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Over $154M tied to detained Chinese-Canadian oligarch invested in GTA real estate – Global News

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A drab, bluish-green glass office tower just north of Toronto, 50 Minthorn Blvd. is unassuming save for a “Bank of China” sign that sits atop the eight-storey building.

But inside, on the first and second floors, is the footprint of companies tied to one of China’s most high-flying oligarchs, Xiao Jianhua. Beijing security agents whisked the Chinese-Canadian billionaire from the Four Seasons Hotel in Hong Kong in a wheelchair five years ago. He hasn’t been heard from since.

A Global News investigation has found the companies, Unexus Group and WinnerMax Capital, are at the centre of a Byzantine network of corporations connected to Xiao’s family, including his wife and brother-in-law, which have invested over $154 million in real estate across the Greater Toronto Area since 2015. Some of the group’s personal properties include a nearly $4-million luxury condo at the Shangri-La Hotel, and a 17,000-square-foot, chateau-style mansion once featured in Toronto Life.


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Former Canadian diplomat speaks out about detention of Chinese-Canadian billionaire


Former Canadian diplomat speaks out about detention of Chinese-Canadian billionaire

The multi-million-dollar condo and townhouse projects being developed by these companies occupy some of the most sought-after land in southern Ontario, which could be valued at over $1 billion according to sources, land title searches, court documents, and reviews of sales and development plans. One project even involved a $4.3-million piece of land in Georgina, Ont., that is now the headquarters for the York Regional Police marine unit, on the shores of Lake Simcoe.

Xiao, who was born in China but holds Canadian and Antiguan passports, handled business transactions and investments of China’s ruling class including President Xi Jinping, according to multiple media reports. He founded his umbrella of companies, the Tomorrow Group, in the early 2000s with his wife, Zhou Hongwen (also spelled Zhou Guangwen). Zhou, along with her sister Zhou Liwen, are listed as the directors of WinnerMax. This Toronto-based company was first incorporated in March 2017, less than two months after Xiao’s detention.

READ MORE: Mystery surrounds Chinese-born Canadian billionaire reportedly seized by China police

The Tomorrow Group controlled interests in state-dominated industries, including banking, insurance, coal, real estate and even rare-earth mineral extraction, and helped Xiao build a fortune estimated at roughly $5.8 billion.

Xiao’s story exemplified China’s excessive world of finance, where wealthy tycoons use political connections to build sprawling empires. His close connections to President Xi Jinping, marriage to a Mongolian beauty queen, and luxurious lifestyle made him a magnetic figure before and after his detainment made headlines around the world.

His whereabouts are currently unknown. Ottawa would not confirm to Global News reporters whether Xiao has ever received consular visits, or if he is even alive. Some media reports have speculated he is under indefinite house arrest in Shanghai.

Following Xiao’s abduction, Beijing authorities accused him of laundering corruption proceeds in foreign markets as well as “bribery and stock manipulation.” In an October 2020 statement, China’s Banking and Insurance Regulatory Commission labelled Tomorrow Group among China’s “illegal financial groups” that were involved in “financial crimes.”

But other factors may have precipitated his downfall. Documents obtained by Global News through an access to information request show Canada’s government has mulled the possibility that Xiao’s kidnapping relates directly to factional battles in the upper echelons of the Chinese Communist Party.

“Should Xiao possess direct knowledge of shady business deals involving Xi’s political foes, his arrest would send a chilling message,” said a February 2017 report by Minxin Pei, a Chinese-American political-science professor, distributed among Canadian consular officials.

“It is easy to envision Xiao singing like a canary in one of the detention centres run by the party’s anti-corruption investigators.”


Xiao Jianhua founded the Tomorrow Group in China, which controlled interests in state-dominated industries like banking, real estate and rare-earth mineral extraction. (EyePress Photo).


(Photo by EyePress News / EyePress via AFP)

Global News could not reach Xiao or his family for comment. But in 2014, Xiao issued a statement denying reports that his empire bloomed from connections with China’s ruling families. Xiao said he prospered by following the lessons of legendary U.S. investor Warren Buffett.

While there have been few reports over the years about his upcoming trial, Xiao’s hope for a fair judicial process is slight. Chinese courts had a conviction rate of 99.9 per cent, according to the latest government statistics.

