What does the new British Columbia rules on Shadow Flipping mean?

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What does the new British Columbia rules on Shadow Flipping mean?

Jon Magnusson
Cobble Hill, BC · Member since 2015 · 56 posts · 25 votes
Hey Canadians, what do the new rules in BC about "shadow flipping" mean for your wholesaling business? If you haven't heard, they are trying to eliminate your ability to assign contracts and make a profit. They plan to do this via taxes, fines, license suspension. Just wondering what the reasons behind this new rule are and the ramifications you guys think it might have on the market in BC (especially Vancouver and Victoria).
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y

@Kevin House  I would love to see the US follow suit...

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  • Jon Magnusson
    OP
    Cobble Hill, BC · Member since 2015 · 56 posts · 25 votes
    10y
    http://m.huffpost.com/ca/entry/9201442 Here's an article on the matter
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  • Kevin House
    Investor · Victoria, British Columbia · Member since 2016 · 3 posts · 1 vote
    10y

    it's just an attempt to curb market speculation and theoretically slow the rise in house prices. Essentially some less scrupulous buyers are getting conditional offers on houses that are generally less than market and then assigning those comtracted sales to others at an inflated rate. In some cases this is actually happening several times on the same real estate deal before it finally transacts. I honestly dont know if it'll have a major impact on prices but will certainly hurt wholesalers.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Kevin House  I would love to see the US follow suit...

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  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    10y

    @Jon Magnusson

    It's more about the politics of appearing to be doing something that actually having a significant impact.   While there may not be anything technically illegal with realtors spinning properties through a series of buyers to collect 2-3 commissions on a single transaction, it seems a little unprofessional.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Roy N.  would be frowned upon in the states for sure.  

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  • Doug P.
    Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes
    10y

    It's not just BC. This is part of the new Real Estate Profiteering Act.

    It's going to introduce sweeping changes to the real estate landscape across Canada including making it illegal for individuals or businesses to own or profit from any real estate. The government will own all the land and improvements and you will have to rent it from them.

    Failure to comply will come with stiff penalties up to and including execution.

    We are the lords of the Great White North. Fear us.

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  • Chad U.
    Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
    10y
    Originally posted by @Jay Hinrichs:

    @Kevin House  I would love to see the US follow suit...

     Jay, I couldn't agree more.  Nothing ticks me off more than when I put in an offer on a property, then see it on a wholesale email list a couple days later for $10K-$50K more than list price.  These wholesalers have no intention of buying the property, just flipping it for a quick buck, thereby needlessly driving the prices up. This happens in South Florida ALL the time, and I'm sure it's not just local to here.  

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  • Paula McDonald
    Realtor · Tampa Bay, FL & Baltimore MD · Member since 2014 · 29 posts · 11 votes
    10y

    Got that right @Chad U..  Same goes here in all of Pinellas County!

    1Reply
  • Benjamin Pekarek
    Rental Property Investor · Asheville, NC · Member since 2015 · 307 posts · 127 votes
    10y
    Originally posted by @Chad U.:
    Originally posted by @Jay Hinrichs:

    @Kevin House  I would love to see the US follow suit...

     Jay, I couldn't agree more.  Nothing ticks me off more than when I put in an offer on a property, then see it on a wholesale email list a couple days later for $10K-$50K more than list price.  These wholesalers have no intention of buying the property, just flipping it for a quick buck, thereby needlessly driving the prices up. This happens in South Florida ALL the time, and I'm sure it's not just local to here.  

    Same here on the Gulf coast! I can't count how many times I've seen wholesalers pull MLS properties using a POF from some transactional lender, jack the price 20k - 50k, and my clients get stuck paying the spread, or finding something else. I agree that there is a place for wholesaling (see cheap houses not worth a realtor's time - 3% of $10,000 doesn't even get me out of bed!) but for the mostpart, I say get your license and be happy with your commission like the rest of us...there's no need to be greedy!

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