The “cooling-off period” is coming to BC this January
The “cooling off period” was introduced to British Columbians this January. The real estate industry has been under fire over recent years for more transparency during real estate transactions. The 2015 Vancouver real estate boom became the tipping point to inspire change. Since then, the Canadian Real Estate Association (CREA) in partnership with local boards have implemented a swath of new disclosure forms and procedures to provide transparency and to establish the standards that must be met in the delivery of real estate services.
Now, after the latest boom, people continue to show their displeasure as multiple offer situations became the norm causing buyers to throw in no subject offers at inflated prices.
Enter some reactive solutions by those governing bodies tasked to make purchasing real estate more transparent and, in effect, give buyers and sellers more confidence in the process.
First, the “cooling-off period”, or recission period, has been introduced and will be implemented effective January 1st, 2023. The purpose of the recission period is to protect buyers from situations that would leave them vulnerable in a real estate transaction. This homebuyer protection period gives buyers three business days to back out of a residential purchase after their offer is accepted. It is mandatory in all transactions and neither party is able to waive this condition. Utilizing this period to back out of the deal does not absolve buyers of all risk however as buyers who do back out of a contract will have to pay a cancellation fee to the seller equating to 0.25% of the agreed upon sale price. As a buyer, if your agreement contains subjects in addition to the “cooling-off period”, it is important to ensure your deadlines for the subjects don’t coincide with the 72-hour period. Should you need to back out of the deal due to a subject, you can do so outside the “cooling-off period” to avoid any ambiguity or potential litigation by a seller looking to collect the cancellation fee.
Second, CREA is set to continue down this trend of transparency by announcing a pilot project that will display real-time tracking of offers on REALTOR.ca listings. This is a first for Canada. Openn Offers, a software provided by Openn Negotiation and originally developed in Australia, will integrate with REALTOR.ca to deliver meaningful data points to Canada’s most used real estate website. For example, this platform promises to give buyers the benefit of accessing real time updates on how many buyers they’re competing with, new bids (including prices) and the overall negotiation process. This creates multiple sales methods for property transactions.
Change will always ruffle some feathers in any industry but it is vital to adapt to ensure the relevance and continued improvement of service to buyers and sellers. We must be proactive to stay ahead of the game and successfully tackle future challenges. Any good REALTOR® knows transparency and communication are key building blocks to building trust. Keeping in mind the bigger picture, will these new regulations and pilot projects provide a solution to the ever-increasing issue of affordability? I am no economist but I do know the basic principle of supply and demand. Canada is a desirable country and as long as supply is an issue the idea of owning a home becomes more and more of a distant dream held by those who don’t yet own a home. It will be interesting to see how these new measures will work practically. Do you think it will have the impact our governing bodies are hoping to achieve?
Written by Brandon Kaye