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The sellers hired the agent to understand the market. If the seller's agent tells them 'you can sell at this price' but buys the house themselves, and resells
by frandroid 11y ago
The sellers hired the agent to understand the market. If the seller's agent tells them 'you can sell at this price' but buys the house themselves, and resells it at a profit, they clearly misled their customer about the optimal price that they could get for the house, for their own benefit. They're in a conflict of interest.
This is not the first time I hear of real estate agents buying houses from their customers and profiting from them. If my agent tried to pull that on me, I'd fire them, or if it was too costly to do so, I'd raise the price until they're not willing to buy. Then I know I would have reached a price closer to the real market price.
- kohanz 11y agoLawsuits have been filed in similar circumstances, but I'm not aware of one where the seller triumphed.
- rgbrgb 11y agoIs that what's happening? How I read it, the sale was being re-assigned to the buyer's agent. It definitely means the seller's agent left some money on the table for their clients, but not necessarily that they did so on purpose. I guess that's why this exists... the seller's agent can point to incompetence (unintentionally mis-pricing the home) rather than foul play.
- pfarnsworth 11y agoHe turned around and flipped it for $1M. That's fraud, not incompetence.
- rgbrgb 11y agoPerhaps we're talking about different cases. I'm not seeing any home in the article that's priced at $1M. I was talking about the first case where the seller ends up selling to the buying agent (not their agent) who then marks it up to the real market value. The seller's agent didn't officially have any perverse financial incentives from that sale, other than the oft-cited incentive to price low and sell quick that all brokers have [0]. [0]: http://freakonomics.com/2008/02/26/real-estate-agents-revisited/ http://freakonomics.com/2008/02/26/real-estate-agents-revisi...
- pfarnsworth 11y agoI re-read the article and I misread it, I thought they were selling to their own selling agent. I guess they instead sold it to the buying agent. If that's the case, then I guess there's nothing wrong since the selling agent is the one that is guiding the sellers, although it sort of makes one wonder if there was collusion going on.
- rgbrgb 11y agoYeah, I think the most troubling piece of this is how hard it is to figure out if something illegal was going on. I'd say it's definitely a point in favor of just listing your home on the open market rather than doing a pocket listing (a private sale without listing). Even if you really trust your agent, pricing a home is really hard and is best left to competing buyers. It sounds like a lot of these sales were "listed" by realtors who already had an offer in hand when they contacted the owner so they weren't really soliciting the open market for highest and best offers (which is definitely a violation of their fiduciary duties).