B.C.’s new real estate watchdog will consider closing a loophole that has allowed offshore companies to submit bids on properties in the province’s overheated housing market, a practice that is outlawed in Ontario and other jurisdictions.
A spokesman for B.C. Finance Minister Mike de Jong said the new Superintendent of Real Estate, who starts his job next week, will review this practice and make recommendations on whether it should continue.
A Globe and Mail investigation found the Chinese firm vanfun.com marketed single-family homes and new apartment complexes in British Columbia, and worked with local realtors and other unlicensed agents to help its clients in China buy homes in and around Vancouver.
The Real Estate Council of B.C., which investigates and disciplines licensed realtors, will operate under the superintendent. It told The Globe offshore agents can relay offers on real estate in the province so long as they were registered to provide those services in another jurisdiction, and that Canadian realtors have a duty to tell their clients about such proposals.
The practice of tendering bids from other jurisdictions is still allowed in B.C. because the licensing rules apply only to those operating in the province, said Jamie Edwardson, a Finance Ministry spokesman. He said until the incoming Superintendent of Real Estate, Mike Noseworthy, weighs in on this, anyone in B.C. entertaining a bid from overseas should take caution. Mr. Noseworthy, whose appointment followed an overhaul of the council that ended a decade of self-regulation by the real estate industry, was unavailable for an interview.
Mr. Edwardson said it is risky for local sellers to accept offers from overseas firms or agents because they are outside of the province’s legal jurisdiction.
“In a way, they’re providing services in China,” he said. “That’s governed by Chinese law.”
However, regulators can take action against the local realtors and unlicensed agents who often sign the paperwork for clients referred to them by these offshore companies, Mr. Edwardson said.
Ontario’s regulator requires anyone offering trading services – broadly defined as anything from advertising a property to helping negotiate a sales price or fill out paperwork – to be licensed with the provincial real estate council. Alberta also requires anyone advertising property for sale there to be licensed by its real estate council.
A representative of Shanghai-based vanfun.com told a Globe reporter his company offers a range of real estate services – including submitting offers to a Vancouver seller’s agent – for anyone interested in the properties listed on its website, which are translated to Chinese and include the home’s Multiple Listing Service posting number.
Vanfun.com has no employees currently licensed to sell real estate in B.C., and neither do a half-dozen similar offshore companies advertising homes for sale in the province, such as Global House Buyer, Soufun, Hilivable or Edojia. Homelink, one of China’s largest brokerages, has an arm devoted to overseas real estate – including Canada. But the only Homelink registered in B.C. belongs to a one-man operation with no corporate ties to China.
Many of those companies also work with Toronto real estate, although none are registered in Ontario, in apparent contravention of the rules there.
Two years ago, B.C.’s real estate council sent a warning to realtors about “an increase in both the numbers and the variety of websites whose main business is to identify people who wish to buy, rent or sell real estate.”
“Typically, the unlicensed operators of these online lead generation services refer potential clients to licensees in exchange for a referral fee from the licensee,” the bulletin stated.
The council sent a bulletin to managing brokers last week stating that such activity constitutes “soliciting for the purpose of providing real estate services” and requires a B.C. real estate licence.
Mr. Edwardson noted council recently fined two licensees for collaborating with vanfun.com, and the superintendent’s office issued a cease-and-desist order against two other people who had been working with the site from an office in Richmond, south of Vancouver.
These cases were a “pretty big warning shot” to operators like vanfun.com, which works with hundreds of local licensed realtors, according to Ron Usher, a lawyer and member of a panel that recommended the ongoing overhaul of B.C.’s real estate regulation earlier this summer.
The disciplinary cases took years for the regulator to complete and likely targeted a fraction of the unlicensed market, he said.
“There’s clearly something large going wrong here,” he said.Report Typo/Error