In 2016, the B.C. provincial government of the day, responding to numerous ethical violations in the real estate industry, created the Office of the Superintendent of Real Estate. In 2017, the Superintendent banned dual agency in the province.

Story continues below

Many jurisdictions across Canada and the U.S. watched with great interest to see if this would solve many of the ills in our industry and pundits expected other provinces to follow suit. The fact is, no one has followed the B.C. regulator’s lead. One of the several reasons why: B.C. has seen a 40-per-cent increase in unrepresented buyers since banning dual agency. Instead of being a customer of a competent and professional agent, buyers act for themselves in the most complex transaction imaginable. Is that really in the customers’ best interest?

Now the B.C. government, with the goal of slowing escalating real estate prices, is proposing legislation for a cooling off period (possibly seven days?)*  for all resale transactions. This rule, according to the BCFSA, has worked well in the condo pre-sale market, where buyers line up for a new condo opening to buy condos years before they will be completed and ready for move in. Having a seven-day cancellation period doesn’t have a negative impact on the condo developer who still has two or three years to resell the odd condo sale that doesn’t go through.

But for the family who is selling their home in one city because they have already bought in another one, there is uncertainty when accepting the “best offer” and having to wait seven days to find out if they have to go back onto the market. If so, they’ll have to scramble to attract the same attention as when their first home hit the market and convince the second buyer that the first one who backed away didn’t do it for a good reason. This will suddenly and unfairly add a major unknown to an already stressful situation.

A seven-day cooling off period for all real estate transactions will not slow the price increases in B.C. real estate, but it will add a great deal of uncertainty and unnecessary stress to the selling process.

 

*Note:  The headline and copy for this story has been changed because the length of the proposed cooling off period has yet to be determined.

18 COMMENTS

  1. What amazes me is that this government thinks a cooling off period will cool the market and eliminate multiple offers… Here’s a thought perhaps we have a supply shortage? Why not fix that, work with cities to increase staff to process permits faster.

  2. I think the comments by Todd Shyiak a very good.

    Concerns I have with the proposed changes, are the games that certainly will be used in the offer process, with Buyers able to place offers on a variety of homes and give themselves an option to choose the better deal later, all at the cost of the seller losing out. I have witnessed this a few times recently with Buyers / realtors putting in an offer much higher than others then fully intending to renegotiate just prior to Completion with “ My Buyer cannot get financing without water, septic or home inspections then asking for everything they can think of to be replaced or price reduced. The sellers in three cases I was involved in, had already purchased other properties, and felt they had no options. Now add another element for games

    I feel there can be a few changes to help ahead of drastic changes:

    I purchased and sold a few personal properties in Arizona over past few years. A positive policy in making an offer in AZ is that a Letter of Secured Finance, must be submitted with an offer. This way there is no Subject to Finance as it is given that you have the financing secured. There is a condition to approved appraisal in the boiler plate. I feel with the approved appraisal and Letter of Secured Financing the lender should not have the ability to withdraw financing, just ahead of Completion, leaving Buyers with no home to live. Same goes for insurance, as I had that happen a few times recently where insurance companies pulled out at last minute because of BC fires and rain, thus the banks would not fulfill their lending obligations

    I also feel that included with the PDS should be a pre-list home inspection paid for by the seller. Inspections done by acceptable / accredited inspectors only. I often have my sellers pay for a pre-list inspection, which we then make public in the marketing along with the receipts / paid invoices of repairs completed. If I feel this is beneficial to the Seller, however even more so for the Buyers. With this option then the Cooling Off period can or should be waived

    Another problem is waiving of strata documents not being read as too many realtors not spending the money in advance, which goes hand in hand with the out of control for costs for strata documents. I have paid upwards of $300+ on occasions for an electronic version which obviously took little to no effort to pull these together. With today’s technologies why are strata not obligated to have a revolving set of minutes, financials etc which can be viewed ahead of an offer online at a central web site. Then all that is required for purchase is the Form B specific to the property for sale. In short make this a requirement for all strata management companies and strata sales

    None of the above issues of finance, inspections, and strata can be dealt with in a 7-day Cooling period, so until those issues get some resolve it is just adding uncertainty and gamesmanship to the offer process

    With or without proposed Cooling changes, these would be a good steps for real estate

  3. I agree Paul.
    If there’s anything that politicians can’ t screw up in Canada and BC there’s not many rocks left to look under anywhere in the country!

