The Real Estate Council of British Columbia has imposed licensing conditions on a Richmond-based real estate brokerage firm that has been accused of allegedly deceiving home owners into selling their properties for low.
A news release issued this morning indicates that Richmond-based New Coast Realty will be required to abide to seven conditions on its practices effective immediately. This includes: monthly reports to the Council on transactions, trust accounts, activities of unlicensed assistants, and complaints received by the brokerage; approval of account signing authorities by the Council; providing records relating to assignments and commission bonuses; and the retention of copies of all offers for properties.
In addition, the brokerage firm is required to appoint a new managing broker that will be approved by the Council. This new managing broker is also to be in charge of conducting training sessions and supervising licensees.
Managing brokers at B.C. real estate brokerages are responsible for all actions and activities taken by the firm.
The Council says New Coast Realty and its legal counsel have agreed to the conditions. A full investigation is underway and the specific wording of the conditions will be finalized early next week.
New Coast Realty, a relatively new firm, has nearly 450 agents and sold over $1 billion in property in 2015 alone.
“There are a significant number of buyers and sellers with transactions in progress at the brokerage,” said Robert O. Fawcett, the Executive Officer of the Council, in a statement. “Those consumers have contractual obligations that they must meet, and the Council does not wish to impede the transactions.”
“The conditions that have been agreed to with the brokerage will ensure that those transaction are able to proceed, and that the appropriate controls and oversight will be in place.”
This comes swiftly after an in-depth investigation in The Globe and Mail, based on the accounts of several former New Coast Realty brokers and an audio recording of a training session, that uncovered the extent of the firm’s allegedly questionable practices. It also suggests that the firm is actively in the business of flipping homes.
According to the report, real estate agents with the firm are encouraged to “sell the house fast and buy the house fast” to earn more commissions at the expense of the seller. They are also taught to inform property owners that the first offer is always the best offer, even though that is not true.
By closing a sale quickly, the firm and its agents are able to move on to dealing with other properties, accelerating the rate of profits for the real estate brokerage and its agents.
Other allegations point to the brokerage’s agents playing both sides, misleading buyers’ agents on the number of offers on a property, misinforming buyers and sellers of market conditions, and persuading clients to provide a bonus to the buying agent while taking a cut.
The Council says it began an investigation several weeks ago after the Globe and Mail informed them of the existence of a tape recording of a training session.
In recent months, attention on Metro Vancouver’s housing affordability crisis has turned to the practices of local real estate brokerage firms, who may be exacerbating unaffordable market conditions.
On March 18, Premier Christy Clark announced that new policies would be implemented to end the ‘pure, naked greed’ of shadow flipping.