Open this photo in gallery One realtor told The Globe that she is proud of an award she received for selling most of the units in three towers still under construction at Westbank’s Kensington Gardens in Vancouver – seen here on April 25, 2018 – some multiple times. BEN NELMS/The Globe and Mail

The most sought-after condos under construction in Canada’s priciest real estate market are being snapped up in private deals involving developers, select realtors and speculators.

Many of those players later flip the units for much higher prices, sucking up supply, further driving up prices and leaving Vancouver-area residents increasingly desperate for an affordable place to live.

Those outside the inner circle are in the dark about who those exclusive first buyers are. To shine a light on that, the Globe and Mail spent weeks piecing together available data on just who bought and flipped condos in six new high-rise buildings.

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The investigation revealed a highly profitable game, played by local industry insiders, particularly realtors.

Allan Ross decided that game was rigged, as he spent the better part of two years shopping for a high-rise condominium under construction. The 47-year-old rents a home with his family and recently gave up on buying a new condo, after a realtor showed him a developer’s price list exclusively for agents and choice clients.

Mr. Ross kept a copy. It shows a one-bedroom unit in Pier West by Bosa, in suburban New Westminster, priced $50,000 lower than what he was quoted at the developer’s sales centre this winter.

Open this photo in gallery Allan Ross, seen in Burnaby, B.C. on April 27, says he spent the better part of two years shopping for a high-rise condominium under construction. DARRYL DYCK/The Globe and Mail

“The whole process is so unfair. It’s about greed and profits. It absolutely is manipulated before you even get a shot at it,” said Mr. Ross, who also learned that insiders get first access to buy certain units.

“It’s not a free market. There are different rules for different people.”

The Globe’s investigation discovered real estate agents with local or foreign clients who buy multiple units have preferential first access, along with other industry players such as private financiers.

A significant number of realtors grabbed a piece of the action for themselves or their families by purchasing one or more units. Many resold those in recent years and made six-figure profits, known in the industry as the “lift.”

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“It’s turned into insider trading,” said Shali Tark, one of several realtors The Globe spoke to who are not members of that insider set. She said she steers clear of presale condos because her clients are at a big disadvantage.

“You will see the same names,” she said, referring to buyers with exclusive access. “They are not buying just one or two – some are buying lots. It’s all behind closed doors, and there is no regulation of who is getting what.”

In the six developments − three completed and three under construction − there were at least 24 realtors among the speculators who bought in early. Another 20 had the same names as local realtors, but some of them listed their occupation on property records as “businessperson.” (Realtors are required to disclose their interest in a property but only to the other parties involved in a sale.)

A guide written for developers by Key Marketing, a Vancouver firm that markets pre-construction condos, suggests it’s in a developer’s best interest to give such realtors special treatment.

“A realtor who buys into the building will likely bring in 10 times the number of buyers as a realtor who doesn’t,” the guide says. “It is therefore a wise investment to offer realtors incentives to purchase … things like discounts, free upgrades and reduced assignment fees.”

The Globe was able to compile the names of 76 industry insiders in all, including realtors, lenders and others; most of them had purchased units in the six developments and flipped them for large profits.

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Another 56 speculators had no Canadian address or listed a foreign one. Some listed their occupation as “student” or “homemaker,” which, in Vancouver, often indicates that purchases were made with foreign money, usually from China.

Flips by insiders and speculators with apparent foreign capital (three buildings) 173 Number of flips

56 Flips by speculators in that group

32 Percentage of flips by that group

In the three completed developments – where postconstruction sales can be tracked – speculators with industry connections or apparent foreign capital accounted for at least 32 per cent of 173 flips by buyers who had bought in during construction but flipped right afterward.

Buying presale is always a gamble, because market value can drop before the units are finished. However, because Vancouver’s condo market remains so hot – partly fuelled by speculation – those players reaped an average $145,759 gross profit, most without ever living in them or renting them out.

The collective windfall from known flips for insiders and foreign investors in the six buildings: $10.6-million.

