The Real Estate Council of B.C. says it's appointing an independent advisory group to investigate allegations of shadow flipping in Vancouver's hot housing market.
"We realize that this is an urgent matter and expect to announce the members of the multi-stakeholder advisory group within the coming two weeks," council spokeswoman Marilee Peters said in a written statement.
Earlier on Monday the B.C. NDP's housing critic called for an inquiry into Metro Vancouver's real estate market over the technique known as shadow flipping, under which sales contracts are reassigned, in some instances multiple times, before the sale of a home is closed.
Details of the practice were revealed in a Globe and Mail investigation published on Saturday.
Peters said the practice of reassigning real estate contracts is legal in B.C., and in the rest of Canada, but agents must disclose their business intentions with clients when selling and buying properties.
"The council has become aware that some licensees may be engaging in business practices that are contrary to their clients' best interests," she said.
"We are deeply concerned by these matters and we invite members of the public who have been directly affected by any improper business practices of licensees to contact us."
The advisory group will be expected to report to the council in 60 days, she added.
B.C. cabinet minister Peter Fassbender said the council is doing what it should to address the issue, and the province will wait to make any potential regulatory changes until after the advisory group's recommendations are put forward.
"The real estate council is there to do exactly what they're about to do now," Fassbender said.
"The less regulation we have and the more self-policing we have, as in the case of the real estate industry, the better."
Loophole raising home prices
Vancouver real estate agent and former park board commissioner Aaron Jasper said the assignment clause can be useful if a client's circumstances change after they put an offer on a property.
For example, he said, one of his clients used the arrangement when he got engaged after having purchased a bachelor apartment. However, he added, he has heard of other realtors using the loophole for less benign purposes.
"It's almost like the wild, wild West in terms of what people are doing. They're trying to make a quick buck, but they have no intention of taking possession of that home," he said.
He said the practice is almost certainly causing house prices to rise across the region.
"Whether you're a doctor on the west side or an average Joe on the east side, it really is putting housing out of reach for everybody across the city," he said.
Jasper said there needs to be serious consequences for those who bend the rules for their own profit, especially considering that buying and selling a home is usually one of the biggest financial decisions of a lifetime.
"I would love to see some of these shady individuals taken out of the business, never to come back," he said. "This paints us all with a bad brush."