My realtor got an offer on my house which we accepted for $140,000, with settlement in 60 days. The buyer did not disclose that he is a realtor, though, until afterward, and through the grapevine my realtor has heard the preapproval mortgage letter was "arranged" and he cannot get a conventional mortgage. Now the pseudo-buyer wants to assign the contract to another buyer for cash for $40,000 more than he is paying me for the property, moving up settlement to 30 days! My realtor and his firm's legal people are looking into it, and I will not sign anything further without consulting my own real estate attorney (guess I was lucky one made up my will!) Has anyone heard of this kind of situation? How can someone make a move to buy a property, tie it up and keep it off the market, and then sell it for a profit before even taking possession of it? I doubt that I can find another buyer willing to pay me $180,000, but I don't like someone trying to go through some back door and cut out my realtor's commission and my own proceeds. I'd rather sell for the same $140,000 to someone else where it is a clean deal and no shenanigans. Has anyone heard of this kind of situation?

quote:

Originally posted by Lady Greyhound:
Has anyone heard of this kind of situation? How can someone make a move to buy a property, tie it up and keep it off the market, and then sell it for a profit before even taking possession of it? I doubt that I can find another buyer willing to pay me $180,000, but I don't like someone trying to go through some back door and cut out my realtor's commission and my own proceeds. I'd rather sell for the same $140,000 to someone else where it is a clean deal and no shenanigans. Has anyone heard of this kind of situation?

My only concern would be the loan, if necessary.
How would the buyer cut out your realtor's commission? Or your proceeds?
But to answer your question, yes it happens.

I would agree that this sounds somehow shady (though I'm not the expert to decide this). However, I'd like to point out that a sale is a sale. You said you'd rather sell to someone else at the same amount. Is the real estate market in Lancaster so comfortable that you can afford to walk away on principle? Definitely walk away if this is illegal or if the sale can come back to bite you, but if it's just that you don't like the tactics, I'd take the money, smile and move on.

quote:

The buyer did not disclose that he is a realtor,

The law says, the agent has to disclose that s/he is a licensed agent in the state of PA. buying on his/her own account when an offer is made.
How will the property appraise $40k above?
Otherwise, if the original contract authorizes the assignment of the contract to another person, and it is allowed/signed by you, you and your agent will get paid (except you will get less if the house really is worth $180k).

The agent(buyer) can loose his/her license for not disclosing that he/she is a realtor. He/she can also loose their license for "trickery" and misrepresentation of fact.
(i.e. bogus pre-qual letter). The assignment of contract is just that.. assigning to the contract of $140,000 for a fee..in this case
$40,000.. which by the way you do not recieve.. the buyer does.

This deal stinks to high heaven.

Isn't this what big companies do when they "help you sell your home?". They get it appraised, then sit down and write out an offer, you have x amt of days. If you accept, then they buy it,and turn around and sell it for more.
Sneaky sneaky. i wouldn't care who the heck bought the house. Let me ask you this, would you think twice if you hadn't heard of the shannigans? Would you have accepted an offer of 140k? If so, then don't worry about it. Let the RE Agent take care of that mumbo jumbo stuff.

I did mean assignment of contract, not contrast, by the way! Spell check can't perform miracles, I guess.
Anyway, my point in posting this question was not to say I am getting "cheated" out of the additional $40,000, but that I cannot understand how a buyer can enter into a contract with a seller, then sell that contract to another before he acquires the property, making a $40,000 profit. If he can come up with the $140,000 and obtain his loan, go to closing with me one day and then sell to someone else for $40,000 more the next day, so be it. But he is saying that he did not need to disclose the fact that he is a realtor, and that I do not have to agree with his assigning my agreement to another party. Apparently I am to sell to him for $140,000 and he will sell to someone else for $180,000, but he wants me to wait for his buyer to pay him before I get paid? Doesn't make sense to me!
I am not quibbling over "losing" $40,000, as I do not think in our current market I could get a buyer willing to pay $180,000. The fact that this buyer expects to settle the $180,000 deal with his buyer before he owns the house is what bothers me. And admittedly, I knew he was buying for investment purposes, just didn't know he was a realtor himself. I do not think that realtors should be able to purchase properties on behalf of clients without full disclosure.
And yes, I truly would rather have a clean deal with someone else for the same $140,000 than to be part of a scheme. The guy didn't disclose he is a realtor, and had a letter authorizing a loan up to $140,000 to purchase the property, which I now hear is bogus. This is chicanery, and apparently he's done it before. The talk among the realtors who know of this is that he cannot get a loan, and thus has a buyer who will pay cash once he gets title.
I'd like to help my (legitimate) realtor make sure it is the last time he gets to pull this kind of stunt in Pennsylvania.
Fortunately I do have a real estate attorney that I will be contacting in the morning, contract in hand, along with a copy of the assignment (which I have not signed). My first concern is whether I am obligated to accept my buyer assigning the contract to another buyer. And no way does this dude get title without paying FIRST!
Thanks for the responses, and wish me luck (please!)

