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Richmond Real Estate Firm First To Publicly Ban Shadow Flipping

A real estate firm based out of Richmond is taking the initiative to ban shadow flipping as the illegal act suspected by the NDP came under spotlight last month, and eventually led to the political party calling on the Real Estate Board of Greater Vancouver for an investigation.

The NDP’s David Eby claimed shady realtors could be one of the reasons the province is potentially losing out on hundreds of millions of dollars in tax revenue. According to Eby, multiple sources have informed him some realtors have been avoiding property transfer and capital gains taxes and are also involved in shadow flipping.

Shadow flipping essentially takes place when a real estate broker uses an obscure assignment clause in sales contracts so that the property changes hands multiple times before the deal is officially closed. This allows the realtor and investors to continuously flip a property more than once for a price higher than the last, and ultimately drive up commissions.

In the midst of the Real Estate Council of B.C. appointing an advisory group to investigate the practice, Richmond firm Metro Edge Realty has decided to be proactive and be the first in the lower mainland to publicly promise clients it will, and does not use the tactic.

“I always felt that’s not right. You’re taking the lift off these sellers where your licence dictates you should be representing them, not taking from them.” said Metro Edge Realty CEO Kevin Lynch.

Other firms in metro Vancouver are likely, and are encouraged to follow suit.

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