Realtor Investor Conflict Question

14 Replies

Hi all.

Brief history:

I've been a Realtor for over a year with the same company, however I became interested by first being a real estate investor.  I was the first agent with this RE company and joined because the owner is a friend of the family and also an investor.  It was with understanding my goal was to park my license, network, work deals, learn the Realtor side of this business and market myself but with the end result of me getting my brokers license in two years and doing strictly investment deals on my own.  Then the company hired a new broker after 6 months, and everything changed. 

Current situation:

Through my networking, another Realtor told me and my husband about a trailer park listing she has with an investor.  We became very interested when we ran numbers and found it to be a good deal.  We met with our accountant, attorney, the listing broker and eventually the seller to ensure we were going to make a sound investment.  I disclosed I was a Realtor with a vested interest as my husband is a general contractor/home builder and basically knows how to find missing information whether through the city or county, and another family is funding the deal.  In short, a lot of research has been put into our first big deal.  

Before we started any of this I called our states real estate commission to see if I had to run the deal through my company.  They said "no."  And nowhere in my contract does it state that I have to run my families deals through the broker.  However, because the owner is a family friend and the company is still small, my husband asked him if he'd rather us purchase it as me being the buyers agent which would benefit the image of his company (minus the 40/60 commission split)  He said "no no. Don't go through the company, save the commission off the deal and buy through listing broker" which is what we were originally planning on doing (save from the top and taxes).  But, I wanted to make sure I was doing the right thing.

Well, owner told the company's managing broker who said I had no right to be doing this deal without running it through the company.  The broker said essentially I was dipping into the companies pocket and that the company will get its 40% commission whether I waive my 60% off the purchase price or not.  Broker said she will not support this transaction if it is not run through the company.  

Is that legal?  This is a family deal and we did all the research and my husband and his mom have been doing ALL the negotiating.  Nothing in my contract states that I have to go through the company. 

Advice?  Thoughts?  Suggestions? 

Thanks! 

Updated almost 6 years ago

I asked for a meeting with both the broker and the owner so we could come to a meeting of minds before they "let me go." That's when I received a text from my broker telling me that she advised the owner against having that meeting and that my licensed wound be deactivated by the end of the day (3 hours). I texted the owner asking if he would call me the following day anytime between 1-5, and he said that he would. I haven't heard from him.

So sorry you ran into this and had to ask.

If you can document that all your contacts for the transactions were outside the current brokerage, you can ack independently - - at a cost - - you may have to defend yourself.

I would seek arbitration with the State Board and go from there.  It's sad that there are those that coerce others because they think they can.

After the dust settles, resign and move on.

Thank you, both, for your advice. My main goal is to handle this ethically and diplomatically.  I live in a small town and my personality is naturally to resolve conflict and not create it. Any suggestions on how do that this situation?

Im pretty sure this would qualify as retaliatory firing. which is illegal. I am not saying go sue them  but that is BS. Don't take it personally and is there a way you can talk to the family "friend" about this?

I know nothing about Alabama employment law. That being said I can tell you without question that your being fired would not be a cause of action in Wyoming. You are employed in a business that makes it's income mostly from commissions from the buying and selling of real estate. You were not fired for a protected reason like race, sex, religion, etc. You were not fired for reporting a dangerous situation or a violation of law, "whistle blowing". In Wyoming you can be fired for any reason that is not a bad reason. If you bought real estate that was listed on the MLS without going through your brokerage it cost them business. Unless you had an employment contract that was violated you would have no cause of action in my state. You need to ask an attorney in your state to see what the laws of your state are.

    That being said if you ran it by the owner of the business and he said OK the owner should intervene.  If he does not you need remember on the next deal that he has no moral fiber or backbone.  Moonlighting is often frowned upon by companies and some have policies about that, some do not.  Do not let this stop you.  If you are not rehired immediately go look for work with the competition.  That is what happens in small towns when you are unfair to your employees.

