Three industry insiders give their views on this contentious issue.
Jared Stanley, Business developer and underwriter, Alt Mortgages:
“The practice of shadow flipping is often unethical in that the seller may be misled and is not achieving true market value. It is similarly unethical if the buyer is misled to pay more than they need to. The perception that this is taking place erodes the credibility of Realtors and undermines trust in the market in general.
Currently, there is not enough empirical evidence to conclude that it is inflating prices, yet there is reason to be concerned. The definition of market value is the price a property should bring in when the buyer and seller are each acting prudently and knowledgeably. Both buyers and sellers rely on the advice of their Realtor to determine what is a fair price, and they are susceptible to being misled.”
Gordon Barthels, Sales associate, Re/Max Lifestyles Realty:
“In the Vancouver area alone, we have approximately 16,000 Realtors, and our industry is doing a hell of a good job dealing with what has been brought upon us. Most Realtors have become so cautious and transparent for fear of anything that could be construed as unfair.
Imagine this: You do a CMA for a seller based on recent sales. Then you add another 5% to your price, just because the market is so nuts, then you list the property, and it sells in multiples for another 5% over that. We don’t tell the seller what the true value of their property is – the market does. We could list every property for $1.99 right now, and in three days, the highest bidder will have established what it’s really worth.”
Ian Hocking, Broker, Keller Williams Experience Realty:
“It appears to me that the real issue is not the semantics of the contract. The issue would appear to be the flow of dollars from place A to place B. The reason is not totally clear, although certainly overseas money is a likely driver. So why not introduce a law that instructs all lenders to require a 35% down payment for all non-residents of Canada?
At least that way, if there is a nasty pullback, those who are speculating will have some significant skin in the game and stand to lose a fair bit before the Canadian banking system has to take the strain. I agree that agents have a responsibility to help their client with pricing, but what is happening at the moment has little to do with any conventional pricing method.”