But beyond the general allegations against Xiao’s companies, which haven’t been proven in court, it’s difficult to determine exactly how much money authorities believe Tomorrow Group obtained, where it went, or how it was returned.

The Chinese Embassy in Canada did not respond to detailed questions for this story.

Where did Xiao’s money go?

As early as 2008, Xiao’s family was setting up a financial foothold in Canada. Xiao’s brother-in-law, Fan Yanfeng, established the China Resource Allocation Corp., which listed his director’s address at a condo in southern Ontario’s winery region, Niagara-on-the-Lake. But it wasn’t until 2015 that Xiao’s family began snapping up development sites across southern Ontario.

Piecing together dozens of land title searches and court documents, Global News has found at least six companies connected to Xiao, his wife and her family.

The structure of the companies is like a Russian Doll: Close to the centre is HZC Capital — described in legal documents as a Canadian real estate “investment vehicle for funds from China.” HZC, in turn, owns Xiao’s family’s public-facing development companies. One of them was Lalu Canada, which later became Unexus. Sources who worked for these companies say private capital companies run by Xiao’s family and their partners make the major investment decisions.

Experts say the way these companies are set up, and some of their transactions in Canada, raise many flags, and questions about whether funds earned from Xiao’s empire in China are being funnelled into Toronto properties.

Money flowing into real estate from outside Canada has become a pressing issue for all levels of government. While there’s nothing illegal about outside investment in Canadian homes, there are strict laws around transferring funds into Canada.

The companies all list 50 Minthorn Blvd. as their business address, on either the first or second floors. And corporate documents for Unexus Group and HZC Capital list Fan Yanfeng, Xiao’s brother-in-law, as a director. WinnerMax Capital, which is tied to these companies financially and through shared corporate registration addresses at 50 Minthorn, is run by Xiao’s wife, Zhou Hongwen, and her sister Zhou Liwen, who is married to Fan, documents show.

A source with direct knowledge of these financial companies said WinnerMax Capital, the company run by Xiao’s wife and her sister, funded some of the land purchases made by Unexus Group, Lalu Canada, and HZC Capital.

“Monies were being advanced by WinnerMax on some of the acquisitions,” said the source, whom Global News has granted anonymity for fear of speaking out. “We used to call it the money from the second floor.”

“They were the purse strings and controlling mind of Lalu, absolutely.”


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Global News’ deep dive into the Xiao family’s real-estate investments offer a window into the kinds of sizzling global money that help fuel skyrocketing home prices: luxury personal properties in the Toronto area, a profitable $73.5-million flip of a land parcel in Vaughan, and condo developments across the city.

An analysis by Global News of property searches, condo unit pre-sales data, completed land sales and development plans, shows that eight of these projects, once completed, could be valued well above $1 billion.

READ MORE: As Canada’s home prices soared during COVID-19, real-estate money laundering audits fell 64%

In Scarborough, a suburban sprawl on Toronto’s eastern edge, Unexus has sold out 385 luxury condo units in “The Borough,” a pre-construction two-tower development. The project’s most affordable dwelling, according to the developer’s public sales data, was a miniature 299-square-foot apartment, sold for $843 per square foot. The sales data, from several years ago, indicates a steep price increase in the area, where an 800-square-foot condo can now sell for about $1 million.

Just north of Toronto in Richmond Hill, WinnerMax Capital — the private investment company of Xiao’s wife and sister-in-law — is building a “limited collection” of 56 luxury townhomes with Unexus. The construction site was purchased in 2017 for $31 million in cash by Lalu Canada, according to a land title search.

Marketing materials from WinnerMax Capital show each designer home in the “intimate enclave” will come with multi-coloured brick and cedar accent exteriors, and offer from 3,000 to 4,000 square feet of modern living. The buyer registration website doesn’t list sale prices. But similar homes nearby market for $1.4 million or more.

But the crown jewel for Unexus could be an assembly of lots at 650 Bay St. in downtown Toronto, a prime development site in the city’s financial district that could yield a luxury condo tower of about 40 floors, according to the company’s marketing plans. If 650 Bay is marketed according to plans — with condos in the area selling for more than $1,200-per square foot — the development could be worth over $500 million, a comparison of luxury condo towers in the area suggests.

