Ask any real estate agent and they will tell you how common it is to have clients who’ve just sold a home be putting offers in on a new home in immediate succession. They have the confidence in doing that knowing that buyer of their previous home has contractually agreed to purchase the home, and the sale being complete that way meaning that they can comfortably go ahead and pay what they need to for their new home. Now imagine if they might be surprised in a few days time to learn that their buyer has had second thoughts and isn’t buying the home now.
Needless to say that can be throwing the largest of wrenches into their plans and in many cases it will mean they don’t get the new home they would have it the current BC NDP Government had any sense of discretion when it comes to their new ‘Cooling Off’ legislation that will allow buyers to have a grace period where they can back out of a home purchase without repercussions. The optics of all this may be good considering the housing crisis in Canada, but the working of it look absolutely terrible for home sellers, buyers, and the realtors who are working with these clients.
This is something that is fairly cut and dried for those of us here at Real Estate Leads. While our online real estate lead generation system is ideal for new realtors who want an advantage in being first in-touch with prospective clients is worth talking about, we’re going to skip that promotion and focus on this 4-page bill that is rather ominously being described by industry experts as being ‘painfully’ short on details.
Figure-it-Out Later Approach
It is no secret to anyone that the current NDP Government in BC has taken a sit on the fence approach to governance, and like many governments that have come before them there has always been a focus on placating people and hopefully doing it with as little as possible. What this legislation is yet another example of Government that wouldn’t be particularly inclined to facilitate changes to the housing market even if they did have even the slightest idea where to get started with that.
But they fully understand the importance of at least looking like they care, so here we go with a hastily and sloppily put together attempt to show the voting populous that there is some way for the Government to make housing affordable again. Of course it will do nothing of the sort, but again with these types of Governments the optics are all that matters.
A major change to how real estate purchases will work in British Columbia was quietly passed by the legislature this week, enabling new “cooling off” periods for home buyers.
List of What’s Missing
For starters, we here in the industry have no idea when this ‘cooling off’ period legislation is even going to be put in place. That’s the first of many parts of this that are missing entirely, and it does speak to the Government flying by the seat of its pants and saying what people want to hear despite their knowing full well it’s the furthest thing from a smart idea.
None of us know when will it start. None of us know how many days the cooling-off period will be. None of us know if you will have to pay a financial penalty if you back out of a deal to buy a home? We also don’t know if this will apply to every community in the province or just Metro Vancouver and Greater Victoria. Considering that left-leaning Governments rely on blind-faith voting bases in big metro areas to be able continue with their malfeasance this might not be surprising.
What we do know is that this has the potential to make homeowners selling their homes be subjected to unnecessary consternation and being put a big-time disadvantage. And for no other reason that both Federal and Provincial Governments in Canada have allowed this housing shortage and affordability crisis to grow on their watch with little to nothing in the way of trying to slow it much less put a stop to it.
The NDP’s Finance Minister is saying that they are still waiting on recommendations by an independent financial agency on how a cooling-off period would work, and in which cities it should apply. She did state though that she wanted to pass the bill now so the province could be in a position to act before the busy summer real estate season. So let’s get this straight; in the interest of disadvantaging home sellers as means of advantaging home buyers because one needs more protection than the other it’s important that this gets done asap and we’ll just rush it out and figure out the details later.
Right then. Gotcha.
2 things are certain in all of this; One, this is going to nothing to bring down the cost of homes for buyers, and – more importantly – this is going to do very little to stop buyers from having to bid on homes without going through the proper processes because housing demand outstrips supply more in Canada than in any other G7 nation. And more than 70% of the real estate offers in BC these days are made without conditions, because of how competitive the market is and all the bidding wars.
The reality of the situation is that the playing field is altered for new homebuyers in Canada now and it simply is what it is. Any thing that works to cater to the inequality of that without addressing the root cause of it is simply window dressing, but in this case it is window dressing that stands to hurt homeowners who should have the security of a legally-binding agreement when someone makes the choice to buy a house.
Certainly nobody is forcing them to do so, and it is a purchase of such a significance to both buyer and seller that letting anyone get a ‘refund’ because they’ve reconsidered is simply not appropriate or acceptable.
If you’re a prospective home seller who is displeased about this you are encouraged to speak to you local MP. It is high time this ongoing collection of half-measures and ‘look at us’ empty actions from the Provincial NDP come to an end.
A Better Suggestion
BC’s real estate sector has a much better idea around implementing a 5-day ‘presale’ period where a new listing goes online but no offers are to be considered until those 5 days pass. Buyers could use the five days to line up inspections and financing, and sellers wouldn’t have to take on the uncertainty of being locked up in a cooling-off period with just one buyer that might fall through.
There is not debate that this is the much less potentially-harmful means of protecting the interests of buyers while still seeing to it that home sellers aren’t disadvantaged ‘just because’ of market conditions that have nothing to with them whatsoever.
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