Complainants puzzled by lack of action on probe of Vancouver realty firm
Four realtors who work for another brokerage found real estate contracts and other paperwork thrown in a dumpster outside the Richmond office of New Coast Realty in February, three days before the company was set to be audited by the regulator.
It was a sign something unusual might be happening at New Coast Realty, a Vancouver-area firm under investigation by the industry self-regulator.
In a dumpster outside the firm’s Richmond office were shredded real-estate contracts and other papers – some showing personal client information. On one document, signatures had been altered with white-out. Four realtors from another brokerage made the discovery by chance while checking the garbage for some missing lawn signs.
“It was very funny. There was a document of a deal I saw … we just made that deal,” said realtor John Zhou, who was the buyer’s agent at the other brokerage. “When we find documents in the garbage, it was one week after the deal was done. That was weird.”
What the group did not know is that the regulator was set to audit the same New Coast office three days after their Feb. 21 discovery.
“While the audit is confidential, there was nothing major identified or found,” New Coast told The Globe and Mail later in a statement.
The documents were found in the dumpster immediately after a Globeinvestigation first revealed questionable practices by New Coast agents, including the controversial “shadow flipping,” in Vancouver’s frenzied real estate market. The Globe’s reporting led the Real Estate Council of B.C. – the industry self-regulator – to promise a “thorough and wide-ranging consumer protection investigation” of the firm. Despite that, investigators have not contacted the realtors who found the discarded paperwork – whose names were given to the regulator weeks ago.
“Well, it may be evidence,” said a realtor who gave The Globe pictures of what the group found. He asked to not be named. “It’s very interesting they destroyed original papers with signatures.”
The owner of the firm where the four realtors work said he reported the incident in April, after the regulator asked people in the industry to come forward with information.
Brokerages are legally required to keep financial and contract records for seven years. Several managing brokers said client information should never be thrown in a dumpster.
Mr. Zhou said the agents who found the documents said they do not understand why investigators did not follow up right away. The complainant received an e-mail from the regulator asking for the pictures only after The Globe contacted the council on Wednesday about the matter.
The realtors are not alone in wondering what happened with the investigation – four months since that initial audit. New Coast has faced no penalties since.
Sukhjit Bassi filed a complaint with the council in early April. He claims one of New Coast’s top realtors deceived him, selling his house for less than market value to a speculator with whom she had arranged deals before. That buyer then flipped the property immediately for a $100,000 profit.
“I am not surprised at all that I have not been contacted [by the council],” Mr. Bassi said. “We Canadians live in a society where there are almost no consequences to bad behaviour.”
Don Stutt calls the promise to investigate “a sham.” His house was relisted by the brokerage for $400,000 more than he received for it, after the wife of New Coast’s owner snapped it up, under what Mr. Stutt calls false pretenses. The Globe reported on his case two months ago, but he has not heard from the regulator either.
“I think if they seriously want to deal with it, they should step up to the plate,” Mr. Stutt said.
The Globe also revealed in April that the firm’s owner, Ze Yu Wu, trained realtors to talk homeowners into selling quickly for less than their property is likely worth. The council put conditions on the company’s licenses as a result, including that Mr. Wu must not do any more training.
New Coast then announced Mr. Wu was “stepping aside” from the firm’s operations. Two weeks later, a Globe photographer took a picture of him arriving at the Richmond office during business hours. Two managers working at competing firms nearby said Mr. Wu is at the office regularly.
The Globe asked the company to explain that, and the documents in the dumpster, but it declined to comment.
Last month, the regulator said it has hired a high-profile B.C. lawyer, Leonard Doust, to advise on disciplinary actions for New Coast “or referral of any matters requiring a criminal investigation to the appropriate law enforcement agency.”
During the same period, James Edge said he was shocked to find a New Coast realtor advertising to sell his house for $278,000 more than he had sold it for, before his deal closed, a classic shadow-flip scenario. He said he figured a brokerage under investigation would steer clear of that practice.
“I thought it should have been stopped already,” Mr. Edge said. He filed a complaint, but no one has contacted him.
The head of B.C.’s Financial Institutions Commission is leading a review of the industry’s regulatory system, also as a result of The Globe’s reporting. Carolyn Rogers said she is surprised complainants have not been interviewed.
“That shouldn’t happen,” she said, adding that investigators in her office would have picked up the phone as soon as possible. “We try to gather more information. So we would go back to the source...and the council has similar powers that we do.”
In a statement on Wednesday, the council said everyone will be contacted “in due course.”
“The investigation of activities at New Coast Realty is a large and complex undertaking involving a number of complainants,” it said.
The regulator also heard from Port Coquitlam councillor Brad West, who wrote to say he was offended recently when his constituents were “blanketed” with New Coast flyers offering to sell their homes quickly.
“The council goes out with much fanfare saying we have heard your complaints and we are putting them under restrictions – but to regular people, it doesn’t seem to have made a difference at all,” Mr. West said.
Bryan Watkins, a managing broker from Vancouver Island, is one of several industry insiders who said they want more robust enforcement.
“It irritates the hell out of me to see this kind of nonsense,” he said. “I think the council needs to fix it … and if then they can’t do it then maybe self-regulation isn’t a good thing.”
The Globe also talked to several ex-clients who felt complaining was not worth the trouble, like 78-year-old Raymond Stolberg. He said he felt deceived when a New Coast realtor talked him into selling his house recently for $1.66-million. Days after closing, the buyer put it back on the market – priced almost a million dollars higher.
“We thought we were being looked after – for our interest – and we weren’t,” Mr. Stolberg said. “The reason I didn’t file a complaint is, what good would it do me?”