Meanwhile, Lalu’s plans for a waterfront development proposal on Lake Simcoe — where the company also worked with York Regional Police to develop a marine building — appear to have stalled in 2018 after facing resistance from local residents.

Xiao’s family members and related companies have not responded to repeated requests for an interview. Directors of WinnerMax Capital and Unexus have not responded to a detailed list of questions both emailed and delivered in-person.

The phone number listed on Unexus’ website is out of service, and in recent weeks the company has moved into the 14th-floor offices of 251 Consumers Dr., a Toronto office complex where WinnerMax Capital is located on the 11th floor.

National significance’

Financial crime experts and political observers say the case raises questions about how Winnermax was able to secure its funding in Canada as China imposes a capital export limit of US$50,000 per year on every citizen. If the transfers don’t follow legal and transparent methods, it raises questions about money laundering.

Matt McGuire, a Toronto-based anti-money-laundering expert, said with all these “red flags,” Canadian authorities should be “eager” to look into these companies.

“This is of national significance and you would expect that a national intelligence agency [FINTRAC] would be focused heavily on it,” he said.

The widespread reports and allegations of corruption surrounding Xiao and his wife’s empire, and regulatory actions and investigations against Tomorrow Group, should be more closely scrutinized by Canadian regulators for money-laundering risks, experts said.

Garry Clement, a former director of the RCMP’s proceeds of crime unit, said the structure of these companies, which often use numbered or shell companies, is “indicative” of trying to obscure who the real owners are.

“Information, deemed reliable, highlights that WinnerMax was the catalyst for some major acquisitions in Toronto,” Clement said.


Click to play video: 'Why Canadians should care about money laundering in real-estate'



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Why Canadians should care about money laundering in real-estate


Why Canadians should care about money laundering in real-estate – Mar 2, 2020

Tomorrow Group’s well-documented financial dealings with elite Chinese officials and Xiao’s prominent dealings in China’s financial, mining and arms company sectors, mean that he and his family could be considered “closely associated” with what is known as “foreign politically exposed persons,” under Canada’s proceeds of crime (money laundering) and terrorist financing act.

International guidelines say a foreign politically exposed person could be a head of state, an elite party official, military leader, president of a state-owned financial institution, or head of a government agency.

FINTRAC, Canada’s anti-money laundering watchdog, requires Canadian businesses to monitor those closely associated with politically exposed clients.

We’ve seen this time and time again, where folks use their position of influence in their country for their own personal gain, and move [money] to other countries out of reach of their local authorities to make it harder to trace,” said McGuire, who advises companies on regulatory risks.

The Chateau


Family members of Xiao Jianhua purchased this Markham property in 2016 for just over $7 million.


(Andrew Russell/Global News)

The investments didn’t only go into commercial real estate. The key directors of these companies also bought properties in the GTA’s most exclusive postal codes. The group even has real estate in British Columbia, with one HZC Capital director listing his address at a $1.6-million home in Coquitlam, a suburb of Vancouver.

Unexus director Fan and his wife, Zhou Liwen, director of Winnermax, personally bought their Markham estate for just over $7 million in 2016, according to a land title search. The compound was built on two bordering lots to accommodate the mansion and adjacent tennis courts, lap pool and recreational quarters.

One online tour of the home from 2013 shows a 25-foot atrium entrance hall, which frames a massive, floating steel and glass stairway. There are dark, chevron-patterned oak floors, a marble-floored ballroom, six bedrooms and 11 bathrooms, an indoor basketball court and theatre, and even an outdoor putting green and Playboy-mansion style swimming grotto on Muskoka-themed grounds that offers plenty of privacy, bordered by tall trees and wrought-iron and stone fences, according to the article.


Exteriors of the Shangri-La Hotel and its residences on July 27, 2020.


(Fred Lum/Canadian Press(

Property documents show equally notable financial details. In 2019, Fan transferred ownership of the home to Zhou Liwen, for $2. The couple has collectively taken out loans of nearly $14 million against the property, records show.

Meanwhile, in the heart of downtown Toronto, a company called WinnerMax Property Inc., which lists Liwen and Zhou Hongwen as directors, bought a condo on the 62nd floor of the swanky Shangri-La hotel in 2019 for $3.75 million.

