British Columbia to crack down on property market 'shadow flipping'

By Julie Gordon
VANCOUVER, March 18 (Reuters) - British Columbia pledged on
Friday to crack down on real estate contract assignments -
dubbed "shadow flipping" by local media - in a new effort to
help cool down red hot housing markets, particularly in the
Vancouver area.
Shadow flipping is where a party agrees to buy a property
for a set price, but before the sale closes, they resell the
contract to a third party for a higher price, taking the
difference between the original and new selling price as profit.
The ruling Liberals said they would introduce new rules in
the coming weeks to prevent the "potentially predatory"
practice, undertaken by some real estate agents and purchasers.
"New provincial rules will prevent the abuse of assignment
clauses by requiring the express consent of the seller and
mandating that any profits from assignments are returned to the
home-owner," the province said in a statement.
Shadow flipping has been pointed to as one of many factors
driving Vancouver's runaway housing prices, particularly on the
city's desirable West Side, where the median selling price for
detached homes hit C$3.4 million ($2.6 million) last month.
The price for a typical home in metro Vancouver, including
condos and townhouses, hit an eye-watering C$795,500 in
February, with sales volumes jumping 36.3 percent.
The province also pledged to work with the city of Vancouver
on "collaborative steps" the two governments could take together
to help boost housing affordability in the city.
The promises comes just days after hundreds of residents
packed into a Vancouver community center to discuss factors
behind the wild real estate market, including international
capital flows - particularly from Asia - local real estate
practices and speculation.
($1 = 1.3015 Canadian dollars)