B.C. announces 3-day cooling period for home sales to reduce risk for buyers
Mandatory 3 days will give potential homebuyers time to arrange an inspection, secure financing
British Columbia has announced a mandatory three-day period to allow homebuyers time to arrange an inspection and take other important steps like securing financing in the province's high-pressure real estate market.
Finance Minister Selina Robinson says the consumer protection policy, effective Jan. 1, is aimed at providing people with peace of mind as unconditional offers are common and could later end up costing buyers thousands of dollars in repairs.
Robinson says the policy, the first of its kind in Canada, includes a cancellation fee of 0.25 per cent of the purchase price, or $250 for every $100,000, for those who back out of a deal, balancing the needs of both buyers and sellers.
Buyers will still be able to make offers conditional on home inspections or financing at any time, the province said in a statement.
Robinson says the homebuyer protection period is based on consultations with the B.C. Financial Services Authority and the experiences of buyers who jumped into deals they later regretted.
Elaine Spilos, a homebuyer who joined Robinson at a news conference Thursday, says she contacted the finance minister after she and her husband were assured by their Realtor that the "exceptional" home they purchased had already been inspected and built to code.
Spilos says the retired couple endured a "very painful experience" three weeks after their purchase when a sewer backed up, with similar damage nine months later.
Industry experts skeptical about effectiveness
In March, the British Columbia Real Estate Association released a white paper which made 34 recommendations aimed at addressing current concerns with the province's housing market, the real estate transaction process and consumer protection.
CEO Trevor Koot is disappointed the province announced only one measure Thursday to protect homebuyers.
"The market has shifted so much that it becomes relatively useless in the current market and the current environment."
Koot says research done by the BCREA showed that a "pre-offer period" of a minimum of five business days from when a property is first listed would offer homebuyers more protection. During that period, sellers would have to list their property but would not be able to accept offers.
He says the industry will be monitoring how effective the three-day cooling period is after it comes into effect in January.
Koot is also disappointed the province didn't follow the recommendations made by B.C.'s real estate regulatory body.
The B.C. Financial Services Authority published a report in May which recommended that a cooling period should be accompanied by an additional pre-offer period.
Vancouver Realtor Lorne Goldman believes any cooling period will be detrimental for sellers.
"Why don't we just let property come on the market and force sellers to wait five or seven days or two weeks to look at offers?"
He says if buyers need more time for things like property inspections, that can happen prior to an offer.
With files from Meera Bains and Yasmin Gandham