Calls for a beneficial ownership registry

With many of the properties tied to Xiao’s family members purchased using numbered or holding companies, financial crime experts say this case highlights the urgent need for a national beneficial ownership registry, a publicly searchable database that would store details about who actually owns and controls private companies.

McGuire said Canada’s lax financial reporting laws make it easier for anyone to buy up property “anonymously” and avoid scrutiny.

“Canada is lagging in terms of its beneficial ownership, and we’ve attracted a really poor reputation worldwide for being a jurisdiction of choice because of the anonymity of our corporations,” he said.

Conservative MP Michael Chong and former diplomat Charles Burton agreed with McGuire’s assessment: that Xiao’s family’s real estate companies and investments raise major anti-money laundering compliance questions.

Chong said he believes the Liberal government has paid little heed to the source of funds imported into Canadian real estate by foreign tycoons and their families.

READ MORE: Hidden ownership loopholes make Canada a ‘pawn in global game of money laundering’

Canada’s reputation as a haven for money laundering has become so bad, according to Chong, that Ottawa has become the butt of criticism from international agencies and the U.S. State Department, which thrusts Canada in the same category as Macau and Afghanistan for its lack of financial regulation.

“A beneficial ownership registry would make it clear who is behind this complex web of companies,” Chong said. “Often, they are holding companies and shell companies and numbered companies, where it’s unclear who the beneficial owner is.”

In the last federal budget, the Trudeau government pledged to create a beneficial registry by 2025, but there have been few updates since.

Burton said Xiao’s family’s financial moves in Toronto should have raised flags in Ottawa, but have instead “fallen through the cracks.”

“The question is, are we dealing with monies that are being laundered through Canadian real estate, which the Canadian government clearly needs to be addressing more effectively?” Burton said.

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Edmonton could be headed toward housing supply shortage, real estate industry leaders warn – CBC.ca

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Supply chain problems, rising interest rates and more people moving to Alberta could contribute to a housing supply shortage in Edmonton, according to multiple industry leaders.

These trends, plus the rising cost of construction, were front and centre during multiple panel discussions at the Edmonton Real Estate Forum — a large industry conference held at the Edmonton Convention Centre — on Wednesday.

“All things are lining up for there to be a housing shortage in Edmonton in 12 months,” said Rohit Gupta, president of Rohit Group of Companies.

Following a panel discussion on the multi-residential market, Gupta told CBC News that real estate developers may not be able to build houses fast enough to meet rising demand.

Supply chain snags

Multiple commercial real estate industry leaders, participating in a panel discussion on retail trends, said supply chain problems keep them up at night.

There are long lead times on mechanical items, including refrigeration, gas coolers and transformers — perhaps because of pent-up demand during the COVID-19 pandemic, said Jarrett Thompson, chief operating officer at Cameron Corporation.

The delays are resulting in more time-consuming and expensive commercial and residential projects, he added.

“Despite there being a market right now, a lot of the builders are pulling back, which is creating some major challenges,” he said.

Among the many challenges is a lack of nails, linked to the war in Ukraine, said Gupta, of Rohit Group of Companies.

“It’s everything,” he said. 

“At some point, we’re so numb to the pain.”

Few executives predict these problems will disappear any time soon.

Darren Quayle, vice president of Alberta client services for Oberfeld Snowcap, expects supply chains to get back to normal in 18 months to two years.

Population pressures

Statistics Canada data shows Alberta saw the most interprovincial migration during the last three months of 2021, marking the first time since 2015 that the province led the country in that metric.

Most of those people came from Ontario.

Gupta said most of the people moving from Ontario to Alberta have settled in Calgary, but Ontarians’ interest in the Edmonton market has been accelerating.

The relative affordability of real estate in Alberta is a key part of their decisions to move, he said.

“We’re seeing people [from Ontario] buying houses sight-unseen.”

During Wednesday’s multi-residential housing panel, Strachan Jarvis, managing partner of real estate investments for Toronto-based Hazelview Investments, pointed out that Canada welcomed a record number of immigrants last year but housing supply has not caught up.

“We simply are not building enough,” he said.

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Price fixing has sent Realtor commissions soaring in an already hot market, lawsuit alleges – CBC News

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Much of the discussion about Canada’s real estate market has been dominated by the meteoric rise in the cost of housing. 