  4. The less government involvement, the better. I am a 35 year veteran of the real estate industry with thousands of listings and sales under my belt. If the buyer is concerned, then add a condition, and if another buyer wants to make his offer more appealing and chooses not to add a condition, that is called the free market. A phrase when people took responsibility for their actions was “Caveat Emptor,” if I spelled it right. Let’s get back to a deal is a deal. Consenting adults making a deal, win, lose, or draw should be responsible for their actions.
    Regulation from politicians very rarely solves anything; it just makes it worse. Need an example of that? Just look at the supply issues in Ontario, all created by government regulation and red tape. At one time, if a buyer or seller was unsure of their decision or the paperwork they were asked to sign, they took it to a lawyer to review; maybe it was not a perfect solution. Still, it did add a layer of protection for the consumer from the scrupulous actions of others. Just my two cents worth. Merry Christmas and have a great 2022 to all those fantastic Realtors out there.

  5. It’s not much a strategy to think or helping enough to hold or prevent the uncontrolled increase in real estate prices but the government could do a lot. Another way is why not the government build more buildings for rental to individuals and families? Anyway this way the government will still make a lot of money. There’s not much rental units or houses out there. One takes a long time to find a rental place, aside from very high rent now. So the effect now is everyone scramble to find a place to buy as the government is inept in keeping home prices at an acceptable level. Don’t forget the law of supply and demand too. Anyway I understand the government make huge money in a fast phased real estate environment.

  6. It’s important to note that the government has not yet specified the length of the cooling off period, nor have they indicated the amount of a recission fee (if any).

    The BC Real Estate Association is conducting a survey of BC Realtors (open until 10 December) to gather views on a cooling off period, as well as other potential market interventions that are under consideration by the government and the regulator. All BC Realtors have received the link to the survey in an email sent on November 26. The results of the survey will help inform BCREA’s official response to the government.

  7. Scarpelli, Lovat-Fraser, Ede and Davidson are the rarest of realtor trademark licensees through their 3 plus decades of licensing that trademark. I know some of these names have traded more homes over their career than the author of this article. Their rareness is not just recorded in their success or years of participation but rather the Perspective and knowledge set they currently hold that has never been allowed to be unleashed because the owners of the realtor trademark want to license that trademark to as many as possible and not withhold it for the best of the best.

    I can assure everyone that within 5 minutes of a conversation the reality of the profession could first be questioned and then critically assessed only by Agents with the rareness these four names contain.

    A Cooling Off Period for these 4 pros would have been a career earnings multiplier because to the level of competence required for a commission to be earned by withstanding such walk away options would reduce their competitors to a mere fraction of the 10s of thousands they to compete against over their 3 plus decades of business at their local mls.

    Of course “silence” is both a Code requirement to license the trademark as is access to any mls system that is required to allow a realtor business to run. Pros like these for those 3 plus decades they have licensed the trademark have been required to be silent and never imply to the public that by choosing them over an inexperienced competitor would provide a superior outcome for the Client. No you cannot imply your skills and knowledge are superior to a one listing broker competitor, the trademark license agreement demands.

    The Pros of the industry should be embracing every single hurdle put in the way that impedes the ability of lesser skilled and lesser experienced trademark licensees from competing on a playing field that has been tilted towards the lesser now for 70 years.

    The Danger Report never mentioned which agents were most exposed to a business wipeout on the issues the report cited. It never mentioned that those with the experience and skill and acquired knowledge would only soar should any of the issues wreak havoc on the industry.

    I highly recommend any realtors with less than 20 yrs experience or fewer than 500 sales to contact one of these 4 names if your a member of the mls system they work out of. Ask them how much business they would have written if they only had to compete against others as highly skilled as they are and not the 10s of 1000s with lesser skills. The answer you should expect is that they would have earned double or triple their career earnings and probably charging their clients less to earn it.

    Obviously this will never happen because a trademark is defined by the worst party who licenses it and never the best. McDonalds is McDonalds because the quality is the same no matter what McDonalds you visit. A Realtor is not a Realtor because the quality is never the same but every realtor must pretend and advertise it is.

