Vancouver, are you kidding me?

[fluffy]

It seems that the closer you get to downtown the more rapacious the prices get. My son and his wife have lived in Vancouver for a few years, renting a few different places, some good some that they couldn't get out of quick enough. They're in a nice condo/apartment in Langley now, an area called Walnut Grove right near where 200th crosses the #1. They're under $1K/mo. in a newer, well kept, pet friendly building. There are deals out there if you look, but plenty of landlords who don't care for crap other than the money.

[LongHaul]

As per this article there has been a reaction to the recent investigation by the Globe & Mail into property flipping in Vancouver. At this point the Provincial Government and the Real Estate Council aren't giving the impression they see this as a serious problem.

Link is below, some extracts from the article follow.

A Vancouver MLA is demanding that the B.C. government appoint an independent investigator to hold an inquiry into how the real estate industry is regulated after a Globe and Mail report outlined a technique in which Vancouver-area properties flip one or more times before a deal closes.

The province did not address the issue of contract assignments in a statement on Sunday, but said “this type of activity reflects a symptom of a high-demand, low-supply market.”

Real estate agents who say they aren’t involved in speculation said they are appalled at what they consider unethical activity by others.

Mr. Eby wrote to the REC in recent weeks, expressing concerns over contract assignment, but said the council was dismissive.
“They blew me off,” Mr. Eby said. “The idea of agents insider trading with their pals without any oversight from the regulator is incredibly corrosive to the reputation of hard-working realtors in our communities.”

http://www.theglobeandmail.com/news/investigations/vancouver-area-home-flipping-leads-to-call-for-inquiry/article28641828/

[LongHaul]

It has taken only a few days since the Globe & Mail Investigative article on flipping in the Vancouver Real estate Market was published to trigger an investigation. See the link below.

Find it curious that the information used by the Globe & Mail for their investigation would be readily available to the Provincial Government and the Real Estate Council yet neither felt an investigation was warranted. Some of these issues were raised as questions back in 2015. Seem to recall the reply was something like there wasn't sufficient data available to determine if there was a problem.

Now that it has hit the news media the Provincial Government, the Opposition and the Real estate Council appear to be running hard to get out in front and lead the charge.

The independent office charged with overseeing the British Columbia real estate market will investigate allegations of fraud and insider trading by some Metro Vancouver real estate agents, the provincial government said Monday.

Superintendent of Real Estate Carolyn Rogers will work with an advisory group being set up by the Real Estate Council of B.C. to look into concerns raised by media reports and Opposition politicians, said B.C. Minister Peter Fassbender.

http://www.theprovince.com/news/real+estate+council+investigate+shadow+flipping+vancouver/11706195/story.html

[Smurf]

Its called greed and everyone wanted their share. Criminals never think they can get caught. This is right up there with the US housing fiasco, just on a smaller scale.

[LongHaul]

By Smurf » Today, 7:11 am
Its called greed and everyone wanted their share. Criminals never think they can get caught. This is right up there with the US housing fiasco, just on a smaller scale.

Will be interesting how thorough this investigation is. It could be hamstrung by the assignment of very limited mandate, resources, personnel and budget. A good outcome for the provincial government and Real Estate Council would be finding some “minor irregularities” but nothing of major concern. Especially after having to backtrack on a statement made just weeks ago.

“This action is a huge reversal from what they’ve done to date, which is literally nothing,” Mr. Eby said. “This is considerable backtracking by government who just weeks ago said there were no issues to be addressed.”

The large sums of money involved in these flips presented a great opportunity for money laundering.
It's not clear if this will be part of the investigation as this is a Federal Responsibility.
However if the Feds get involved it could force the Provincial Investigation to be done thoroughly.

The Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, is the federal agency responsible for policing attempts to launder money in Canada. Realtors are required to fill out a FINTRAC form for every transaction.
Using the broker’s Canadian address on the form instead of the purchaser’s foreign address reduces the level of risk perceived by FINTRAC as they do their audits, Eby said.
Renee Bercier, speaking for the federal agency, said it is legally barred from commenting on any information it has received or enforcement actions it has taken.
“That being said, FINTRAC considers the allegations made to be serious.”

