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A Realtor first and foremost is bound by a code of ethics—if indeed you are dealing with a “Realtor." However, every licensed real estate agent is governed by Real Estate Law and regulated by the Department of Real Estate in your state.
If the agent representing you in the transacation is also representing a family member or members, this fact should have been disclosed when you signed the Agency agreement. If you feel like the cards are stacked against you, and maybe they are, listen to your gut and use common sense. I would get out as fast as you can and let his/her kin pay for the “overpriced and undervalued” property.
I am sure the Department of Real Estate would be interested in knowing more about your situation. If you suspect fraudulent activity then report him/her right away to the Department of Real Estate.
While this would most certainly not be ethical, it is possible that if multiple bids are submitted on a property that one or more may be “related to the seller” in some way – that is, friends or family – those that have no intention of actually buying the home. The real estate agent(s) involved may or may not be aware of such activity.
You can avoid paying too muchfor a home by stopping your bid at the price level where you are comfortable – even if there is a higher bid “on the table”. The “fake buyers” generally have no intention of actually completing the purchase, so their offers are no good to the seller in the end. In the absence of other “real" good faith would-be buyers, your bid will stand out to the seller as the highest "real bid" he or she has received. If he or she wants to actually sell the house, he or she will be compelled to consider your offer. If you stick to your guns and don’t overbid in the flurry of activity, that figure should be a comfortable one for all parties.
Can a realtor drive up the price of a property, by arranging to have family members or friends bid against you?