South China Morning Post Headlines MAC Marketing Deceit – “Bogus Buyers”; “Scam”; “Teetering Market”; “Steadily Falling Prices”.

scmp
Supposed homebuyers Chris and Amanda Lee were exposed as employees of MAC Marketing Solutions in Vancouver [image and caption accompanying the SCMP article]

“A senior executive at a Vancouver marketing firm was forced to resign after employees of the company were caught posing as the daughters of rich Chinese property buyers in interviews with TV reporters.
The deception was intended to create the impression that Chinese buyers were still queuing up to buy into Vancouver’s teetering real estate market, which has long been fuelled by money from China and is now rated as the second least-affordable city in the world, behind Hong Kong, according to the Demographia consultancy.”

“The scandal erupted after a series of news reports this month, sourced to MAC Marketing, suggested that an influx of Chinese buyers would give the Vancouver property market a boost over the Lunar New Year period. That would have been in contrast to statistics from the local real estate board showing that prices have been steadily falling in Vancouver for the past eight months.”

“TV news crews at an open house for the new Maddox apartments in downtown Vancouver on February 9 were introduced to two buyers supposedly from China to support the notion of a Lunar New Year boost, who identified themselves as sisters Chris and Amanda Lee. In an interview with CTV, Chris Lee said: “I’m from China, and that is my sister, Amanda. So, we are looking for a place together.”
She told the reporter their parents were visiting Vancouver for Lunar New Year and were bankrolling the sisters’ purchase of an apartment. “So, if we like this place, we have to tell them and they make the decision. Yes, really, Chinese people like to buy at this time [Lunar New Year].”
A similar story was carried by CBC, featuring Chinese house hunters Chris and Amanda Lee.
Two days earlier, a story predicting a Lunar New Year boost in property sales was carried by The Vancouver Sun newspaper, quoting McNeill.
However, an anonymous local real estate blogger known as the Rainforest Whisperer last week questioned whether the sisters were authentic Chinese buyers, after another internet posting showed that an “Amanda Lee” worked for MAC on the Maddox project.”

“MAC was eventually forced to admit that both the “Lee sisters” were its employees, and that they weren’t even sisters. MAC hasn’t revealed the true identity of “Chris Lee”.
“We regret we did not do a better job at ensuring full transparency with those interviewed and apologise for any misunderstanding this may have caused,” MAC said last week.
McNeill told the newspaper : “I don’t know if it was an overzealous employee or if this happened in a formalised way.”
In announcing the resignation on Wednesday, McNeill refused to reveal the identity of the executive who quit.
“McNeill owes an explanation to the media [whom MAC duped], to the broader real estate community [whose reputation MAC has irrevocably damaged], and to the general public [the ultimate targets of this fraud],” the Rainforest Whisperer wrote.”

“The average price of a detached house in the core district of Vancouver West topped out at C$2.25 million (HK$17.13 million) last May. It has since fallen by more than 11 per cent.”

– from ‘Bogus buyers exposed in scam to boost property market in Vancouver’, South China Morning Post, 22 Feb 2013 [hat tip to numerous readers who alerted us to this via comments or e-mails]

The SCMP article carries some big messages, regardless of veracity:
1. The Vancouver RE market is falling.
2. Sellers are desperate enough to attempt subterfuge.
3. Buyer beware (moreso than usual).
This fiasco is turning out to be a spectacular back-fire for MAC Marketing and will quite probably have deleterious effects on the entire Vancouver RE industry.
Ongoing kudos to Whisperer for detecting the blatant deceit.
Regular readers know that we have always maintained that off-shore buyers of Vancouver RE, along with the vast majority of local buyers, have been buying on the premise of ever rising prices.
Now news is getting out that prices are falling.
And the knowledge of the seller desperation implied by this marketing deceit could have a more profound negative effect on buyer sentiment than any of us had initially guessed.
Do you see why we maintain that falling prices will beget falling prices?
– vreaa

Original story covered here:
CTV TV News Featured ‘Condo Buyers’ Actually Marketers Of Very Same Condos!
VREAA 13 Feb 2013

52 responses to “South China Morning Post Headlines MAC Marketing Deceit – “Bogus Buyers”; “Scam”; “Teetering Market”; “Steadily Falling Prices”.

