gregg,

Realtors in Ontario have the same responsibility to present all offers at the soonest possible time.

The overseeing board in Ontario is Real Estate Council of Ontario - RECO http://www.reco.on.ca/

and or ontario real estate association - OREA www.orea.com

Good Luck