So the British Columbia Real Estate Association and the B.C. Provincial government are basically duking it out in the media right now. Back in November of 2021, the B.C. Government announced something that they wanted to introduce into legislation called a "Cooling Off Period," which is when somebody writes an offer on a property, they would have a period of time to essentially cool off from the heat of their offer and actually make a decision if they want to continue on buying that particular home. Now, there was really no detail included about what this cooling off period might look like because it was announced as a sound bite just to appease the public during a time where the housing market was really, really hot.
No different than the Tesla company announcing a car that's not going to be ready for the next four years. The B.C. Government used this opportunity to gain some popularity, release a sound bite that they thought people would love to hear without any real thought behind what it might impose on the marketplace. They did zero consultation with the real estate industry on what the benefits and cons of input lending such a policy might bring on. Thus why the British Columbia Real Estate Association and them are kind of sparring in the news. If you want to learn more about what's happening, this is the video for you. It's Darin back with another video from the Germyn Group where we know you've only got one chance to either buy or sell your next home. So we're here to help you get it right. Be sure to absolutely smash that subscribe button because you know what?
So now that you know the history of the cooling off period, the British Columbia Real Estate Association, or BCREA, as we'll call them moving forward, really pushed back this week on the provincial government because again, they did absolutely no industry consultation. For those of you that don't know, BCREA represents all 24,000+ real estate members in the entire province of British Columbia, and they have various mandates attached to what they're there to do. Between education and providing standard forms as being two of the bigger ones in terms of Realtors, they also provide advocacy for the public. Because guess what, everybody, us Realtors, we need the public too, because without you, we don't have a job. If you look on their website, it says BCREA is the voice of Realtors in BC. In collaboration with the province's ten real estate boards, they work with all levels of government to advocate for public policy that provides housing opportunities, ensures economic vitality, protects property owners, preserves the environment and builds better communities.
So it sounds like in terms of an organization that represents Realtors, they really have their head screwed on straight because they're here to protect the public as well. BCREA is convinced that the government has got it completely wrong when it comes to this cooling off period that is being suggested, and it's something that the government almost seems to be doubling down on. Unfortunately, like many things that the government does, they're going to be incredibly late to the party with this cooling off period because it's seemingly an all right idea when the market is hot. But you're a regular viewer and subscriber of our channel, you know that the real estate market is changing, as it always does, and any time the government gets involved, it's usually 18 months too late to begin with. And this is probably another example of that about to happen.
Rather than implement a cooling off period, BCREA recommended 30 various things that could help with the real estate market in BC, which is actually linked in the description of this video. If you're interested in taking a read, one of the things you'll notice though, if you get into it, is they are definitely against this cooling off period, but they are more into something called a pre-offer period. In their pre-offer period, they suggest a period of time between a listing goes live and when it actually is available to take offers that they will allow prospective home buyers to do their due diligence on the property. They have other recommendations in there as well, like things like having all the strata documentation required to make an intelligent purchase available prior to a listing going live, and many other things that you can check out in the attached report. So here's the biggest problem of what the government did back in November and not so much what they're doing now, but really making the announcement prior to is they did no consultation, no research, and had no discussion with the real estate industry.
Selina Robinson went as far to say and suggest the following. "I am aware of many points of view on this, including the Association's suggestion of a pre offer period. Pre offer periods are unlikely to address concerns about the risks to buyers, can encourage multiple offer situations and have an unknown effect on housing prices." She also suggested that "As a Commission driven industry, Realtors had a vested interest in the market being hot, but the government's work is to make sure people are protected." Well, guess what Ms. Robinson? My job and all other Realtors in British Columbia is to make sure that their clients are protected as well. So that's one thing we share in common.
Her comments about having a vested interest in making the market or continuing the market to be hot or just plain wrong. Because hot signifies the volume of sales that are happening. How many transactions are happening maybe in a given week, month or year, but it has nothing to do with whether home buyers or home sellers are protected. We as Realtors don't control the amount of people that put their homes up for sale, nor do we control the amount of people that choose to buy homes at any given time during a year. Sales volume is what makes a hot market. Whether a listing goes above asking price or not, has no relevance on that. In more transactions than not, it involves a client who both needs to sell and buy a home.
Selling a home in a hot seller's market means it's detrimental to be buying in the same market. Buying a home in a marketplace that has great conditions for a buyer means it's not so great to be selling a home in that market. So with respect to Mrs. Robinson, let's get very clear on what a hot market means and what it means to real estate professionals and the general public. Introducing this cooling off period could provide some benefits to home buyers.