And that’s just the money that can be traced. Countless additional speculators were able to keep their identities and transactions private by reselling units preconstruction, through contract assignment, a practice known as “shadow flipping” that is restricted in B.C. for existing home sales, but not condo presales.

Average profit for insiders and speculators with foreign capital (per flip): $145,759 Average profit

$1000 Minimum profit

$513,200 Maximum profit

A buyer who purchases a presale contract on assignment from an initial buyer pays them the amount of the deposit, usually 20 per cent of the original sale amount, plus whatever price increase the reseller tacks on.

Those deals are impossible to track because they are not registered as sales in land-title records. And only a fraction of assignment transactions are posted in the realtors’ Multiple Listing Service (MLS), because that’s only allowed with developer approval.

Only the developers know how much money actually changes hands – and most take a cut of every assignment flip, between 1 per cent and 5 per cent of the purchase price.

Allan Ge is a realtor who bought early in one of the six buildings, then cashed out for huge profits. He invested in Station Square, a multitower complex in Burnaby, where the developer had given him exclusive access.

“We have a relationship – and so they do us a favour when the market is good,” Mr. Ge said, explaining he helped the developer move units early on, when sales were slow. “The benefit for us is the first access.”

He said that so far, he and his clients have bought 120 units since preconstruction sales began there six years ago.

“Half were investors and half people who want to live there, but most of them came back [later] to resell,” he said. “They made the most money in the last two years. Three hundred to four hundred thousand [dollars] they are making on their flips.”

Speculators such as Mr. Ge’s clients, who buy and flip contracts preconstruction, are supposed to report their earnings as income or capital gains; however, other realtors told The Globe that dodging those taxes is part of the attraction for some players.

The B.C. government is trying to change that, by bringing in a law requiring developers to report all condo shadow flips to the province and the Canada Revenue Agency.

Several realtors said setting up registries that only governments can access is not enough.

“It needs to be a fair playing field for everyone,” Ms. Tark said.

She and others want developers to be compelled to make new condos available to all buyers at the same time and price. They also want access to all the sales data, through the MLS or another system.

“So I know what has been sold and what incentives have been given. I want to know my buyers have been given the same opportunities,” Ms. Tark said.

Two of the condos Mr. Ge picked up for himself were registered in his wife’s name, Qi Mei Han. When the couple sold them postconstruction, they made a gross profit of more than $340,000.

Mr. Ge said he also bought and flipped additional units privately, preconstruction, but refused to say how many.

“Sometimes, I just don’t want to waste that unit and have it go back to the developer. They trust me. I want to do my job. So I buy it,” he said. “Once my client cancelled [the sales contract] two times, and then I said: I will buy it. And I make money.”

Mr. Ge was the listing realtor who sold his own properties, with his wife named as owner and no mention of their connection. He claims he did tell the buyers he had a stake in the transaction.

His wife calls herself a “realtor’s assistant” and has served to obscure Mr. Ge’s interests before. She was on a list of “local residents” – along with other realtors’ family members – who wrote letters to Burnaby City Council to voice support for the developer’s plans at Station Square, which the city had yet to approve at the time.

Ms. Han even posed as the buyer of a property purchased by one of her husband’s clients a few years back. The client was from China and could not get financing, so Ms. Han agreed to take out a mortgage and put the property in her name, then have the client cover the payments.

Mr. Ge claims he has made no more deals like that, adding, “Maybe I am inexperienced at that time.”

Russell Yip also managed to obscure his personal interest in a development. The realtor bought two preconstruction units at the Hanna in Vancouver but put one of those purchases under a company name.

He later tried to flip both – while also trying to resell another unit for clients who had bought it under a numbered company with a post office box address.

There was no mention of Mr. Yip’s vested interest in the MLS listing under his company’s name. He told The Globe he worried that if prospective buyers saw a realtor owner flipping two properties, they would offer to pay less.

“If I saw an agent with two units listed, I would have thought I am going to negotiate really hard,” said Mr. Yip, who said he sold because he could not afford to keep both suites. “We wanted the highest price for my clients and for the value of my unit.”