But what’s often missing from that conversation is the parallel increase in what Canadians pay in real estate commissions nearly every time a home is bought or sold. 

For example, a brokerage representing a buyer in 2005 in the Greater Toronto Area would have earned a commission of about $8,795 on the average single-family home — while in December 2021, the buyer’s brokerage would earn about $36,230, or four times more on that same home, according to Dr. Panle Jia Barwick, a leading economist on the real estate industries commission structure. 

To put that jump in perspective, the median household income increased by just 14 per cent between 2005 and 2019, after adjusting for inflation. 

That discrepancy is just one of the points laid out in a recent lawsuit, alleging price-fixing and anticompetitive behaviour in Canada’s real estate market.

In the Greater Toronto Area, the average real estate commission exceeds $62,000 before tax. (Patrick Morrell/CBC)

The class-action case launched on behalf of Toronto resident Mark Sunderland on April 9, 2021, claims that some of the country’s largest brokerages, including ReMax, Century 21, and IproRealty Ltd. among others, as well as the Canadian Real Estate Association and the Toronto Regional Real Estate Board, have “conspired, agreed or arranged with each other to fix, maintain, increase or control the price … for buyer brokerage services in the GTA.”

Commission structures vary across the country, but typically real estate agents and their brokerage charge a percentage-based commission on the sale price of a home. In Alberta and B.C., it’s seven per cent on the first $100,000 and three per cent on the balance. In other parts of the country, commissions range between four and five percent. 

The allegations

While the seller pays the full commission, it’s split between the brokerage representing them and the one representing the buyer. 

Sunderland’s lawsuit argues that the agreement known as the buyer brokerage commission rule, created by the Toronto Residential Real Estate Board and Canadian Real Estate Association, effectively forces sellers of residential real estate listed on the Multiple Listing Service (MLS) to pay the commission of the buyer’s real estate brokerage.

Similar practices exist within many other real estate boards across the country.

This arrangement has thwarted competition in the market by pushing sellers to pay for something they would not pay for in the absence of this agreement, the lawsuit argues — and it negates the ability to negotiate the price or quality of the service.

Stephen Brobeck is a fellow with the Consumer Federation of America. He says with respect to commissions, the real estate industry functions as a cartel. (CBC)

“It’s not a typical smoky room conspiracy; it’s out in the open,” said Garth Myers, a partner in Kalloghlian Myers LLP,  the law firm that filed the case on behalf of Sunderland and anyone who has sold a home in the GTA since 2010. 

The effect of this alleged price-fixing can be felt by those who don’t offer the standard commission rate, said Barwick, the economist focusing on the real estate industry’s commission structure. 

The buyer brokerage commission rule “creates the incentive and ability for buyer brokerages to ‘steer’ buyers away from residential real estate properties where sellers offer lower than the norm buyer brokerage commissions,” she wrote as part of research commissioned by Kalloghlian Myers LLP for the case.

Merely the fear that this could happen is enough to pressure sellers into offering the standard commission, she writes.

The practice of steering is further enabled by Realtor.ca, which allows real estate agents and brokers to see the amount of commission on offer but hides the information from public view.

Similar lawsuit certified in the U.S.

Sutherland’s lawsuit is similar to a class-action case underway in the U.S against the National Association of Realtors and America’s largest real estate brokerages. 

The U.S class action, which was certified last month, also alleges that anticompetitive conduct has taken place within the real estate industry, causing U.S. home sellers to pay inflated commissions. 

Using hidden cameras, Marketplace producers found some real estate agents steering potential buyers away from low-commission homes, a practice that breaches the law. (CBC)

“Tens of billions of dollars are at stake,” said Stephen Brobeck, a senior fellow and former executive director of the Consumer Federation of America, a non-profit organization based in Washington, D.C., whose research has helped inform the U.S. case.

“In terms of commissions, the industry is striving to maintain a pricing cartel,” said Brobeck, noting it’s something that’s happening in the U.S. and in Canada. 

On the sale of the average Canadian home, which is now $746,000, the full commission — what’s split between the buyer and seller’s brokerages — amounts to between $26,330 and $37,300 before tax. In a market such as Toronto, the average commission exceeds $62,000 before tax. 

When Sunderland sold his home, he paid “the standard 2.5 per cent” commission to the buyer’s agent and their brokerage, his lawyer said. 

