Friday, March 4, 2016

Richmond real estate company enforcing policy against Asian shadow flipping

Richmond real estate company enforcing policy against Asian shadow flipping

 

 
 
Richmond real estate company enforcing policy against shadow flipping
 

Real estate for sale in Richmond, February 17 2015.


A Richmond real estate company is enforcing a no-shadow-flipping policy in response to recent allegations that real estate agents are taking part in the controversial practice.

“We owe our clients the best that we can give them,” Metro Edge Realty CEO Kevin Lynch told The Province. “Our policy is basically saying that, as a company, we will not allow internal flipping of this nature.”
The Globe and Mail recently exposed so-called shadow flipping, a 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.
While an independent advisory group is tasked with investigating the allegations, Lynch decided to act immediately.
“Let’s not wait for this (investigation) that might take six months, a year ... before anything comes of it,” he said. “Let’s be proactive.”
The policy will be enforced first through education, training and development.
“We let every single person know that comes in our door and joins our company, this is our policy,” said Lynch.
He’s also ensuring his 80 staff members are properly trained and educated — the company 18 training sessions scheduled in March.
The policy will be enforced through an existing review process, which will happen at a “deeper level.”
“Now we’re looking for any assignments to ensure that we have our checks and balances in place,” said Lynch. “If someone tries to sneak that through ... you’re out.”
Lynch would like to see other companies adopt a similar policy.
“The company is really the one responsible at the end of the day,” he said.