An unscrupulous associate–level real estate broker in Colorado wrote a purchase contract for the sale of his father's home. The agreed upon sales price was $325,000. The contract, written on June 11, 2019, was an all–cash offer, closing on July 5, 2019. The contract did not require an earnest money deposit. The broker represented both the buyer and seller, and expected a 6% commission at closing.

The same unscrupulous real estate broker wrote another all–cash purchase contract for $395,000 on June 16, 2019, for a different property with a quick closing date of July 12, 2019. The contract did not call for an earnest money deposit from the buyer. The broker represented both the buyer and the seller, and he expected to receive another 6% commission at closing.

The broker opened escrow for each purchase contract, but did not provide any contact information for the buyers or sellers in either transaction. The title reports were completed and sent to the broker to deliver to both sets of buyers and sellers. As the closing date for each transaction approached, the settlement agent reached out to the broker to schedule signing appointments. The settlement agent received no response.

Then the settlement agent received two commission advance agreements. A commission advance is a financial agreement whereby the real estate agent and their employing broker obtain an advance or loan of a portion of a pending commission for a fee. The commission advance company advances or loans the agreed upon amount to the real estate agent before closing, with the promise from the broker the loan will be paid back at closing.

The real estate agent and his or her broker apply for this advance online. They provide a copy of the fully executed real estate purchase contract and they both electronically sign an agreement to repay the advanced amount. In addition, the agent must pay a fee, typically 20% or more of the amount advanced prior to closing.

The commission advance company is based out of Florida. They failed to do their research and thought the word "broker" after the real estate agent's name, meant he was the employing broker who was authorized to enter into a commission advance agreement.

The real estate agent acted in the capacity of the employing broker and himself in assigning $6,250 of the commission due under each contract to the commission advance company. He borrowed a total of $24,750 and the commission advance company was supposed to be repaid through several closings.

The settlement agent grew suspicious. She had no direct contact with the buyers and sellers, the real estate broker was not responding to her requests, the closing dates had come and gone, and now she had two commission advance demands.

The settlement agent wondered if her transactions were legitimate or not. She contacted her operations manager for guidance. A quick internet search by the manager revealed neither property was listed for sale.

The operations manager instructed the escrow officer to resign as settlement agent and return the commission advance demands to their original remitter. The commission advance company owner was furious. He stated he would file a police report in order to collect on their commission advance.

As an aside, the real estate agent advertises, "Building lifelong relationships through exceptional service," on his social media outlets. This same scenario was reported by another Colorado operation in October 2017. It is unfortunate to hear the scam is occurring again, less than two years later.