VANCOUVER — The regulator for British Columbia’s real estate sector has recommended that the province adopt a so-called “cooling-off” period of three business days to protect people buying a home, through legislation tabled this spring.
A report by the B.C. Financial Services Authority suggests buyers should not be allowed to waive the period in which they may back out of a purchase agreement, with some exceptions such as court-ordered sales or auctions.
The report released Thursday advises that sellers be required to provide reasonable access for a property inspection during the three-day homebuyer protection period, which would start the day after an offer is accepted.
It also advises that B.C. implement a “modest” termination fee of 0.1 to 0.5 per cent of the price of a home to be paid by buyers who pull out of a deal.
The fee “strikes a balance between discouraging frivolous offers and recognizing the disruption in the selling process,” the report said.
Additional recommendations include a five-day “pre-offer” period after a property is listed, when a seller may not accept any offers, along with suggestions aimed at enhancing transparency in the transaction process.
For example, the report advises that key strata documents should be made available when a strata property is listed. The province could also require buyers to disclose to sellers any other active offers they’ve made, it suggests.
The B.C. government introduced amendments to property legislation in March and Finance Minister Selina Robinson tasked the independent regulator with consulting real estate industry stakeholders on the parameters of a cooling-off period and other potential measures.
The province has heard in recent years about homebuyers feeling pressured to take “unreasonable risks,” such as waiving home inspections, which has led to “horror stories,” Robinson told a news conference on Thursday.
The government is reviewing the report and Robinson said her aim is to move “relatively quickly” with the bill that passed its third reading last month, but the real estate industry also needs time to adapt to the changes.
“I’m eager to move on these elements. I do need to have more discussion with (the B.C. Financial Services Authority) and others around what time frame is needed to act, certainly around the buyer protection period,” Robinson said, noting there’s a “whole range” of other recommendations.
Blair Morrison, the regulator’s CEO, said there would be “adjustments” to the real estate transaction process to bring the cooling-off period into force.
In order to develop the report, Morrison said the authority hosted 20 consultation sessions with more than 140 people from across B.C.’s real estate sector.
“We think this is core, basic, good consumer protection that should apply throughout British Columbia,” he told the news conference.
“We want to make sure this works for the sector, for the real estate (agents), for the lawyers and other parts of that process,” he added.
He said the review was not intended to address housing affordability in B.C.
The report also considers “blind bidding,” a common practice in which sellers are not compelled to tell prospective buyers about competing offers.
That lack of transparency can “skew the perception of market fairness and potentially lead to distrust in the real estate transaction process,” it said, pointing to concerns about inflated valuations or buyers overpaying for a home by offering a price that significantly exceeds the next highest offer.
The regulator looked at open-bidding alternatives, advising B.C. to consider options such as live auctions and anonymous disclosure of other offers.
This report by The Canadian Press was first published May 26, 2022.
The Canadian Press