A Richmond realtor has jumped on the shadow-flipping controversy and turned it on its head.
The real estate industry in B.C. is investigating the claims, which revolve around some real estate agents secretly flipping properties for higher prices without the knowledge of their listing clients.
But rather than wait to see what happens, Kevin Lynch, the CEO of Metro Edge Realty on Coppersmith Way, decided to get ahead of the curve.
After watching the fall-out in the media, Lynch took the bull by the horns and adopted a formal “no flipping” policy, even though, until the practise was exposed last month, he said he’d never heard of anyone in the industry getting up to such tricks.
“As soon as I saw this stuff coming out, I realized it was important and I had to do something about it,” Lynch told the News.
“This was a chance to do the right thing, but I wasn’t aware of anyone in the industry doing this. It must be very few of the deals that are going through are shadow flipping.”
Lynch blamed much of the furore on the media, likening it to the media frenzy over the years on attacks by pit-bull breeds of dogs.
“It has just being blown out of proportion,” said Lynch, who has been in the business for 20 years.
“It’s a hot topic when someone gets hurt, like has happened here with the shadow-flipping.
“What happens then is that people think it’s all over the place but, as I said, I’m certainly not aware of anyone doing this.”
Lynch said he brought up shadow-flipping with his leadership team a few weeks ago and, from there, the company resolved to adopt a formal policy.
“The hope is that it compels others to follow suit; it’s not just for us, it’s for the industry,” added Lynch.
Carolyn Rogers, the Superintendent of Real Estate and the CEO of the Financial Institutions Commission, has been appointed by the Real Estate Council of B.C. to look into allegations of shadow-flipping.
The Globe and Mail was the first to expose the practice that involves brokers reselling a property multiple times at increasingly higher prices before a deal closes. By doing so, they profit from each transfer using an “assignment clause” within sales contracts.
The original seller receives less than what the property ends up being worth and the last buyer may be paying an inflated price, with the difference in value going to the agent and the buyers in the middle.
Numerous homes in Richmond are being sold for hundreds of thousands more than what they sold for in less than 12 months, according to sales records.
With files from the Vancouver Sun