  1. It would be very appropriate if these two “sisters” are forever associated with the greatest market top in Van RE history.

    Perhaps referring to the “Chinese sisters incident” will be a way of conjuring a period where 1million dollars for a East side teardown was considered not only normal, but acceptable.

    One can only hope, but I’m no longer holding my breath.

    We have more than just RE to battle against in this city;

    “Vancouver reigns as the most expensive city in North America to live in, even more so than swanky locales such as New York and Los Angeles, according to annual rankings by The Economist.

    The report ranks cities based on the cost of 160 goods and services, from food, toiletries and clothing to domestic help, transport and utility bills.”

    One hundred and sixty goods and services that now rank us more expensive than the arguable centre of the financial universe, New York.
    The scope of the affordability problem in Vancouver is much broader than just high RE prices, its now extended to every facet of our daily lives.

    Its funny for me to think of us as more expensive than New York, I find NY so intimidating. Though I would consider myself a successful young entrepreneur, thoughts of “making” it in New York seems so far fetched because of my perceived (incorrect) New York premium.

    Who knew the whole time the joke was on me, perhaps the motto should be “If you can make it in Vancouver, you can make it anywhere.”

    • anonymous poster #888

      Brilliant and insightful comment.

      • I had no idea. Good comment Burt. You have a link to the article discussing Vancouvers cost of living by any chance? Can it really be that bad? I will admit I feel a certain amount of pity for you people still living there. You must be miserable.

    • I prefer FAM.The Fake Asian Moment.

      As in “The Vancouver market reached it’s Fake Asian Moment in February 2013.

    • I think the yellow helicopter marked the top, and it was a scam to boot.

    • UBCghettodweller

      I was talking to someone from the Bay Area over the weekend and she made a big deal about how expensive things were. I asked her for specifics about what she thought was outrageously priced and what the prices were. Most of what she considered really expensive (gasoline, food, housing,) according to her numbers, was usually equivalent to what we pay in Vancouver, and many things were 10-20% cheaper! How’s that for skewed perspective?

      Additionally, it was interesting how she cited lucking out on buying a house in the early 1990s and blamed “the Silicon Valley people” for driving up prices in the Bay Area (I guess every city has a HAM substitute.)

      As a disclaimer, this person was from the Marin city area. San Francisco proper is more expensive than Vancouver in almost every respect as best I can tell from online perusals of rent, food, serviced, and consumer goods. But I may be wrong about that. There are ways to live cheaply that avoid mouldy basement suites in Vancouver if you know were to look.

  2. Pretzels...thirsty

    The new face of deceit
    The Chinese sisters

  3. We did some research on HAM. Query of 15 highrises in downtown Vancouver, all are 3yrs or newer. Over 300 were owner/investor (not owner occuppied dwellings). Of those 8 were American and 5 were overseas. The rest were Canadian.
    So much for HAM.

    • Lifetime Renter

      You will have to do better than that. Of those Canadians, how many were recent arrivals able to buy their way into the country. How much of their capital is from foreign sources. You would have to be wilfully blind not to see the extraordinary transformation of this city as a result of the arrival of very large numbers of very wealthy people, mostly from China. The government refuses to keep statistics on this so that their buddies who own the banks and property development companies can claim it’s a myth and not a factor in the hyperinflation of the cost of shelter and in speculation. One of the things I like about Vancouver is that there are people from all over the world here. And I happen to think there is room for more. But it disgusts me that those from other countries who want to come here to work can, increasingly, only be here as easily exploitable ‘guest workers’ or with temporary visas. Meanwhile, foreigners who have found a way to skim off a portion of the wealth in their home countries created by super-exploited workers with zero rights can buy their way in. On top of that, government refuses to ensure that in the face of this extraordinary growth, development aligns with the needs of those of us who do the work around here whether we’re from around here or not. And we are the great majority. Instead, government has allowed development to be driven entirely by the profit needs of the finance and property development capitalists. The result is the mess of unaffordable housing, severe levels of debt, overloaded transportation and health care infrastructure, to name just some of the problems. And without an honest discussion about this, and in the absence of any social movement that defends the interests of the majority, economic hardship and rising social tensions will prove ripe for demagogues spouting xenophobia and racism. Ironically, history shows that the same social forces that today try to hide the real situation when it comes to things like the cost of shelter will, when needed, be the first to try to redirect people’s anger towards racial minorities and immigrants – anything to keep people from targeting those who are truly responsible.