@Mallory W. so there are some details missing. I don't know your state's real estate practices but the states that I am familiar with. The real estate commission is collected by the company working with the seller and is then distributed to the company employing the agent working with the buyer. Your independent contractor's agreement with the company you worked for should spell out how your own deals are handled. If you wanted to deviate from that you should have had that side agreement with the owner put in writing. Perhaps you have an email or something that would document your discussion with them? It is not uncommon practice for an agent to be able to waive their commission and then the company only charges a nominal fee to process the paperwork. It would be highly unlikely for an agent to take a commission on their own deal and not do the split with the company. 

It sounds like the broker is wanting to build a real estate company rather than be a company where agents can hangout until they get their own license. Now you have to find another company to hang your license with.

Mallory, your old broker sounds desperate and you should run.  I am an agent and investor and my brokerage only wants the best for me and my family, besides missing on a commission split it is not going to run them out-of-business.  

You are better off.  Don't get discouraged, there are a lot of unscrupulous and greedy brokers that would do anything for a couple of bucks.. Thankfully, we (agents/brokers) are not all like that and there are some amazing brokers out there also...

Just discuss this upfront when looking for a new brokerage..

Good Luck

Gavin

Guess that solves the problem lol.  

Buy the MHP, then hang your license with the competition. This whole thing is sad, really.  I empathize with you extra since you and your husband went so above and beyond to try and avoid this exact thing. I also live in a smaller town and know what that means as well. You sound like a stand-up investor and agent @Mallory W.  Their loss!

Something you need to consider is not just what is in your contract, and what the real estate commission says is legal and not legal...is what is the standard of practice in your market? Sure there may not be anything that is illegal about bypassing your broker, but if the standard of practice in your market is that all your personal deals are run through your brokerage, then I completely understand why your broker would be upset. In my market the standard of practice is if the property is on the MLS, then I need to act as an agent and get a commission on the property. If it is an off market property, it does not go through my brokerage.

This is a problem I run into in the market place a lot, not this specific situation, but novice agents, newbies or part timers not understanding what the standards of practice are in the market place.  Also they always think they are in the right, and want you to point to them where these things are written. Well they are not written, it is a general understanding in your industry that to conduct business you do X, Y and Z.

Mallory, I live in Loxley and do my deal with Crane Legal/Title. I don't know if you have consulted with a RE attorney but Crane in Mobile and Daphne has many many years of experience in the RE industry. I have full confidence they can help you. I would give them a call and see how they can help you. I know they are in the office tomorrow but will have a small skeleton crew on Fri. Their Mobile office number is 445-4040. A lady named Terri Hickey is the one I deal with. If you talk to her, please tell her I sent you. 

Hope this helps,

Happy Thanksgiving!

Originally posted by @Account Closed :

Mallory, I live in Loxley and do my deal with Crane Legal/Title. I don't know if you have consulted with a RE attorney but Crane in Mobile and Daphne has many many years of experience in the RE industry. I have full confidence they can help you. I would give them a call and see how they can help you. I know they are in the office tomorrow but will have a small skeleton crew on Fri. Their Mobile office number is 445-4040. A lady named Terri Hickey is the one I deal with. If you talk to her, please tell her I sent you. 

Hope this helps,

Happy Thanksgiving!

 Hi Dee Dee.

Thank you your response.  I don't think I want to involve attorneys.  I'm just shocked that it ended up coming to this.  I'm going to hang my license with a different broker and would prefer to use this as a learning experience.   I don't see what kind of legal action that could be taken anyway, or how it could better the situation, you know?

Happy Thanksgiving to you, too!  Thanks again! 

Did you and your husband go back to the owner and ask him what's going on - especially since OUT OF COURTESY you went to him and offered to go through his company and he said no?

Does that Broker boss of yours stand to profit from you going through the company? My guess is yes..... But if so, sounds to me as if SHE may be the one with a conflict. 

You said you do not want to involve attorneys.  That's fair enough. However, for those of us that may one day risk the misfortune of dealing with these people it would be great if you at least reported the broker to the State licensing board.