Perhaps the realtor in question should recuse himself from the deal, and use a colleague. Though, in terms of it being a "TOTAL" conflict of interest, it's difficult to say with the information provided.
I think there are some issues that need to be disclosed, and the motivation of the realtor should be brought into question.
But, if he's simply trying to help and he's not taking advantage of one party or another, due to his professional status and information that he's withholding, I think it's an arrangement that can be workable.
The key points again, are to investigate and understand the situation fully and completely. If you feel at all uncomfortable, I would suggest not moving forward in this format.
This is not unheard of, and I don't think it's unethical, so long as proper procedure is followed. But, he is now a party to the transaction as Kim mentions below. That does complicate things, and it would be ideal if he excused himself from his representation duties, and had another realtor step-in, on his/her behalf.
That's about all I can suggest given the limited information, but I would not jump to the conclusion that anything nefarious is taking place here, without really examining all the pieces in play.
Good luck, and I'm sure others will have additional information to add. If I can be of further assistance, or if you'd like to discuss this in more detail, feel free to e-mail me at any time,
Eric M. Abrams
I imagine the agent does not want to lose the home to foreclosure..thus getting no commission...so he is doing some outside the box thinking..which is great..as long as it is legal. Just because the "company" supports it..doesn't make it good. I will however, not rush to judgment as I don't know all the facts. There is some possibility that this is fully legitimate and above board..but in my 22 years..I have not come across it. Myself and my colleagues below most certainly would love to have ALL the facts to see how this is being "sold" to you.
I must ask the same question Vicky asks...What does your agent say?