“His view, and the view advanced in the case is, the reason he had to pay [the 2.5 per cent] was because of this price-fixing conspiracy among the various brokerages in the GTA,” Myers said.

“It’s the market that sets the rate, not MLS rules or collusion between brokerages.”​​​​​​– Rui Alves, CEO iPro Realty Ltd.

In March 2022, the Canadian Real Estate Association and the Toronto Regional Real Estate Board brought a motion to dismiss the entire action as having “no reasonable cause of action.” That motion will be heard in the fall.

Another defendant in the lawsuit said he feels the case is without merit. 

“Our business is very competitive,” said Rui Alves, chairman and CEO of iPro Realty in a statement to CBC News. “It’s the market that sets the rate, not MLS rules or collusion between brokerages.”

iPro Realty does encourage sellers to offer the prevailing rate for the area — or may suggest offering a higher commission rate to the buyer’s brokerage in a slower market, he said. 

“This proves that in no way are our fees fixed but simply reactive to competitor fees in the area, just like any other competitive business would do.”

CBC News contacted ReMax and Century 21; while Century 21 Canada said it doesn’t believe there is merit to the claim, it would not comment further. 

ReMax said it wouldn’t comment, given the ongoing litigation.

Steering and real estate commissions

A 2021 Marketplace investigation into the issue of steering by real estate agents found that consumers’ fears around the issue are not unfounded.

To test if real estate agents would indeed steer buyers away from a low-commission home, Marketplace producers went undercover, posing as homebuyers looking for a home in Vaughan, Ont. As would-be buyers, the team asked three local real estate agents to book viewings at three properties on the market, including one offering only one per cent commission to buying agents instead of the 2.5 per cent considered standard for the area. 

While one agent was upfront about the low commission and offered to negotiate the purchase anyway, the other two agents did not tell the buyers about the commission — and discouraged or thwarted them from seeing the home. 

WATCH | Marketplace investigation into real estate ‘steering’:

Real Estate Secrets

7 months ago

Duration 22:30

Investigation catches real estate agents breaking the law to keep commissions high, hamper competition and block private sellers.

One of the agents steered the buyers by telling them the house was overpriced by $200,000 and said the owners would not budge on the price, which was not the case. The other agent told the buyers she was unable to book a showing and suggested the property might have tenants, a turnoff for many people wanting to move in themselves. The owners of the property told Marketplace they did not receive a showing request from this agent.

Further to that test, producers called 25 real estate agents across the country while posing as sellers interested in listing a home. When the agents were asked about lowering the commission rate for the buyer’s brokerage, 88 per cent of the agents warned against doing so. 

“Although they’re not supposed to do it, some agents may be very cognizant of what they’re getting paid and push their buyer to another home,” said an agent in Halifax.

“I have had agents say to me, ‘You know we’re looking at two houses and they’re both a good fit, but I’m definitely sort of massaging them towards yours because there’s more in it for the Realtor,’ ” said another agent in Winnipeg. 

The Canadian Real Estate Association (CREA) and Ontario’s regulator, the Real Estate Council of Ontario (RECO) would not talk to Marketplace about the investigation. However, shortly after learning about the findings, RECO issued a notice about steering to the more than 93,000 real estate agents, brokers and brokerages then under its purview, noting that such behaviour breaches its code of ethics.

“In addition to being illegal, the conduct undermines consumer protection, consumer confidence and the reputation of the real estate profession as a whole,” the notice said.

Still, it’s rare to see sellers offering rates lower than the standard buyer’s commission. According to Toronto real estate agent Alan Spivak, sellers offering commissions of less than 2.5 per cent to buyer brokerages in the Toronto area represented less than one per cent of total listings at the time of his review. 

“This is consistent with my experience for all residential real estate in the GTA since at least 2010,” he wrote in an affidavit included in Sunderland’s statement of claim.

How to increase competition

If there were no buyer broker commission rules in place, Barwick writes, services would become more competitively priced — buyers would pay for their own representation and could negotiate pricing or forgo the service altogether. 

This is already the case in the U.K. and Australia. There, buyers and sellers pay for their own representation and commission rates are lower.

