Assignments, Home Flipping & the Development Industry
There has been recent media attention on what is being referred to as ‘shadow flipping’, particularly in the re-sale housing market. This is a technique used by some real estate brokers to gain extra commissions by having a property change hands multiple times before a deal closes. A decade ago when there were significant price increases in the residential market, the development industry began to notice that purchase agreements were being resold (or “flipped”) more frequently via assignments with the assignor making money on the value of the purchase agreement as market prices rose. Many developers took action to limit this activity in the new home market, including tighter restrictions on assignments in their purchase agreements.
The Urban Development Institute (UDI) is pleased that the Financial Institutions Commission of British Columbia (FICOM) and the Real Estate Council of British Columbia (RECBC) are reviewing practices related to the assignment of home purchase contracts. UDI would be pleased to participate in the process.