‘Foreign buyers get 15% off:’ Home sellers look to beat new tax
Published Sunday, July 31, 2016 6:25PM PDT
Last Updated Sunday, July 31, 2016 6:56PM PDT
With time running out before the provincial government’s new 15 per cent property transfer tax on foreign homebuyers takes effect, the real estate industry is working overtime to get deals registered before they become subject to the tax.
“Realtors, notaries, lawyers, moving companies, they’re all scrambling to try and make this all happen,” said Dan Morrison, president of the Real Estate Board of Vancouver. “I don’t think anybody realized the impact this would have.”
But for those who can’t get a deal done in time, Eddie Chen has another strategy.
Chen, who is from Taiwan, and thus could have been subject to the foreign buyers tax if it had existed when he moved here, recently listed his house in Richmond for sale.
The MLS listing is eye-popping. Seven bedrooms, $2.35 million, and foreign buyers get 15 per cent off.
“I’m trying to reduce the impact of this new policy to foreign buyers, because they’re going to walk away from this market,” Chen said.
If foreign buyers walk away from the market, and prices drop because of lower demand, home sellers like Chen will stand to make less money.
This is essentially what the provincial government is counting on - that the tax will cool what everyone, including Chen, agrees is an overheated market.
“I have two houses,” Chen said. “I have to sell one to cash in in a market like this, right? Everybody’s trying to do that.”
Chen sees the foreign buyer discount as a way to safeguard his potential earnings on the property. It keeps foreign buyers in competition, and hopefully keeps the price up.
“If everybody’s doing what I’m doing, the market will stay steady,” he said.
Chen originally listed his property - which has been on the market for just two weeks - for $1.9 million, so the current asking price is roughly 15 per cent higher.
In the end, he believes, he’s likely to get his original price, either from a local or a foreigner.
“It’s only asking price,” he said. “Everything is negotiable.”
Other sellers seem to be making the same calculation. A home listed for sale on Craigslist is offering a 10 per cent discount for non-Canadian buyers.
Morrison said real estate agents are legally obligated to abide by whatever pricing strategy the seller proposes. He said Chen’s strategy isn’t illegal, but it does reflect poorly on the industry.
“I was a little upset by it because I don’t like realtors doing things that are going to hurt our reputation,” Morrison said. “At the same time … we don’t set the price as realtors, the sellers set the price.”
With files from CTV Vancouver’s Tom Popyk