      • Chinese nationals are restricted to removing US$50,000 per year from China. By definition, it would appear that those “investor class” immigrants must engage in illegal activity in order to fulfill immigration requirements. Does no one see a problem here?
        Would love to see an analysis re net benefits/costs of this form of immigration as opposed to skilled worker class.

      • Naked Official #9000

        @disloyal cadres; “lifetime renter” and “youtoldus.so” ..

        You are both obviously disharmonious splittists racists!

      • the poster formerly known as anonymous

        @Lifetime Renter:

        Well put.

    • Real Estate Tsunami

      If Chinese buyers are non existent in Vancouver’s RE market, why would a major Chinese newspaper bother writing about it?!

      • anonymous poster #888

        Exactly. And why does Xinhua (Chinese state media) interview Vancouver-area real estate agents about the state of the real estate market here? I’ve come across several articles in recent years in which Xinhua was interviewing Vancouver real estate agents.

      • There’s one thing we can all agree on… there is little evidence, other than anecdotal, of exactly how we’re defining foreign buyers. Of course, an issue is not properly defined, it’s not only impossible to measure it, it’s equally impossible to do anything about it. Luckily, the discussion that’s been going on for years on blogs such as this fine one finally appears to be gaining a wider audience.

        “There’s scant evidence behind the myth about foreign buyers of Vancouver real estate” : http://tinyurl.com/bf9d9p9

        Funny how the real estate machine is willing to take either side of the “hoards of foreign buyers” argument, so long as it is financially profitable to do so.

      • Joe Mainlander

        Because when a lie is discovered it’s news.

      • Real Estate Tsunami

        Told you so,
        Want evidence! why don’t you go to some of the 500 open houses this coming weekend in Vancouver West.

      • @ Real Estate Tsunami

        Not everyone who looks Asian in an open house in West Van is a foreign buyer. That’s the point.

      • anonymous poster #888

        @joe mainlanders

        Xinhua has been interviewing Vancouver real estate agents for years. I remember an article from over a year ago I which xinhua was interviewing a realtor on west broadway. It had nothing to do with these Chinese sisters and the Mac scam. Xinhua routinely interviews vancouver realtors about the state of the real estate market here. We don’t have North Korean state media interviewing realtors on west broadway. That’s because North Koreans aren’t invested in Vancouver real estate. Xinhua keeps an eye on Vancouver real estate because so many people in china are invested in Vancouver real estate or aspire to invest in vancouver real estate.

      • Real Estate Tsunami

        Told you so.
        Not everyone who looks Asian is Asian.
        Of course not, but their language and dialect makes them so.
        Do you speak Mandarin? My wife does, and she can tell from which region in China people are from.

  4. When I first saw this I didn’t think it would result in anything…We’ve all seen this happen many times over the years. I think it’s only gone mainstream this time because sentiment has slightly shifted. Had this come out a couple years ago it would have been glazed over, when everyone’s making money noone cares about this type of stuff.

    It will be pretty ironic if this is the story that turns foreigners off from our market and wakes up locals to the delusion that is Vancouver RE and causes prices to accelerate downward. RE marketing company kills RE market. Guess that’s what can happen when they get a little desperate.

    I still doubt though that this story is really “mainstream.” Sure, RE investors and the bear community might all know about it, but the average Joe may have already forgotten about it if they knew of it at all.

    • Pretzels...thirsty

      The problem is that “average Joe” uses only 5 percent of his brain, and does everything based on greed and fear.

