Q&A with Globe and Mail RE Reporter

Kathy Tomlinson is the reporter who wrote a recent article detailing the flipping of property in Vancouver which seems to have gotten some government attention.

Many Franks pointed out that she did an AMA over on reddit today.

There’s a comment from a Real Estate lawyer that points out this practice is not necessarily a driver of a hot market, but more a symptom of a hot market and it can go both ways:

First, without a clause disallowing it, any contract can be assigned. You can assign your cell phone contract to someone else. There’s nothing sneaky about this.

Second, the final purchase price is listed on the transfer document (Form A Transfer) and easily found through the Land Title registry. Just need the PID number, pay the search fee and it’s under s.2(b) of the transfer. Property transfer tax is paid on this amount since it’s a tax on the transfer. There’s no tax avoidance here.

Third, the seller. The seller signed off on the transfer agreeing to the sale price. If they thought they could sell for more, there’s no one forcing them to sell at the price they signed off on. I fail to see how the sellers in the article were taken advantage of.

Fourth, the middleman. Okay so a few things, if the middleman isn’t paying taxes on the lift (the difference between the original purchase price and the final sale price), then that’s tax evasion, and attracts criminal liabilities. And a stupid way of going about it too. Sure, it’s a private contract but if the CRA/police come inquiring there’s a massive paper trail.

Further, if the middleman signed the contract without having the intention to complete but just to flip, then they’re taking on the risk of not finding a final buyer. And if they don’t complete, then they’re liable to lose the deposit and get sued for damages if the seller can’t find a buyer at the same price.

I was around in 2008 during the housing crash when it went the other way, when buyers assigned their contract at a loss because their financing fell through when property values plummeted.

Garth is right basically, this is a symptom, not a driver of insane housing prices. Want to watch prices drop? Increase the interest rate. Have the rate go to 6-7%. I might have to go into foreclosure work.

Read the full AMA thread over at reddit for this and other viewpoints.

It’s interesting that this topic has blown up so much and spurred responses from government. There’s nothing inherently shady about purchasing something and reselling it for a higher price and if the government feels like getting some of their hands on this money all they have to do is tax each assignment transfer.

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[…] rules –Take the money and run! –Fond memories of the VSE –Laundering? –Assignment flipping –Expect rates up says Yellen –Vancouver a better China –CRA looks for flippers […]

Vanco
Guest
Vanco

With the stock market tanking, can the Bears put down a down payment even if the housing market drops?

Oh they likely already switched out of stocks and put their money into whatever was growing.

Hyper-mega-Bull
Member
Hyper-mega-Bull

bears are experts market timers when it comes to everything except real estate.

gold is telling us that more monetary stimulus is coming.

patriotz
Member

http://www.theglobeandmail.com/report-on-business/economy/housing/bcs-house-flipping-practices-setting-off-alarm-bells-in-ontario/article28711928/

Mr. Kucey said the (Ontario) council also wanted to encourage sellers to do their due diligence if they’re approached by an agent offering to buy their home, which includes making sure they’re getting the best price.

Ya think?
Unsolicited offers for houses in Vancouver have been around since the 1970’s, and it’s amazing that there are people who’ve lived in the city for decades who can’t see that’s it’s simply an attempt to buy for less than the market price.

Diadora
Guest
Diadora

China’s central bank cut the minimum mortgage down payment for first-time buyers from 25% to 20%, as it sought to shore up the property market…. and Fortune.com called “This Is Why China’s Housing Market Is Such a Mess”
Wait a minute…. our’s is 5% down!

Hyper-mega-Bull
Member
Hyper-mega-Bull

The brand new audi trolley, power by richmond

https://youtu.be/ivwQKhnN6Mk?t=1m21s

franko
Member
franko

Join the discussion

Hyper-mega-Bull
Member
Hyper-mega-Bull

Housing advocates say it’s time Vancouver talks about rent control

http://www.straight.com/news/634276/housing-advocates-say-its-time-vancouver-talks-about-rent-control

patriotz
Member

BC cities do not have the power to impose rent controls and the last thing we need is another useless discussion over something the City cannot do and which the provincial government is not willing to do.

What the City can do is crack down on AirBNB which I think is responsible for the removal of a good deal of rental stock.

More generally I think the real problem is underutiliization of housing. But apart from the above, it’s the result of provincial and federal policies that encourage owners to keep housing empty or nearly empty.

Whistler or bust?
Guest
Whistler or bust?

Nay fan of rent control. I am however a fan of immigration control and foreign buying. It will solve the problem very quickly.

history
Guest
history

Hong Kong H shares down 4.5%, money laundry money cut and run. Locust learn English asap? bwaaaa… not

paulb
Member

New
319
Sold
231
TI:7954

http://www.paulboenisch.com

Oracle
Guest
Oracle

Things that need to be done:

1) Grandfather all existing ICBC plate holders. Any new car that wants to get a new plate buys from existing stock. Or maybe sell a limited amount annually at $1 million per licence plate. New immigrants would either take transit or shell out $$

2) grandfather all citizens and prioritize them for use of medical facilities. New arrivals should have to pay a facility access fee of maybe $1000 per use.

