Shadow flipping to be investigated by the Real Estate Council of BC

Dec 19 2017, 8:03 pm

After media reports of a shady but legal real estate practice came to light, the Real Estate Council of BC (RECBC) says they plan to launch an investigation.

The phenomenon of shadow flipping was brought to light in an investigative piece by the Globe and Mail. Buyers can sell or transfer their interest if there’s an “assignment clause” in the contract and the house is then re-sold for more money, allowing the buyer to turn a profit and the real estate agent to get multiple commissions.

In the end, the original seller loses out, sometimes to the tune of millions of dollars.


“Assignments are typically used when buyer demand outstrips supply, as in the current Vancouver real estate market,” said Marilee Peters with the RECBC in a statement. “The Council is appointing an independent advisory group to investigate whether assignment clauses are being used appropriately, and to develop recommendations to increase the Council’s enforcement and oversight of non-disclosure by licensees investing in properties.”

Peters said they plan on announcing the members of their advisory group in the next two weeks and have recommendations in two months.

According to the Globe and Mail piece, assignment clauses are becoming increasingly common in the “feverish” Vancouver real estate market where demand outstrips supply, and could be contributing to an already too-hot market. Foreign investors might be playing a key role in this style of flipping homes as well.

NDP critic David Eby called on the government to investigate assignment flipping on Monday.

BC Housing announced recently that they are planning to gather numbers on foreign homeownership in the province in order to better understand housing affordability. The province has asked the group to examine key factors affecting home prices in B.C., with foreign ownership joining variables such as supply, the economy, and interest rates.