First draft of report on shadow flipping expected today

VANCOUVER (NEWS 1130) – We could get a better idea of how big an issue shadow flipping is in the Lower Mainland later today.

An independent advisory group is expected to release the first draft of its report on the controversial practice.

The group itself was appointed by the Real Estate Council of BC, which is why some have questioned just how impartial the report can really be.

Real estate expert Thomas Davidoff with UBC’s Sauder School of Business would love to see some stiff recommendations. “But my suspicion is they’re not going to find that this is a particularly prevalent behaviour and I don’t think this is going to be particularly important for the market.”

He’d like to see the report call for clarity, when it comes to the role of a realtor.

“I hope they’ll say something like a disclosure that if the buyer is known to have the intent to sell the assignment, that that would be disclosed as well. Certainly, if you’re representing yourself as a seller’s agent, you need to very clear about your intentions to do anything with the property yourself.”

The report is meant to shed some light on how prolific the practice is here in BC.

Davidoff suspects the number of actual cases of shadow flipping is low.

“There is no question in my mind that there are shady practices going on. But that said, I think the facts are probably on the side of the realtors profession, generally. I’m guessing it is a very small fraction of properties that are shadow flipped and when it happens, I’m guessing the losses have been on average, not very large.”

But even if that’s the case, he says the report is still very important in the eyes of the public.

“Even if the facts are that there are only 10 cases that anyone has documented out of thousands of transactions, they need to talk about general process, what the duties are ethically of a realtor to serve their client, not so serve their brokerage.”