This is how our RE market works so why not other areas? RE is also a Ponzi scheme for those that got in early.

Best place on meth
Member
Best place on meth

But, before that new immigrant gets to buy a licence plate for $1 million dollars, Canadians get first dibs on purchase and the opportunity to flip the plate multiple times and sell it to him in the end for $3 million.
And yes, we should pay the income tax on the profit.

Polozi Scheme
Guest
Polozi Scheme
Best place on meth
Member
Best place on meth

Engaging in a free trade deal with china sounds about as appealing as engaging in unprotected sex with an AIDS riddled prostitute – or Christy Clark for that matter.
Now I have even more reason to support First Nations people in opposing any pipeline.

Best place on meth
Member
Best place on meth

Wait, scratch that.

I just realized how insulting that comment was to AIDS riddled prostitutes.

My apologies.

Chabar
Member
Chabar
southseacompany
Member
southseacompany

“You couldn’t ask for a clearer chart showing that negative interest rates fuel property bubbles” Business Insider

http://uk.businessinsider.com/chart-sweden-negative-interest-rates-property-housing-bubble-2016-2

“You can’t find a clearer warning that ultra-low, zero, or negative interest rates fuel bubbles in the property market. Rates go down, house prices go up. Low interest rates let consumers borrow mortgage money at ultra-low rates. That increases the amount of debt those consumers hold, but because the money is in the form of mortgage loans it drives demand for houses and pushes property prices upward. “

Chabar
Member
Chabar

Those CRA probes are racist, they shouldn’t be done within our multicultural society.

http://bc.ctvnews.ca/are-house-flippers-all-paying-their-taxes-cra-probing-128-home-sales-1.2771284

Chabar
Member
Chabar

While they are at it maybe looking into this stuff would make sense too… it is all related, same shit.

Douglas Todd: Thousands of Metro Vancouver mansion owners avoiding taxes

http://www.vancouversun.com/opinion/douglas+todd+income+anomaly+depletes+metro+vancouver+base/11390940/story.html#sthash.MMARxrEn.dpuf

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

“We should move quickly to a cashless economy so that we can introduce negative rates well below 1%” policy-maker -What I learned at Davos-

http://www.zerohedge.com/news/2016-02-10/something-very-disturbing-spotted-morgan-stanley-presentation-slide

space889
Member
space889

Bears have 2 hopes left – a big Chinese crash that causes all the SFH to be dumped on the market at 50% off, and/or US Fed interest rate increase of 1% that will just CRUSH, CRUSH, all those stupid moronic home buyers and force them to sell at 50% off.

Negative interest rate is like kicking them in the groin when they are already crying on the ground. It’s going to destroy their hope and that last barest thread of hope & sanity.

We have to be nice to bears on this blog cuz they are always so nice to other people, especially Chinese and home owners who they can’t wait to see getting financial crushed and ruined, so they can say “I told you SO!!!!” and dance in celebration of their misery.

Dr. Strangelove
Guest
Dr. Strangelove

After reading this article I can better understand the problem and your overall act. Perhaps you aren’t bad guy and you might have some lucid moments but it’s hard to control temper and not to get overexcited around certain things. Luckily you are in Canada now and could use numerous public services that will mitigate situation.

“How China Leaves Mental Health Problems Unaddressed”

According to a study by The Lancet, roughly 173 million Chinese suffer from a mental health disorder. One hundred fifty-eight million of those have never received professional help for their disease.

http://www.theglobalist.com/how-china-leaves-mental-health-problems-unaddressed/

Specuskeptic
Member

Maybe failed insurance fraud is a cause… https://www.facebook.com/HorribleContent/videos/969265613165902/

Best place on meth
Member
Best place on meth

Wow, that’s kind of surprising.

I would have guessed at least 5 times that number.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

Deutsche Bank risks its own “keep dancing” moment

http://blogs.reuters.com/breakingviews/2016/01/28/deutsche-bank-risks-its-own-keep-dancing-moment/

if authorities think we are anywhere close to another lehman borthers moment they will jump on negative rates and start the helicopter printing press.

https://upload.wikimedia.org/wikipedia/commons/e/ef/Ksc-69pc-442.jpg

Chabar
Member
Chabar

While you are admired and considered high value expert at this blog perhaps you could stop turning this same site into circus with all these tacky images posted around? It is so 90’s.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!
fosolo1
Member
fosolo1

In other words , we are fecked. Totally .