    Have a great 2022!

  8. In Toronto only thing will cool down supply supply supply. That’s need take out permission process from city to private company sector. Engineering and developer will submit plan to license private firm, who will over see and implement development plan, also will have right to
    override zoning variation and by laws. Quick permission for development. Not 2/3 years.
    Even submit for permission and start work at same time, with developer sole responsibility to follow by city laws and zoning if they want to keep their license in good condition, with big fine. Developer engineering firm will be full responsible to oversite work . Lots of countries in Asia doing like that process for speedy process to avoid govt red tape.

  9. 7 days cooling period in resale will or may create issues as the Buyer may take advantage and put offers on multiple properties and then decide which one to buy unless buyers will be required to walk out of contract only due to a valid reason not because they were shopping while had an accepted offer in hand and decided to move to another property. agents should have access to some “” registry system in resale only where realtor will be able to check if this buyer is already in contract with another seller …like BRS here in Ontario but this one should be strictly for knowing if the buyer is tied up with another contract. some kind of tracking system. we need to be fair with sellers too . or some kind of disclosure in offer where Buyer assures he is not shopping around and will only walk out of accepted contract due to financing and will provide proof of declined mortgage and if its proven that he bought another property in the same price range and same area , buyer will be responsible for some kind of compensation to both seller and agents for work they have done and efforts .

  10. Personally I have not seen a spike in unrepresented buyers in our market. In fact they seem rare and small by percentage here in the Fraser Valley. Admittedly I don’t see every sale but every licensee I speak to says they have successfully referred a non Clint out to another licensee, something we teach in our ethics course.
    I am reserving judgement on the cooling off period until BCFSA has gone through their consultation process and I can see exactly how they propose the legislation and how it will ease pricing.
    Right now our biggest problem is inventory levels and roadblocks by local government making it harder to receive a building permit. New starts are down and with our flooding victims needing restoration and needing resources for new homes will create a demand for more trades, higher inflation and in turn higher home prices. This cooling off period better be structured well.

  11. Is the government going to give the seller the same 7 day cooling off period? I don’t think buyers would be very happy with that!

  12. Outside of North America this is a normal process in many countries and has zero impact on real estate sales. A little additional work for the big bucks from a sale should not be hurt a professional. The fear seems to be losing the control of having the APS signed and sealed immediately …the credo of commission salespeople! The sky will not fall…rarely, if ever, does in real estate

  13. Assuming it’s not legally enforceable, we’d advise our selling clients to strike the clause regarding the cooling off period. Agree that it gives complete control to the buyer.

  14. Thanks for publishing this alert!!

    Agree!

    This would make every APS ‘conditional on everything at the whim of the BUYER’ for 7 days.
    If I’m a Seller I’d want a premium in the price, to allow for the “IF” in buyer’s offer.

    Would a Buyer ‘who knew what they were doing and knew what they wanted’ be able to opt-out/ waive that 7-day doubt period?

    How EXACTLY-similar to the New Condo Cooling-off period (rooted in 1970’s general public nescience about condo as a form of title).

    rce

  15. Giving the option for home buyers on resale homes to have a cooling off period will allow them to submit as many offers as they want on multiple properties at the same time, then be able to back out on the ones they do not want. Does this sound like a great idea to you? This will only increase the number of offers on each home.

    • well said. You nailed it. A seller now can have all their friends put offers in and tell the legitimate buyers “I have 20 offers”

  16. I would think that if you are adding a “great deal of uncertainty and unnecessary stress to the selling process” it should have an impact on the selling price. However, the 7 day cooling down period will certainly give the buyers an opportunity to obtain a home inspection, check out their financing and decide whether they really want the property. It will help level the playing field since all buyers should be able to make unconditional offers and have 7 days to cancel their contract if things don’t work out as planned. Only time will tell!

  17. Good article Todd. Regulators seem very concerned when a seller is going to make some money on their sale, but I don’t ever hear them clamouring to help the seller if the prices drop. In my area, NB, sellers have been getting decent prices for their home in the past 18 months. However, for the decade previous, it was a strong buyers market and no one cared. Odd that.

LEAVE A REPLY

Please enter your comment!
Please enter your name here