REAA gets tough on flipping
Friday 10 March 2017
Extreme flipping cases have prompted the Real Estate Agents Authority (REAA) to announce it is getting tough on cases of agent misconduct.
By Miriam Bell
REAA chairman John Auld said the REAA was going to be more proactive in investigating potential cases of agent wrongdoing.
This included participating in the practice of flipping properties and not disclosing links to future buyers to the vendor.
Auld, who was appearing before Parliament’s Commerce Committee yesterday, said the REAA is already testing out some investigation measures.
It will be investing in new technology that will allow it to track when properties have been quickly re-sold for big profits.
This will enable closer scrutiny of flipping without having to wait for a complaint or information from the public.
Also, last year the REAA reviewed 300 Auckland cases where a licensed agent was involved as either the buyer or seller in cases of flipping, Auld said.
The REAA is fronting the issue following a series of reports about cases of extreme flipping.
In the most recent case, a Papakura property was re-sold by a property investor on the same day it was purchased for an extra $81,000.
In another recent case, two neighbouring South Auckland properties were sold five times in four days.
The REAA’s mandate is to regulate the real estate industry.
To this end, its focus will be on agents involved in the practice of flipping – not any other parties who are flipping properties.
However, while public perception has it that flipping by investors is rife in Auckland, that is simply not true.
Recent CoreLogic data shows that the prevalence of flipping in today’s market is well down on its prevalence in past years and property booms.
According to the data, 7% of Auckland sales in 2016 were properties that were sold within a year.
But this is as compared to 11.7% at the peak of the last boom in the mid-2000s and 9.2% in the mid-1990s.
Data from Myvalocity serves to further support this picture.
It has just 4% of sales in Auckland in 2016 being due to flipping. This is as compared to 7% in 2015, 6% in 2014, and 5% in 2013.
NZPIF executive officer Andrew King said cases of extreme flipping are unusual and getting more so due to the bright line test.
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