That is a somewhat common occurance from what I've been hearing. Alot would be determined by the contract language. You should always consult an attorney when going through these types of deals to protect your interet. The short sale negotiator may have one working for them and you might also hire them but if your interests differ from the negotiators in any way (like the situation you describe) then having your own personal attorney to protect your interests is important.

You'll need to have an attorney review the facts & documents you have and tell you what if any remedies may or may not be available to you.

Hope that helps

Hi Andrea,

That is a pretty sticky question of ethics that would be better handled by the local Realtor Board or Bar Assoc. I would personally stay away from such a situation. However, I do not believe there is any law to restrict him/her from buying the property as long as it has been disclosed to everyone involved that the negotiator is the purchaser. As you said, he NEGOTIATED with the bank. Once the property is owned, you are free to sell at whatever price you see fit.
http://www.MassBar.Org