The real estate market in December of 2021 or January of 2022 was absolutely nuts. It was so busy that people were buying homes, almost as if homes would never, ever be built again or ever available again. It was insane. During this time, we saw people making offers that were absolutely out of this world. We would come into the office and see comparable sales that had maybe sold a week or so earlier.
And the newest sales to hit our hot sheets were so much higher, so much larger, and so far out of the realm of sanity that even us Realtors couldn't believe how high these numbers were. This, of course, was probably the craziest time I have ever seen prices rise as a realtor, and thus people made some offers that they probably wish they could take back a little bit. Buyer's remorse. This is when somebody makes an offer on a property and after committing to it 100% by removing their conditions, they regret it. They want to get out of the offer.
They think they're in over their head. They maybe think the prices aren't going to continue to rise. Or worse yet, the biggest reason of all, they think they significantly overpaid for the property. If you want to know what happens when a buyer chooses to back out of a deal in British Columbia, this video is exactly the one for you. So stay tuned.
We're going to get to it. All right. So I received an interesting email the other day from a notary who does pretty reasonable amount of business up in the Langley area, and she had sent a blast out to everybody on her email list that for the first time ever in her career, this actually happened to her 6 times in one week.
6 buyers of real estate decided in one week to not complete on the purchase of their property. And again, this is likely because they probably think they significantly overpaid in the early stages of this year. I want to give you an example of what I mean by people overpaying. There's no doubt the market was busy. There's no doubt that the prices came up and what's going to happen to prices that's for another video or leave your comments below and let us know what you think.
But this video today is not about what prices are going to do. This is about what prices did. As I mentioned at the start of the video, people were making offers like property was never going to be made or made available ever again. Take a look at these two properties in Cloverdale with reasonably similar characteristics and just the differences between one that was sold in January and one that was sold a few weeks or months later. And what happened with the prices?
We've got property #1 on 72 A Avenue, and characteristically, it's a 3200 SQFT home with almost a 3500 SQFT lot selling in mid January for just shy of $1.9 million. Fast forward a couple of months where the market is a little more balanced and home buyers don't have to make those crazy, crazy offers that they once did because there's more homes available for them to choose from. You've got a very similar home just six blocks away, in fact, with a lot that's a little bit bigger and a home that's a little bit newer that sold for $1.778M. That is a difference of about $110,000 from a home that sold about 2 months prior. In fact, today you've got this other home that's similar on 73 Avenue asking $1,750,000.
This is a difference of $140,000 for just waiting a few months. So it's probably safe to say that some people that bought homes in maybe December or January way overpaid for them. It's really not these people's fault either, that they made offers that were so hot and heavy at the time for the homes that were available during these months versus the amount of buyers that were available. It pushed us into absolutely erratic and crazy market conditions. But just like so many other things in life, such as stocks, what goes up can come down and the conditions can change.
And the conditions have changed. They've balanced out quite a bit. If you're a regular watcher of our YouTube channel, you know that the conditions have started to pair more in favor of the buyer. Here's the funny thing. Many buyers think that they can simply just walk away from their deposit if they chose not to complete on a sale.
Where this came from, I have no idea. I believe it is more of what happens in the U.S. Where if you put down a deposit and you decide not to complete on the deal, you can just give your deposit, the seller walk away. And that's kind of the end of what happens. And I'm not even sure that's where that came from. But that's what a lot of homebuyers think.
The one problem with that, though, is that is not how it works in Canada, not how it works in Canada. There is a lot more recourse and a lot more of potential bad stuff that can happen to you as a home buyer if you decide to walk away from your deal. Quick Disclaimer: I'm not a lawyer. I'm not here to give you legal advice if this is happening to you. You're a home seller.
You're a home buyer. You want to walk away from your offer. Don't get your advice from this YouTube video. Call a lawyer. Don't watch this and take advice, even though I think I know what I'm talking about.
Call a lawyer. So here's the scoop of what might play out if you decided to walk away from a home purchase as a buyer. #1) The seller has an obligation to try and mitigate damages, so they would have the responsibility to try and put the house back up for sale and sell it for top dollar in a reasonable time frame as fast as possible. This means if they were able to resell the property for the same amount that you had initially offered them, then there's probably not a lot of problem there. However, we would need to talk about your deposit you put down as well because the deposit is a good faith payment that you're going to come through as a buyer and give the seller the remainder amount of money when completion comes.
That deposit is locked up into a trust account governed by something called the Real Estate Services Act, and both parties have to agree to release that for that deposit to get out. This is kind of sounding like there might be some legal fees involved and you, as the buyer, might be responsible for any and all legal fees a seller may incur regarding your cancelation or walking away from completing on your contract. Now I described a scenario where the seller may sell the home for the same amount and there wouldn't be any damages. But what if the seller wasn't able to sell their home for the amount that you had initially agreed to pay for it? Now I had described a scenario where the seller was able to sell their home for what you paid for it to a new buyer.
But what would happen if that wasn't the case? What if the market changed so significantly that they had to resell the home at a loss? This is another big problem for you as a buyer because now there's something involved called "Damages." Here's a quick story for you. Following the spike in the lower Mainland and real estate prices in 2016, there was a buyer from Vancouver of a Surrey home that decided to walk away from their purchase.
In May of 2016, the BC couple made a subject-free offer on a home in Surrey for about $1.26 million and agreed on a closing date of September 1. However, after the couple sooner tracked their offer because the BC government imposed a 15% property transfer tax on all foreign national buyers buying real estate in the area, on September 2, the deal had not gone through. So naturally the seller sued for liquidated damages. They sued and they won, and 5 months later they were able to resell the same home for $910,000. This was a 28% drop in the price.
The Supreme Court then ordered the would be home buyers to pay the seller the $350,000 price difference plus $10,000 in additional costs pertaining to the property taxes, utilities and hot tub chemicals spent over the 5 months that the home remained on the market. That's an example of what damages could be. Damages could also be the difference in purchase price. It could be paying the legal fees or the moving costs and storage costs of the sellers. What if the sellers were purchasing another home and because you as a buyer didn't complete, you force them not to be able to complete on the home they're purchasing?
You could also be responsible for all of the legal fees that the seller incurs to get the money out of you. The one thing the court is going to be paying attention to the entire time is how to make the seller whole again. Any damages that they have incurred because of you, the buyer, you're likely going to be responsible for it should the seller decide to take it to court. So the reality in British Columbia and the lower mainland and possibly all over Canada is it's not quite as easy as just walking away from your deposit if a buyer decides to not complete on the purchase of a property that they committed to. if you're looking at selling your home, check the description below because you're going to want to grab a copy of our free PDF on 4 things you can do over a weekend to increase your home's value by up to 5%. We've researched this information to the 9's to help bring better value to our home sellers when selling their home to make sure they absolutely maximize the sale price of their property. And for any of you home buyers out there, we didn't forget you. We've got an awesome PDF on 6 things
First time home buyers screw up every time and how to avoid them. Don't be the one that screws it up. There's a link below as well where you can jump and plug time directly into my calendar. I'm a real person and I will call all you and help you answer and figure out whatever things you got going on related to real estate in your life. Thanks for reading everybody.
I appreciate you checking this out and we'll see you on the next one. Take care. Bye