    • 4SlicesofCheese

      It is not mainstream, and people will forget this specific incident in a few weeks.

      • Yes, that’s still possible.

      • The Mac apology was on Facebook through my Global News feed and just about every comment missed the point or thought this wasn’t a big deal:

        “stupid girls, chinese girls obviously that had nothing better to do than be dishonest and mislead sometone to the point HE loses his job. what ever. charge them!!!!!”

        ” Is this really that big of a deal? This seems like the equivalent of discussing the looks of a Big Mac in a commercial. The employees mislead, the company apologized. Do we really need our pitchforks, there seems to big bigger issues we could be talking about.”

        “Just wondering what the big deal is with this story? Was it some kind of investigation? Who got hurt? Did they attemt to buy a condo with false information? Was there a fraud here somewhere?”

        “Oh like I’ve never seen a Realtor “seed” an Open House with an enthusiastic “potential buyer” who goes around wowing and openly exhtolling the virtues of the property that they can’t wait to put an offer in on… There’s nothing illegal about creating hype – the illegallity would be the follow-through with placing a bogus competing offer. Basically this caused the company embarrassment because it exposed them for using a well-known tactic, so who’s going to trust them….”

        But then again on any Global news story where they discuss real estate most of the commenters seem to think that it will go up forever so maybe Pretzels is right. The media and real estate “Experts” brain washing has pretty much worked for the vast majority of people.

      • 4SlicesofCheese

        10 years is a long time for a bull run. So it will be hard to change sentiment with one story.
        The general public will of course say they knew the bubble was going to burst all along, after the fact.

      • Maybe not mainstream, but the story definitely appeals to journalists, who will keep referring to it.

    • groundhog -> Agree; timing is everything.
      The market was ‘ripe’ for this to happen.

    • It became significant because MAC Marketing fessed up to it… If they hadn’t commented, it would have remained in the realm of the “Crazy Real Estate Bears Conspiracy Theories”… Such as “Look how bitter those real estate bears have become… They’re even accusing Saint Cam McNeill of planting employees as fake buyers…. Tsk, Tsk. They should buy now, or they’ll be priced out forever.”

  5. Quick anecdote from dinner tonight. In-laws neighbours, about 10 years from retirement, purchased a townhouse nearby in Langley. Figured since they’re going to want to downsize at retirement they may as well buy now. Been trying to rent it out for $1500 for a couple months but no takers so now they’re asking for around $1300 but in the meantime it’s sitting empty.

    Got me thinking more about HAM. Seems there’s still a lot of debate about whether it exists or not. Stories like this lead me to believe maybe we’ve all (realtors included) deluded ourselves with this myth and all these empty condos everyone talks about are owned by realtors as investments and baby boomers buying for their future needs or for their kids future needs as they don’t want to be priced out.

    In-laws thought it was a pretty smart idea to buy the townhouse too, no comment from me.

    • Far and away the biggest engine for the bubble has been locals borrowing too much money and overextending to outbid each other to pay preposterously large amounts for properties that are worth far far less [Think: Beanie Babies], all the while telling themselves that there is such relentless demand from foreigners that they’ll be able to retire on the proceeds in ‘x’ years.

      • Ralph Cramdown

        But isn’t it a superlative trick convincing the locals that the HAM* came and then left again? By externalizing the cause, the shorn people will feel better about themselves. It’ll also set up the next boom that much more quickly, since the locals will feel themselves blameless in the last one — not that the geniuses behind this conjuring trick are thinking that far ahead.

        * If indeed it turns out that HAM wasn’t a major factor. I don’t think I’ve got enough data one way or another.

      • Real Estate Tsunami

        Are the waves of Tawainese buyers in the early 80s and the Hongkong buyers in the 90s only figments of my vivid imagination?

  6. Outside of the bear blogs I have not heard a single mention of these news items in mainstream life. It is a non-event. No different from weight loss commercials, bosley, or any other infomercial. We get this type of lie fed to us all the time. One of the culprits that is getting a free pass here is the news media. EIther they are too gullible/lazy to be competent news professionals or they are complicit in this scam.