Mr. Yip ended up keeping the suite owned by his company and flipping the other one for more than $1-million, the highest price per square foot of any unit.



In that 21-unit complex, at least six were initially bought by realtors. One quarter of the building was then flipped at or near closing. There were also several attempted flips on the MLS, a practice that serves to create interest and potentially drive up prices.

Even so, Richard Wittstock, whose firm managed the project, announced on Twitter at the time that initial buyers were “all locals; zero non-residents. One flipped prior to completion.” He said he later corrected his “error,” but that was only after another Twitter user challenged his claim – and Mr. Wittstock still insisted there were fewer flips than there actually were.

Some realtors such as Brian Higgins and Amy Leong promote their vested interest in properties to entice other buyers. The pair work for a company that manages properties for Concord, one of the country’s biggest developers.

An online ad for Mr. Higgins boasts that he has “invested in multiple Concord presale opportunities.” In one of several online posts, Ms. Leong said, “Because of our early access, we just bought personally … we took 10 clients in with us and they were able to pick the best floorplans and suites … the next day, prices were up 15-20 per cent.”

Several realtors without exclusive access told The Globe that the benefits for select agents are an open industry secret.

Open this photo in gallery Real estate agent Alaina Burnett, seen in Vancouver on April 25, managed condo presales for Concord and other developers for a decade before quitting when she decided she didn’t like where the industry was heading. BEN NELMS/The Globe and Mail

“I don’t think it’s right, period. It’s a conflict of interest,” said real estate agent Alaina Burnett, who pointed out that realtors who buy in have an obvious vested interest in reselling their own units over others for the highest possible price.

“Are you going to do what’s best for your clients or are you going to do what’s best for you?”

Ms. Burnett managed condo presales for Concord and other developers for a decade, but she quit because she didn’t like where the business was heading. She said certain brokers, known as “whale realtors,” were given exclusive access to dozens of units.

“Most of the people who are buying them are speculators,” she said. “They are able to cherry pick the best units when they go in with the whale realtor.”

Some of those speculators who flipped multiple units in the six developments are private lenders, which suggests their business has expanded to flipping condos.

One of several is Golden Top Financial Services Inc, whose director is Hua Zhang. His company flipped at least two units in Park Avenue West by Concord in Surrey for a gross profit of $267,300.

Golden Top is “engaged in the business of financial services” in Vancouver and has granted short-term financing at annual interest rates of as much as 48 per cent.

Several investors – local and foreign - appear to be simply buying and selling multiple condos for a living.

Retiree Yu Shao purchased at least four units in the Burnaby development, while Han Ting Shao, with the same home address, bought and flipped two more. The younger Shao, listed as a “student,” grossed $281,220 from those transactions.

A speculator listed on the MLS only as “S Li” flipped at least two units in one Vancouver development plus two in another, sales worth $2.3-million. The listings reveal only that he or she is a “seller in Asia.”

Much of the local business still revolves around the so-called “whale realtors,” however, who seek out and open the door for investors, then help them resell.

Realtor Shirley Dang-Kramer told The Globe that she is proud of an award she received for selling “most of the units” in three towers still under construction at Westbank’s Kensington Gardens in Vancouver – some multiple times.

“I had clients that purchased presale and then I have some who purchased as assignments and they are selling on assignments,” Ms. Dang-Kramer said.

Two buyers she brought in early were the real estate notaries she sends her clients to. They later flipped their unit, at a 43-per-cent price increase, before it was built. Ms. Dang-Kramer helped them resell and earned a $5,000 commission.

She also bought two condos herself as investments, one of which she tried to flip but could not because she priced it too high.

She makes no apologies for having early access to some projects. She says she’s earned that and believes would-be buyers and realtors who feel shut out are simply “brainwashed” by negative real estate news.

“Everything is going to go up in price, and that’s just the way it is,” she said. “People are either jealous or they are not in the market.”

With data analysis by Michael Pereira