Fraudulent activities in British Columbia’s real estate market should not be overlooked anymore, according to an independent advisory group tasked with examining a series of pejorative disclosures. The realtors who are guilty of misconduct should face penalties up to $250,000. The advisory group is chaired by B.C. Superintendent of Real Estate, Carolyn Rogers, who has issued 28 recommendations, designed to protect the public from unprincipled agents. The group calls on the Real Estate Council of British Columbia to fix its practices, implement a new ethics code, bring in new rules and block licensees from engaging in certain practices.
The contentious practice of shadow flippingBC’s real estate industry has been shaken by accusations that realtors are taking part in shadow flipping. The provocative practice involves brokers reselling a property multiple times before a deal closes. This is done to make enormous profits on sales. To increase transparency, and ensure the protection of sellers’ interests, Finance Minister Mike de Jong has announced new rules for the housing industry. Now, the rules need sellers to give permission to assign a contract and have any subsequent profits. In this way, sellers will be completely informed about the contract assignments. It is also recommended to ban agents from representing multiple clients on the same deal. Homes or Mere Investments? Today, houses are trading as investments rather than looked upon as wonderful places to live. Whenever there is a great price fluctuation in the housing market, people rush to make dollars instantly. According to the advisory group, the Real Estate Council did not consistently use the existing rules to deter unethical behaviour and appeared reluctant to interfere, rather than being proactive and authoritative to prevent problems. For instance, it was noted that the Real Estate Council took little action against agents who were found not to be complying with other regulations, such as reporting requirements to counter money laundering.
Penalties for Corrupt Activities in BCFor misconduct, the current maximum fine is $10,000 for real estate agent, while for brokerages, it is $20,000. But it is now recommended that the penalty should be increased 25 times more than the current price, i.e. $250,000 for individuals, and $500,000 for brokerages. Further Recommendations to Protect Public Interests According to the report, it is suggested that high-volume "opportunistic" buying of houses directly from owners should be subjected to licensing standards. The 11-member panel calls for setting up private lines of communication for members of the public to report wrongdoings and raise worries without the fear of retaliation. Another recommendationis to end dual agency, where a realtor can act for both the buyer and seller in a transaction. Restoring Balance in BC The group did not anticipate ending self-regulation of the real estate industry completely. The report says that it is a decision that rests only in the hands of the government. Metro Vancouver’s Soaring House Sales In June 2016, house sales in the region were 4,400, which were 4,375 in June 2015. Even though more properties have come onto the market in recent months, the imbalance between supply and demand continues to influence the market conditions. From June 2015 to June 2016,new listings for detached, attached and apartment properties in Metro Vancouver have increased by 1.2 % and now equal 5,875 units. The MLS® Home Price Index composite standard price for all residential properties in Metro Vancouver is at present $917,800. This represents a 32.1% upsurge compared to June 2015.
Growing Competition for Homes Listed for Sale
Changes from June 2015 to June 2016
- Sales of detached properties decreased from 1,920 to 1,562
- Sales of apartment properties reached from 1,774 to 2,108
- Sales of attached properties increased from 681 to 730