    • Print media is just understaffed and overworked and margins are as thin as a dime. There is no complicity or conspiracy in the stories they tell…..just no damn time to follow anything up so they take the easy route and simply publish the contents of press releases that they think will appeal to their paying audience.

      The papers are a victim of low revenues and the internet revolution

      • Ralph Cramdown

        Rightly or wrongly, the separation between “church and state” (editorial and advertising) isn’t seen as quite such a big deal in soft sections like real estate and lifestyle. They listen to complaints, and they know they’ll get a lot more of them if a mistake is made in the sports section, or even if a favourite comic strip is cancelled. Real Estate is where the freshly minted cub reporters get assigned to see if they can precis a press release without making too much work for the copyeditor.

        I think the internet has made things far worse for hard news outlets. With click by click analysis, they can no longer pretend that their readership is anything but lowbrow (they knew all along, but…) They know that the NASCAR wreck and the celebrity pregnancy story each get 50x more views than does the latest outrage by rebel factions in Lower Slobovia. I even have a feeling that I haven’t invented a word for yet: When one part of me wants to read a story but another part doesn’t want to click because I don’t want to encourage the editors to fill the site with more stories like that.

      • anonymous poster #888

        I agree Farmer that news rooms are understaffed. But if there was no complicity on the part of the media, what was the reporter doing there in the first place? Even if it wasn’t a scam and the Lee sisters were truly looking at getting rich parents to buy them a condo, how is that news! Stop the presses! Two spoilt adult children are looking at condos for their parents to buy them. They might buy this unit but they’re not sure. Have to check out a few other buildings before deciding which one they are going to buy. Has is that news! Following people shopping is not news. How often does a reporter follow a kid onto a used car lot and follow him around as he picks out a car for his daddy to buy him for his 16th birthday (I’m so Surrey, of course in Vancouver it would be a new Maserati dealership)? None of this is newsworthy even if it were true. The only reason why a reporter would be interested in the Lee sisters would be to create more media hype for Vancouver real estate around Chinese New Year. It is obvious that the media is complicit.

      • Funny stuff, Ralph. I feel the same way some days. Try not to encourage them by clicking on that “too good to be true” story caption or headline. Some days it is just better to walk away and stick with news that you know is trustworthy. Who has the time to read fluff anyway?

        Oh wait. Bite my tongue……it is almost everyone.

      • You make a good point anonymous poster #888. Why indeed is this newsworthy? I don’t attempt to judge what gets delivered to us anymore by a dying media though as I have long since given up on the majority of papers (and I am not alone). Their just rewards come in the form of the ABC circulation statisitcs. Some will make it…most are headed for life as exhibits in a museum. They are earning that place in history one sad manipulative story at a time. Let us not shed any tears as we bid them farewell.

  7. Naked Official #9000

    I must commend this loyal cadre, “Chris Lee”

    You are truly in the vanguard now, my dear!

    Continue to show filial piety to your senior management (the ones who didn’t resign)

    You truly have what it takes to succeed, “Chris Lee” – a giant shit eating grin if ever one was seen – who knows, maybe you too, could be premier of this vast concessionary zone!

    We’ll be sure to get you appointed – its worked so far this time.

  8. Not sure, but that can’t be good for “the brand”…

  9. apologists for the MAC scam shows you how deep the con goes in our society. MAC and the RE/Media industry want to put you in debt for virtually forever .. deceive you to buy a bogus asset, but this is not seen as doing hurt. Despicable.

  10. From “da stream”

    “Mac marketing certainly cleaned up at the Georgie Awards last night. Numerous awards as well as speech/apology by President.”

    The perpetrators have been shot. The problem, therefore, no longer exists.

    Had a fun discussion with a fellow who complained that marketing should be done only by professionals with ethics. I won’t say who it was, but I laughed so hard my upstairs landlord threatened to evict me for making “too much noisy”.

  11. Thanks for the George Carlin link……..it was a good laugh.

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