It was a few months back when the Provincial government in British Columbia announced that it was implementing new legislation intended as measure to protect consumers who are left with no choice but to ‘act fast’ when buying a home given how competitive it is in the housing market. What it is essentially doing is giving buyers an opportunity to back out of an agreed purchase of a home if they realize they may have overleveraged themselves in order to buy it.
That in theory is a good thing, and especially considering the severe financial hardships that can occur for people if they are forced to go ahead with purchasing a home that they really can’t afford. It’s worth mentioning here given the nature of what we do that a good realtor is one who can be expected to steer their clients away from these potentially stormy waters. But there are going to be instances where the client insists on putting in their offer on a home one way or another and so there are plenty of reasons why this cooling-off period is a good idea.
But there are others that means it is not such a good idea at all. Homeowners who have a sale agreement in place with would-be buyers may move forward with their purchase of a new home, and having their buyer being able to back out of the agreement may throw a major wrench in their plans. So their needs to be a balance, and realtors who are struggling to generate clientele no matter how high a level of service they provide will want to consider our online real estate lead generation system here at Real Estate Leads.
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But lets’ get back on topic and share more of what we know about the BC real estate cool off period legislation.
The cooling-off period is properly being referred to as the Homebuyer Protection Period, which is different from the pre-offer period, and it begins immediately after the agreement is signed between seller and the buyer. It is equitable between both, but some believe the property legislation stacks the deck too much in favour of home buyers. It’s helpful to know if you have clients who this may apply to that a termination fee of 0.1 to 0.5% of the price has been recommended to be paid by buyers who pull out of a deal.
Critics have been vocal in opposition to this, and understandably. Leading that is the belief that this property legislation will be mostly ineffective for addressing the disparity between the listing price and the purchase price, a difference that can often be hundreds of thousands of dollars. The next concern is how it will work in practice.
The BC Finance Minister placed an independent financial agency to look into how cooling-off period would work, but the primary aim was always to have it in place for the busy 2022 summer real estate season. Critics within BC’s real estate sector do not approve of the legislation, and point out the act citing that proper stakeholder engagement would clarify why the cooling-off period is a bad idea.
One thing that is for certain is that a cooling-off period will do nothing to address rising real estate prices. Among realtors the majority belief is that it might be better to have a 5-day presale period where a new listing goes online but no offers are allowed. This would preempt sellers having the uncertainty of being locked up in a cooling-off period with just one buyer whose deal may or may not come to fruition.
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