A Vancouver-area real estate brokerage firm is now the focus of two investigations as more people come forward alleging they were treated poorly or deceived by New Coast Realty.
The Globe and Mail has learned the Real Estate Board of Greater Vancouver is gathering evidence on the firm, while a separate probe by the industry's self-regulator continues. A B.C. MLA is urging police to investigate also.
The firm is now at the centre of concerns over practices in Vancouver's white-hot real estate market. The investigations come as a result of The Globe's revelations about an audio recording in which the brokerage's owner, Ze Yu Wu, coaches his agent teams on how to earn quick commissions by talking homeowners into selling their homes for less than they want. The recording of the session last October includes Mr. Wu teaching agents in Mandarin how to persuade their seller clients – by lying to them – to accept the first offer they get.
"It is only a saying to the homeowner, but actually it's not true," Mr. Wu says on the audio recording. "The first offer will never be the best offer, I am sure about this, but you have to say: The first offer is the best offer."
The president of the board, a trade association that represents just over half of the province's real estate agents and controls access to the Multiple Listing Service in the region, says it wants to hear from members with specific information on New Coast or its agents. "If there's a problem there, we want to shine a light on it," Dan Morrison said.
The process of the board, which metes out its discipline to members in private, is separate from an investigation by the industry's self-regulator, the Real Estate Council of B.C., which went into high gear last Friday.
Also Wednesday, the opposition housing critic asked police to step in. David Eby, MLA for Vancouver Point Grey, sent a letter asking Vancouver police and Richmond RCMP to open a criminal fraud case.
Mr. Eby wrote that Mr. Wu's training session likely amounts to "a co-operative, co-ordinated, organized fraud of New Coast Realty clients on a large scale." Even if no fraud has taken place, the training session amounts to "attempted" fraud and can be prosecuted, Mr. Eby wrote in the letter, which he tabled in the legislature. Mr. Eby says the police must investigate Mr. Wu because, as someone who is not a licensed real estate agent or managing broker, he is not accountable to the real estate council.
New Coast Realty's lawyer, Simon Coval, sent a statement responding to all new investigations and allegations, saying: "New Coast Realty's agents and management work hard to serve the best interests of our clients and to respect all professional obligations while doing so. New Coast is fully co-operating with the Real Estate Council's investigation into the allegations which have been made and will respond to the allegations in detail."
(Listen to raw audio of a New Coast Realty training session.)
Several former New Coast agents say Mr. Wu's ideal business model is to sell homes quickly for a low price to investors or speculators who are also New Coast clients and then flip the properties for a higher price.
One seller says he was stung in a recent sale by New Coast and will file a police report. That seller, and an agent from a different recent sale, contacted The Globe recently with complaints.
The seller said he listed his Richmond house for sale in January with a New Coast agent who has since left the firm. Records show the agent sold his house within 16 days, but then offered in a signed contract amendment to waive her commission. The client and the agent say she felt badly for selling his house under market value. The agent then left the brokerage to work for a competitor.
The seller shared his documentation with The Globe, but does not want to be named for fear of repercussions. Documents show when the sale closed in February, New Coast added the $76,125 commission back into the contract, despite the earlier signed agreement waiving it. An inserted page states: "New Coast Realty is collecting full commission," adding that the agent was not authorized to cancel it.
The seller complained to New Coast managing broker Josh Rosenberg. E-mails show Mr. Rosenberg initially said the firm had not altered the contract. He reversed New Coast's position and charged no commission after the seller threatened legal action.
"The moment you change a contract unilaterally, you commit a wrong," the seller said. "If I had overlooked that and proceeded with the transaction, I would have had to go to court to recover the money from them."
The seller said he is filing a complaint with the Real Estate Council of B.C. and the police.
Earlier this month, the real estate council told The Globe it does not keep track of how often it sends complaints to law enforcement for criminal investigations. "When it involves wrongful taking or fraud, we forward it to police," said Maureen Coleman, the council's special adviser to consumers and licensees.
New Coast's lawyer responded to The Globe on the seller's case by noting: "Although New Coast never authorized the elimination of its commission, it honoured the arrangement and charged the seller no commission."
Another case was explained to The Globe by an agent representing a buyer who wanted to make an offer on a property listed by a New Coast agent. The buyer's agent alleges New Coast's listing agent cost her own client $130,000 by refusing to consider the offer and instead accepting a deal that would give her a higher commission.
He told The Globe his client was prepared to offer the $1.58-million list price for the Richmond house in February. He alleges he called to make that offer but the New Coast listing agent said – in two separate calls – that she had just received an "over asking [price] accepted offer." However, MLS records show she actually sold the house for $1.45-million.
The listing shows the buyer had no agent, so the New Coast listing agent will collect twice the commission she would have if she sold the house to a buyer with an agent.
The prospective buyer's agent asked to not be named because of a board rule that agents can be fined for speaking out about other members.
"This type of business practice is so horrible. She was not looking out for her seller's best interest," the agent said.
"This type of thing has happened to about four realtors in my office. I have sent a complaint to the real estate board about a week ago and have not heard anything back."
KTomlinson@globeandmail.com; Follow Kathy on Twitter: @KathyTGlobe
MHager@globeandmail.com; Follow Mike on Twitter: @MikePHager