Q: I am a first-time home buyer who just got in a bidding war with none other than the listing agent who decided she wanted the home herself the day after a major price reduction. She would have ignored our offer entirely if we hadn't voiced our concerns to her supervisor who decided he would still allow her to make an offer, but he would take over as the new listing agent.

Our first bid tied with the listing agent's bid even though we offered full price. Our second offer was slightly over full price and we ended up winning the bid. However, I feel I should not have been competing with the listing agent who was originally hired to sell the home, and who waited until the price dropped enough to make it her own personal investment. I felt she had several advantages over us such as her own commission or her company making the deal. The playing field was not level. Most of all, a listing agent acting as a buyer presents a major conflict of interest.

My wife and I are greatly looking forward to our first home, but feel the process of purchasing it was greatly unfair. I'm not sure about the legality of the Realtor's actions, but she definitely did not represent her profession in an ethical manner. Please let me know how you feel about this and any possible actions I could take.

- Pete S.

A: Let me first direct you to the REALTOR® Code of Ethics at www.Realtor.org. At the bottom of the page, you’ll find a link to this PDF file. The Code is also available online in the following languages: Chinese, Korean, Spanish, Tagalog, and Vietnamese.

At first glance, it looks like you definitely have room for a grievance. With that said, you don’t mention anything about your buyer agent. If you didn’t have a buyer agent, your situation is exactly why I always advise buyers, especially first-time buyers, to get their own agent. A buyer agent is your cheerleader, confidante and watchdog through the whole process.

Fortunately, you had the common sense to call in the broker on this deal to protect your interest.

Realtors are called such because they belong to the National Association of Realtors. Not every tissue is a Kleenex, and not every licensed real estate agent is a Realtor. The primary purpose of the NAR is to protect its members and act as guardians of the Code of Ethics, which they hold dear.

Article 1 stipulates the first duty of the Realtor:

“When representing a buyer, seller, landlord, tenant, or other client as an agent, Realtors pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve Realtors of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, Realtors remain obligated to treat all parties honestly. (Amended 1/01)”

If you were a buyer using the listing agent, then you are considered a customer, not a client and the Realtor was obligated to treat you honestly, though not represent you. In various other Articles, actions of Realtors are governed and some of this particular Realtor’s actions may have violated the Code.

You took the first step and that was to contact the agent’s broker once you suspected unethical activity. Kudos to the manager, by the way, who saw that the agent needed to be a bit further from the transaction and took over the listing. If you want to pursue it further, download the Code of Ethics and contact your local Realtor association where the Realtor is a member. File your grievance and it will be taken up with the internal investigative panel.

From what you’ve told me, the agent not wanting to take your offer is about where the questionable activity ends in my opinion. Once the agent was placed in a position to compete with your contract, s/he was then just another contract. Was it a fair playing field? Well, you won the bidding war, which means you must have been able to compete…no question there.

Obviously, the agent would have some inside knowledge about the seller that no one else would have, and she may have the commission to use in her financial arsenal, but that just comes with the business. A well-moneyed buyer would have given you just as much competition.

My biggest question though, is that if the price warranted dropping to a certain level, why would the agent then turn around and bid the price back up? Nevertheless, the pricing of real estate is a moving target until a buyer executes a contract AND an appraiser backs it up with an appropriate appraisal.

Published: April 11, 2003

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