In Australia and the United Kingdom, buyers and sellers pay for their own representation in real estate transaction and there’s more competition as a result. (Norm Arnold/CBC)

“That would also encourage sellers to negotiate more vigorously with their listing agents and those commission rates would most likely come down too,” Brobeck said. 

Brobeck’s own research has determined that “decoupling” real estate commissions in this way could drop standard rates by one to two per cent over a couple of years.

The Canadian Real Estate Association told CBC News it would not comment on the Sunderland case as it’s before the courts.

The Toronto Regional Real Estate Board, another plaintiff in the case, said it “has no involvement with and does not consider or discuss REALTOR® commissions.”

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Worry, buyer's remorse high as real estate market slowdown materializes – Ottawa Business Journal

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A wave of buyer’s remorse is taking shape in several heated real estate markets, after housing prices started dropping and the number of sales slowed over the last two months.

Realtors and lawyers in Toronto and Vancouver say they have noticed buyers looking at what options they have to get out of a purchase and sellers hoping to ensure one goes through because conditions have shifted dramatically from the previous highs and frenzied pace.

The country experienced a 25.7 per cent drop in the number of homes sold over the last year and a 3.8 per cent slide in housing prices between March and April, the Canadian Real Estate Association said Monday. The average home price last month totalled $741,517.

Such numbers have prompted some sellers to explore lawsuits to ensure transactions move forward and other purchasers to worry about the value of pre-sale properties they bought years ago but have yet to take possession of.

“With today’s real estate prices, there’s really no option but to go all in and if you’re going all in, and then suddenly you’re realizing that perhaps you made a bad bet and there’s a way out of that bet, you’re going to do whatever you can to get out,” said Mark Morris, a Toronto real estate lawyer.

In recent weeks, he has seen nine cases where buyers want to back out of deals but on Monday alone was approached by three sellers keen to use legal channels to keep purchasers from walking away.

Morris doesn’t call the encounters a trend because it’s unclear how many other lawyers are seeing the same spate, but three queries in a day is his new record. He used to see one case of that nature every few months.

“Purchasers are looking at the existing crisis, and in the best of times, they feel they overpaid, but now they have objective proof that they’ve done so because markets have started to pummel and fall and really shows no signs of slowing down,” said Morris.

“Many of those buyers are faced with the option of moving forward or upping and walking.”

People get “spooked” every time the market turns and explore what they can do about deals they signed, but few end up walking away because it’s hard to get out of such transactions, said Phil Soper, CEO of Royal LePage.

He thinks the exception to this pattern came in 2020, when the COVID-19 pandemic broke out and people wanting out of transactions had so many unknowns on their side.

Most buyers trying to end a deal this year won’t be successful because there is no legal way out, but such cases are also impractical for sellers, Morris said.

“Is a seller really willing to pursue a buyer that has no assets? Is the seller really going to go through three years of courts only to find that they have a judgment that can’t be pursued?” he pondered. “Are they really ready to put up the amount of money that it will take to pursue this to the ends of the earth if they’re able to resell? Perhaps not.”

In cases where the buyer has put money into a seller’s trust account, that money can only be released with a court action, the closing of the deal or a mutual agreement not to pursue the sale, said Morris. He’s seen buyers agree to give the seller the money, if the seller mutually agrees to end the deal.

If a deal ends, brokers can sue for their lost commission but not many explore this avenue because it’s “not a good look” to take legal action against a client, who might still turn to you when they try to sell the home from the failed transaction again, said Morris.

While Tirajeh Mazaheri hasn’t seen legal action in Vancouver, the Coldwell Banker Prestige Realty agent has seen buyer’s remorse and worry crop up among investors who purchased pre-construction homes a few years ago but have yet to take possession of them.

“A lot of those people are thinking, ‘Is the market going to be able to justify this price or keep up with the price I paid and can I get this money back if I want to sell in a year?'” she said.

The people who purchased in early rounds of pre-construction sales for a building are already ahead of the curve, but those who bought later will have to wait longer to break even or make a profit, she said.

Even though worry is at a high, Mazaheri and Soper agree the markets do rebound and homes are still a valuable investment.

“Anyone who bought a home in 2021 in this country, if they bought anywhere near market price, their home is going to be worth more in 2021,” said Soper.

“Will it be worth more one year from now? That’s harder to predict ? but even a year from now the likelihood of that home being worth less than it is today is smaller.”

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