The penalties assigned to Realtors by the Real Estate Council for violating the client's trust in these cases seem trivial. With the money a Realtor made on these flips a 90 day suspension would be an opportunity for a luxury vacation.

As part of its research, The Globe looked into 13 recent cases, where the REC disciplined Realtors for not disclosing their vested interest to clients. Some of the wrongdoing involved contract assignments. An agent can lose their licence for misconduct. However, in 10 of the cases, those found guilty were given a 90-day suspension or less.

http://www.theglobeandmail.com/news/british-columbia/bc-to-examine-real-estate-industry-watchdog/article28661774/

[Even Steven]

url]http://www.theprovince.com/news/real+estate+council+investigate+shadow+flipping+vancouver/11706195/story.html[/url]

This is an interesting article, but it fails to discover something new. Contract assignments been around for a long long time. They do create a number of middle men in a hot market, but the end prices are still remain end prices. Don't really see anything criminal about it.

[LongHaul]

Even Steven » Feb 12th, 2016, 9:59 pm

This is an interesting article, but it fails to discover something new. Contract assignments been around for a long long time. They do create a number of middle men in a hot market, but the end prices are still remain end prices. Don't really see anything criminal about it.

The Contract Assignments are legal and my understanding is their purpose is to assist in protecting the buyer and seller if something goes wrong with the sale. It's when they are used for other purposes it becomes questionable.

As an aside the Realtors I have dealt with over the years have been totally professional, honest and ethical. Their careers were being Realtors and they had been through boom and bust times.
I suspect it is a small percentage of Realtors or Developers that are possibly causing issues.

As per an article in the Vancouver Sun, a partial extract follows.

According to C. B, senior tax analyst at H & R Block, “the concern is that the middlemen (involved in contract assignments) are earning income on sales before the closing, but that this income is not being reported because it wouldn’t be on file as part of the land transfer.

“There is a concern that there are people engaging in such activities that are then not reporting their accurate income.”
That untaxed income can be on both a flipper’s sales commissions, if they happen to be a realtor, and, more significantly, on clear profit made — which can be as much as $100,000 or more in income — through the flip.

Retired lawyer H. L. told me in an email last week: “I can guarantee you that hundreds of millions of tax dollars are unpaid in Vancouver alone. Enforcement would bring the escalating market to heel.”

http://www.vancouversun.com/opinion/columnists/barbara+yaffe+evasion+goes+unpunished+overheated/11720846/story.html

This article was in the Province and picked up by PressReader. Interesting article.

http://www.pressreader.com/canada/the-province/20160214/282338268927864/TextView

This article has a warning to buyers buying a new home to be careful of a claim it is GST exempt.
Some agents/developers are pushing the envelope on this. If the CRA decides otherwise the buyer is on the hook even if they were mislead.

Vancouver lawyer R.U., who advises notaries on real estate transactions, said that if a buyer purchases a new house, tax free, they could be on the hook if and when the CRA caught on. Even if the buyer was deceived by a seller or agent, the CRA could put a lien on the property.

http://www.theglobeandmail.com/news/investigations/questionable-tactics-encourage-bc-homebuyers-to-avoid-taxes/article28758483/

[techrtr]

In this mad rush to sell Canada to foreign owners how about we charge them a huge tax and put it directly into heathcare and education? For example, some guy from China pays $2million for a property in Vancouver that would be worth $250,000 just about anywhere else and then lets it fall apart or become a crack house. He has to pay a $100,000 acquisition tax. Maybe that's already happening but I've never heard of it.

[Donald G]

The Provincial Government, Municipal Governments and those Real Estate people involved in listing, flipping and selling the property make far more money if the property sells more often and for more money so I do not expect any of them to do anything about curbing housing prices.

Another study and another slow death to any changes that would bring about change. Real estate Agents IMO are just as unscrupulous as back alley used car salesmen.

[Ken7]

LOL - In that last pic ... where is that dryer vented to? Inside the staircase??? Oy.

Likely the bedroom for heating..

[the truth]

The Provincial Government, Municipal Governments and those Real Estate people involved in listing, flipping and selling the property make far more money if the property sells more often and for more money so I do not expect any of them to do anything about curbing housing prices.

Another study and another slow death to any changes that would bring about change. Real estate Agents IMO are just as unscrupulous as back alley used car salesmen.

100% correct