Naturally, the provincial government's attempt to curb this form of racketeering in the Lower Mainland's drastically overheated housing market will only be as good as the ability to enforce it {look out for a rise in unreported "side deals"}.
It also sounds like this change pretty much puts to rest any thoughts of wholesaling that does not involve purchasing, then reselling.
I believe I've mentioned this before in wholesaling, you don't need to assign a contract, simply take a release fee for the equitable interest held and allow another to buy, that is with seller consent as well. We've done this with a property in a neighborhood that is in high demand, there are usually no Realtors involved and there is a waiting list of buyers with the HOA.
Even with a property under contract, the owner may continue to accept other offers, referred to as "back up offers".
You also need motivated players, an owner is not so picky, but your first buyer may have buyer's remorse and shown a better deal they may be willing to get out of the contract. You may not need to pay anything!
As to the law in BC, no clue, but check the statute carefully and they may view a release in the same light if a buyer is really "in the business" of pulling off such transactions. :)
The Government press release does give a different impression than the quotes in the media articles. It reads like it will only be applied to licensed agents and that the programme may be self-policed.
I've be trying to dig up more information this evening, but have yet to find the actual text of the new regulations.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
10y
@Roy N. - there is at least one other way to "quick flip" a house other than assignment of contract and other than closing first. There is the notion of "conditional release from contract" for a fee - contract is not assigned but original "purchaser" releases his rights to purchase in exchange for monetary compensation; the new buyer enters into a separate agreement with the original seller when doing this. An attorney in the state of PA named Brad Dornish is the first I had heard of doing that, and that attorney has a "quick flip" home study course for sale at his website for a reasonably low price.
Interesting idea. I wonder if it would work (and pass the sniff test) with the standard contracts the real estate boards use in the various provinces.
I can see this working if the person requesting you to "release your right to purchase" had an accepted back-up offer on the property, otherwise, what would prevent the seller from entertaining another offer?
You establish the conditions under which the release is to be executed; one condition is that your new buyer and the seller enter into an agreement identical to that which was originally in place (except for the name of purchaser of course), another condition being the amount of compensation of course.
You establish the conditions under which the release is to be executed; one condition is that your new buyer and the seller enter into an agreement identical to that which was originally in place (except for the name of purchaser of course), another condition being the amount of compensation of course.
The "conditional" aspect is the part that I wondered if it would "fly" with regulators. You can be certain if works, they'll be using it in Vancouver next week ;-)
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
10y
@Roy N. - the release I mentioned above is not going to be a standard RE contract, so the conditions of the release would not fall into those standard forms. Every time a buyer or seller is unable to meet all contingencies in a standard contract, the contract becomes released so that buyer and seller can move forward with others; so the notion of a contract being released is not new. Somebody clever just has to figure out how to make it work, maybe only until regulators shut down this approach as well. Then we could talk about using options ...
I believe I've mentioned this before in wholesaling, you don't need to assign a contract, simply take a release fee for the equitable interest held and allow another to buy, that is with seller consent as well. We've done this with a property in a neighborhood that is in high demand, there are usually no Realtors involved and there is a waiting list of buyers with the HOA.
Even with a property under contract, the owner may continue to accept other offers, referred to as "back up offers".
You also need motivated players, an owner is not so picky, but your first buyer may have buyer's remorse and shown a better deal they may be willing to get out of the contract. You may not need to pay anything!
As to the law in BC, no clue, but check the statute carefully and they may view a release in the same light if a buyer is really "in the business" of pulling off such transactions. :)
Interesting idea. I wonder if it would work (and pass the sniff test) with the standard contracts the real estate boards use in the various provinces.
I can see this working if the person requesting you to "release your right to purchase" had an accepted back-up offer on the property, otherwise, what would prevent the seller from entertaining another offer?
I'd think it may smell a lot if you write in contingencies for the contract to be released, you don't need any prior agreement, but you may have an understanding, always have the intent and ability to perform, if circumstances change then your intentions may change and be justified.
Just briefly looked at the news report, it looks like they are addressing the "net listing" theory with agents, it may apply to anyone, don't know.
Looks like the spot light is on and I don't think I'd be testing them attempting to circumvent the intent of the law especially when you can just take title and sell using other methods. :)