I wonder if you would be able to rescind your agreement with your realtor/buyer based on fraud? Surely, presenting a pre-qual letter as fact when, in actuality, it was a total fabrication would be sufficient cause for you to void the purchase agreement.

Afterall, his inability to obtain financing without assigning the contract to another gives you no assurances that he will be able to close. Afterall, you are selling to him, not to the other buyer so the other buyer's ability to finance the purchase is neither here nor there to you.

That is my feeling too - he was merely acting as a broker for another party, and why someone else would pay an additional $40,000 for the property is beyond me! It was on the market 8 weeks, starting at $164,500. Similar houses went for more a year ago, and they weren't totally updated either. But everyone wanted a new kitchen (it's a 3 story 100 year old house in the city) or additional parking, etc. We removed ancient wallpaper, had it painted inside and out, took out old carpet and painted the wood plank floors, and had everything structurally in good repair. It was even pre-inspected at my own expense just to be sure! Sure, it's a lot of square feet, but it's 3 stories and a walk up to the first one, and city properties are either going cheap in Lancaster or high (if they have historic elements and were remodeled with updated k&b, of course). So I accepted the $140,000 offer when the price was reduced to $154,500.
I am sure my realtor and his firm's legal counsel as well as my own will get to the bottom of this, and it really is my hope that this fellow loses his license. He apparently had someone willing to pay more, much more, than the list price while no one else has even made an offer. So he enters into a contract with me to buy, my realtor gets his commission, and then his real buyer takes possession, giving the realtor a $40,000 commission for negotiating the deal? Isn't that odd? The guy is doing nothing, not even obtaining a mortgage and closing on the property! I don't care of someone flips it, but how do you flip what you don't own yet and use the proceeds from the flipee to pay the owner? Life continues to baffle and amuse me!

Here's what I would do - I'd move the closing up to 30 days, sell the house - and document everything so that AFTER you have closed on the house, you send all the facts to the realtor's broker. I do think he's being slimey - but I'm more concerned about you selling your home than his sliminess (at this point in time)..... Good luck selling your house!

Lady Greyhound...
Re-read your "Agreement of Sale"?
In PA the agreement spells out that "assignment" is NOT allowed. Go to line 505, paragraph 25.(though these 'get rich' guys advocate it)

So this agent (term used lightly) has :
Not disclosed he's an agent
Not followed the contract
possibly lied (or forged/colluded) documents!

He's busted!!!

Now, to get his 'good faith' money and get out of the contract....
He's 'breached' it by assigning so have YOUR agent put your place back on the market and send out a standard PAR termination notice stating you want all the money.

If you need more info from a PA Realtor - pm me???

After you get the money...
Do 2 things :
#1 call the Lancaster board ask file a complaint.
It's free for you and very expensive for him.
#2 Call Harrisburg @ 717-783-3658
and bust him there too...

Short description of "Assignment".


Legal version.
Dad signs agreement 'cause kid can't get loan. Lists kid on agreement as an assignee. Then deed goes in dad/kids name. Mortgage in dads only.

Not legal version.
{this is the mouse/elephant scam}.
Mouse is broke.
Elephant is wealthy.
Mouse has time, elephant doesn't.

Mouse finds lots of houses and bids on all of them w/assignment contingency. With NO assignee named.
Elephant 'cherry picks' the one/s he wants and pays mouse up front for the deal. He may re-assign too yet another elephant!
The other 'deals' are quickly forgotten by all but the sellers and languish 'till the sellers accept that the 'time is of the essence' clauses are long past.
Comes day of settlement - about half the time nobody shows up as the now inflated house price becomes a bad investment.
As there is NO signature or name of the assignee
anywhere, theres no-one to go after and your out a sale.

See why Pa words the contract so carefully???

Thank you again to all who have responded! I promise to keep you posted on this site as I think it will be of interest to anyone else in this position. I have faith that it will be resolved and I will get satisfaction; another buyer is surely out there, if not the one this "agent" has lined up, then another. And I hope it is an opportunity to put this guy out of business permanently, as my realtor has heard from others that he's pulled these tricks before. I will not sign anything until my lawyer goes through the paperwork, and will use any legal means necessary to fry this guy! Like I said, I don't care who makes a profit on the house (I sure did, as I bought it for $24,000 in 1976, lived in it 32 years, put $30,000 into renovations before putting it on the market....if I rented somewhere, I'd have paid someone else for 32 years and not had the old house to purchase the new). But if you are going to flip a house, you should purchase it first is my opinion, not sell your option to it to another party until you own it.
Thanks again, folks!