“Routledge says he accepts the Bank of Canada’s estimate that housing is potentially overvalued by 10 to 30 percent. That implies “many Canadian households are over-leveraged and will ultimately default in order to reduce this leverage, at a magnitude underappreciated by the market.”
The “regime” in place for some time, he notes, has been rising home prices and growing home equity. But Routledge tells BNN a regime change is coming, meaning a correction for real estate prices – with Vancouver hit harder than the rest of the county.”

pricedoutfornow
Guest
pricedoutfornow

Good lord, how could anyone watch that video and not want to sell their house in Vancouver NOW? Rush to the exits! Not to mention all the media attention about people being fleeced (even foreigners) and just general comments about the real estate market being overvalued. Soft landing? (you’d better pray, Christy!)

fosolo1
Member
fosolo1

National Bank Financial says hot foreign money could turn cold

“National Bank Financial is sounding the alarm over the hot foreign money that’s helping push Vancouver and Toronto home prices out of reach for many, warning a correction is coming for Canadian real estate.
Financial services analyst Peter Routledge has been cautious on Canadian housing for a while now. But his tone darkens in a note Wednesday on domestic banks, writing “unfortunately, we are bears when it comes to the Canadian household.”

http://www.bnn.ca/News/2016/2/10/National-Bank-says-hot-foreign-money-could-turn-cold.aspx

space889
Member
space889

I will believe it when it happens. Until then, trend is your friend.

Also, if hot money stops, what makes it guarantee it will fall? If all these hot money are corruption money and those corrupt people move here to live, why would they sell at 50% off??

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!
Best place on meth
Member
Best place on meth
I think that all of this discussion about the technicalities of flipping misses the larger issue and people really fall into 2 main camps. On one side you have the decent people who believe that real estate should be properly regulated to encourage housing to be treated as was originally intended, to house people, and that speculation, greed and profit motive should be discouraged as much as possible. On the other side you have the lowlifes who pretend they’re free marketeers who claim that real estate should be a free-for-all, where all manner of greedy sleazebags can do as they please to make a buck. This includes flipping, money laundering, rampant speculation, hoarding of multiple properties, cabals attempting to corner the market, tax evasion, wholesale foreign ownership…. basically anything goes. Nothing wrong with turning the real estate market into one… Read more »
space889
Member
space889

And what are you? I don’t have mine, it’s so UNFAIR, wahhhhhh, poor me! You should sell your house to me at my price, even if you can sell for more. Gov’t should force people to sell to me at low price…wahhhhhhh….it’s so unfair!

fosolo1
Member
fosolo1

After all these years I think the sharks are finally starting to circle the real estate waters and IMO it is going to get very bloody.
The final nail in the coffin is all the press from the G & M article. Why it was sanctioned by the brass at the Globe is up for debate but what better way than to unofficially pop the bubble.

Shut It Down Already
Guest
Shut It Down Already

People have been declaring the “final nail” since 2008. Remember that big post-Olympics crash?

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

who or what are the sharks and how will they impact the price of real estate? how will the globe article lead to price declines?

more importantly, if vague metaphors get up-votes why are all my hyperspace comments being downvoted?

space889
Member
space889
space889
Member
space889

Hmmm….potentially big bond yield spike coming. To the negative side.

http://www.zerohedge.com/news/2016-02-10/jpms-striking-forecast-ecb-could-cut-rates-45-boj-345-fed-13

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!
Vanco
Guest
Vanco

I suppose its ironic.
The hardened bears would feel at home in a communist country with their views. They would get a piece of land too since it’s owned by government and distributed equally to its citizens.

bestplaceonearth
Guest
bestplaceonearth

yeah, enjoy that piece of land until, for whatever reasons, the communist government wants it back. they send a bulldoze to crash your house and leave your homeless.

space889
Member
space889

Same with eminent domain powers around the world, or the squatters rights being champions here by the bears.

Most of the time, people get compensated, based on household numbers, etc. Granted there is always argument about what is a fair amount and forced movements. But when the powers want your land, doesn’t matter what country you are in, you wouldn’t be able to hold onto it. It’s only a matter of grace period and how nice they are initially.

btw, even those crappy compensations condos are now worth $500K+ CAD in the big cities in China, and the middle class that sold and came to Canada can seriously outbid most locals with that wad of cash.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!
OpenCourse
Guest
OpenCourse

she is referred to by some source as Mrs Mayor
https://www.youtube.com/watch?v=6ExKzBsfqe4

Whistler or bust?
Guest
Whistler or bust?

I am no fan of Moonbeam but he is the only political who will acknowledge there is a problem. A heck of a lot better than the “protecter of equity” Christy Clark.

Best place on meth
Member
Best place on meth

Dear god, what is that hideous thing attached to Moonbeam?

The man has no taste whatsoever.

space889
Member
space889

And yet still hotter than anything you can get your dirty stinking hands on….unless you enjoy lard and/or old leather.

Chabar
Member
Chabar

They look like some weird Siamese twins, Chang and Eng Bunker guys.

space889
Member
space889

They are still together?? Wonder how long they will last when he loses the next election and can’t get provincial NDP party leadership and have to go back to running a juice shop. Can’t imagine her staying with him when she can still easily bag someone 10x richer than him.