#assignmentgate in BC!

The Globe and Mail has been selling a lot of newspapers lately with their deep-down investigative journalism about the Vancouver housing market lately. Included in that is this weekend’s piece about The Real Estate Technique Fuelling Vancouver’s Housing Market which, to me, read a lot like sour grapes by sellers of already-vastly-overpriced-homes. A bit of greed, too. Let me not suggest that what is happening in Vancouver right now in light of these findings (and previous ones) is fair or equitable to the average Vancouver-ite. However, reading the reaction of some of the homeowners, I can’t help but think they should only look in the mirror and “blame” themselves for making “only” $4.843M in tax-free money on their home in 29 years.  Broken down, that’s like making $151, 172 PER YEAR of tax-free money. So, where’s the beef?

The beef is simply that Realtors are doing a lot of door-knocking, offering very rich prices for these homes, sellers are selling, and then that contract gets flipped once, twice, or more, for a higher price. Eventually the buyer that was originally on the paperwork has gone and left, and the new, actual buyer, has ended up paying hundreds of thousands more for that home (in this one case, $1M more). Is that fair? Absolutely not. However what kind of person agrees to an offer brought to them by a single Realtor who happened to be door-knocking, accepts the offer, doesn’t read the assignment clause, doesn’t ask their lawyer to review the offer, and then feels slighted that they were ripped off?

The moral to the story here is simple: As much as the public may loathe the work of a Realtor lately, a good Realtor is still someone that can (and does) protect your interest and bottom-line. I work with dozens of solid, ethical and knowledgeable Realtors who would give you the numbers and give you the time and space to make your decision. This is not a commercial for the Real Estate Industry - I’ll let them do that themselves - I just can’t wrap my head around the short-sightedness of these individuals who sold these homes.

I also can’t wrap my head around the Vancouver housing market as a whole. Luckily I don’t live there, because I don’t think I could afford to if I did. I know that far east money has a lot to do with this insane ride that market is on, and I know that every market suffers up and downturns. I truly feel sorry for the people who are not in the market already but want to get in, the true Vancouverites whose communities are disappearing day-in-day-out to vacant monster homes and buyers who never intend on living in their properties. What I don’t understand however, is what will or can be done about this type of transaction? Will the BC Government disallow assignments all of a sudden? Will some more Realtors face fines and/or suspensions? Will any of this even matter in the big picture?

One final point: In case you’re wondering, I would venture to guess all or the great majority of these transactions are cash-deals. These are not being financed. Assignment rules surrounding financing are very difficult in Canada. There are very few lenders who would consider financing the property at the new price in the first place, and those that would would require an appraisal.

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