Whistleblower reports fraud in Vancouver real estate market
Anyone driving through metro Vancouver will need more than their two hands to count the number of ‘for sale’ signs littering front yards of every street.
To say its crazy is an understatement. Houses everywhere are being snatched up at exorbitant prices, and now investigators are looking into fraud and insider trading within the business.
It starts with homeowners getting cold calls or visits to their front door from a realtor. The realtor states that they have someone who wishes to buy the home. Those who decide to sell may see their homes flipped multiple times before the completion date.
It’s called an assignment clause and it’s legal. It’s made possible by the red hot housing market.
According to the Canadian Real Estate Association, across Canada the national average sale price for homes increased 12% last December compared to December 2014.
If you were to take the two red hot locations out of the mix, greater Vancouver and Toronto, the increase was 5.4% – to give you a bit of an idea what type of money is changing hands.
Here’s where the fraud and insider trading is taking place. A realtor snaps up the house from the homeowner, and in between that time and the completion date, that house is flipping hands many times.
Some realtors are avoiding paying property transfer and capital gains taxes during each flip and exchange of hands – what they are supposed to do legally – thus increasing the price by hundreds of thousands of dollars along the way.
They make profits, avoid paying the taxes, and engage in money laundering.
Over a two or three month period, a house is flipped numerous times, and realtors are avoiding the legal transactions of selling and buying a house over that time – after all it would be a lot of work!
This results in an estimated hundreds of millions of dollars of lost provincial property tax revenue and capital gains tax revenue if realtors are engaging in this type of conduct.
Some realtors are not disclosing their professions or personal interest to potential sellers. Others are ripping off homeowners they are supposed to represent by undervaluing properties and flipping them for a profit.
In the end with lost provincial taxes not coming in, ultimately it’s the rest of the tax paying public who has to make up that difference the rogue realtors are costing us.
And believe me we’re taxed to the gills!
With so many extensive reports coming from different sources, the inevitable conclusion is made that oversight of the real estate industry in British Columbia is miserably inadequate. So the Liberal government is calling on the real estate council of BC to order an independent investigation.
In the mean time, the result of a few bad apples in any industry is that those who do conduct themselves in a legal manner have their reputations questioned. So it becomes equally important for those who know about misconduct and fraudulent issues taking place to come forward to report on them.
Otherwise your guilt will be presumed anyway – and you did nothing wrong.
We’re always stating the obvious. People need to come forward to report on misconduct. And they need a place where they can make that report.
[source]Investigation launched into allegations of fraud, insider trading in Vancouver real estate market[/source]
[source]Some B.C. real estate agents insider trading and helping to money launder: NDP[/source]
[source]Homebuyer, beware: ‘Property Brothers’ stars urge caution in hot housing market[/source][/citesource]