Shadow Flippers, Realtors buying their own listings...you're going to want to read this!
CBC, Global, CTV, Globe and Mail etc etc etc are reporting some stories about Realtors, and Real Estate transactions.....so of course I had to write a blog about it!
So, recently there has been reports of a few things that are eyebrow raising. I am going to break them down piece by piece to better help the public understand what is right and wrong.
1) Realtors buying their own listings
Does it happen sometimes? Yup
Should it happen (in my opinion)? Nope
Have I ever done it? Nope
You see, Realtors are humans too (insert joke here). So occasionally we take off our Realtor hats, and put on our Buyer hats and need places to live, or invest in, just like everyone else. No problem in that. Where there is however a problem is when Realtors purchase their clients listings. You see, there are fundamental things a Realtor will likely know about his Seller(s) and 3 of these things that we are absolutely not allowed to disclose are
1) Motivation (why they are selling, divorce sale? Relocation of job?, Can't make payments? etc)
2) Personal information (self explanatory)
3) Their bottom line price (again, self explanatory)
So when people ask me if I would ever purchase one of my own listings, the answer is a vehement NO! not in a million years would I personally put myself in that type of situation where I think it's a conflict of interest, but hey, that's just me.
This leads me to the next point that's all over the news this week...
2) Assignment Clauses (flipping)
Does it happen sometimes? Yup
Should it happen (in my opinion?).....meh, suite yourselves
The media is making a big deal about Johnny Buyer getting an accepted offer to purchase a home from Sammy Seller for $500,000. In that offer, there is a clause that reads something like "The buyer reserves the right to assign this contract in part or in whole to a third party prior to completion". They schedule completion for 6 months later, and in that time the market goes up and 1 month before completion Johnny Buyer assigns (sells) the paperwork to someone else for $600,000. Johny just made $100,000 for doing nothing, the new buyer completes on the contract, the Seller makes his $500,000 as agreed on. Everyone's happy right???.....wrong. I can tell you who is not happy on these type of deals....The Provincial Government! who else! You see, even tho this was in all essence 2 transactions, only the new buyer will be Property Transfer tax. 2 deals, 1 transfer tax = an angry government. Get ready for this to likely change in the near future.
One thing that has got me confused tho, is why now? This process of assignments has been around since Moses wore sandals. in the early 2000's when people were lining up for condos, and they were taking 2 years to build, many ,many people would flip contracts....why is it now a big deal?
Let me tell you a quick story about this. A couple years ago I had a home for sale in North Burnaby, and we got 3 offers on the home. All 3 buyers agents sat outside in their cars waiting for my seller to make the decision on which offer they were going to choose. Here's how it went.
ME "Congratulations Shelly, your offer of $700,000 was accepted! Give me 10 minutes to get it all signed up in here, and I will come out and give you a copy"
5 minutes later.....
RING RING RING
ME "Hi Paul speaking"
MARTY from Remax "Hey Paul, how are ya? I heard you sold 1234 Burnaby st, congrats!"
ME "ummmm I haven't even got it signed yet, how did you know?"
MARTY from Remax " Shelly called me from her car, asking if I had a client that wanted the house for $750,000"
Yep, this happened. Ink not even dry yet, Realtor trying to flip the contract to another buyer. Happens with builders so so often, I can't even describe it. I guess I am just immune to it now, so it shocked me that it made news
3) Realtors using their office address to shield foreign buyers
This one will be short and sweet. I have personally never seen this happen and would NEVER happen at my office. If Realtors are indeed doing this to not alert the government of foreign transactions (which are deemed to be higher risk for money laundering) and filling out these forms knowingly incorrect, they should be banned, fined, whatever. Absolutely in no case should this ever happen. Again, in a decade I have never seen this, but that is not saying it doesn't happen.....it just blows my mind that anyone would want to face the consequences of defrauding the government....not smart.
Lastly let me disclaimer that the above comments are the views and opinions of me, and me only. They are not meant to offend anyone, discredit anyone, and all the names have been obviously changed.