Yet the challenge is you can't favor just one side of the equation. You need to make sure everybody is equally represented and that includes both home sellers and home buyers. Some of the problems this could create is buyers taking advantage of the system. An example of that would be a buyer writing offers on multiple properties with no intent to actually move forward or close on all of them and just work with whichever one they prefer in the end. It could be the one they got the best deal on or whatever other thing that might be.
But the other properties they did write offers on they don't move forward with. If there's no recourse for that buyer, that is incredibly detrimental to that seller. In fact, it's completely unfair to the seller. And another thing it could do is severely impact the seller's plans if they had specific dates that they required. Maybe they wrote an offer on a property prior to putting their home up for sale and they needed to make certain things work by having a cooling off period.
Those sellers wouldn't have any assurances or clarity on what is happening with their property because the buyer would have unbridled control over what is happening through a cooling off period. The other thing that people might care a little bit less about is it removes advantage for buyers. And what I mean by that is not all buyers are created equal and maybe they shouldn't be. If there's a cooling off period and conditions stop mattering, meaning you stop having to put on these due diligence clauses to protect yourself as a buyer on these contracts. Because you can rely on this cooling off period, you start to remove the advantage of one buyer over the other.
If I'm a home buyer and have 30% down to put on a property. Or maybe I can buy a property with complete cash. That is beneficial for the seller to know, and that's beneficial for me because I have the ability to do that. That doesn't mean the buyer that only has 5% down is not deserving of buying this home. That might be available as well. But certainly that should be a decision that the seller gets to make based on the qualifications of the person bringing them their offer.
If you're watching this video and you are in the example or in the boat of only having 5% down, I feel for you because it is a very difficult market. However, we need to make sure that it is fair for all parties. That's very important. One of the other detriments that came to mind is how important it is when a new listing comes live. I describe it to many of my clients as the horse out of the gates.
It's your big splash into the marketplace and a cooling off period, such as being described by the B.C. Government, could really take that advantage away from a seller. If an offer was written on the property and the buyer went through what's called a cooling off period and didn't move forward with that property, their initial splash and impact on the market might be severely disabled. The important part about this entire conversation is it needs to be equilibrium and it needs to be fair for everybody. An example where I think many people probably won't agree where the BC government got involved and the pendulum has swung far too far for rights of one particular party is in the example of landlords and tenants. Look, everybody tenants deserve to pay fair rent, they deserve a safe place to live, and they deserve to live in a home that is upkept and they are respected of their rights.
However, being in my role as a real estate professional, seeing many landlords walk into their properties for the first time in a long time and seeing what they look like after some tenants have taken care of them is scary. Getting money from tenants for damages is incredibly difficult. The damage deposit of a half month rent barely covers anything anymore, especially in today's dollars, and there's not even a central database involved with a tenant. So if they take advantage of one landlord and continuously move on to other landlords and don't either respect the property, pay their rent, whatever that might be, a landlord has no way of finding that information out. Again, it's got to be fair for both sides of the equation.
And that is certainly an example in British Columbia where many people are very reluctant to buy investment properties now because of how much rights and how much power the tenants have. I thought really long and hard about what some potential solutions to this cooling off period might be. Certainly BCREA had a bunch of suggestions in their report. Again, which is in the description, but a few things that came to mind for myself as I thought about how we can better protect home buyers and home sellers to make sure everyone has a better shot at getting what they want when we get into these very busy markets. The first is we need to figure out how to address this under listing issue where you put a property onto the market for significantly less than what you think it's going to sell for.
Perhaps there is a way of holding the other seller or real estate professional accountable when they list a property for sale that if it sells for significantly more, maybe over 5% more, as an example of what the original asking price was, they have to prove how they came to that asking price and whether they tried to manipulate the market. Another problem that would be so easy to solve is having a property pre-appraised. The two biggest conditions that will usually hinder a buyer are having subject to financing, having to go to the bank to get your money and get your mortgage confirmed or property inspection, and by having a universal pre-appraisal done on the property, this can eliminate the idea of having to worry about whether you'll get approved for your mortgage or not. When a buyer goes to get a mortgage, they are approved for a mortgage, but the secondary piece of that is they need to get the property appraised so the bank knows they can comfortably lend money on it.
And this is very problematic because all banks use different appraisers and those appraisers are responsible back to that bank. By creating a universal appraisal where all the banks can rely on the same source of information, the buyer could then comfortably know that not only are they approved for a mortgage, but the property has been pre-appraised as well. This ties into making pre-inspections available to home buyers. This is something we do personally on all of our listings because we think it's a great service to our sellers. But perhaps, maybe a rule of putting a home up for sale is having a pre inspection done to make available to the buyer.
But lastly, all of that is great. But the real problem and everyone watching this video knows, is Inventory. The inventory needs to come to the market to match the demand. For far too long, we have been limping along in British Columbia and the lower mainland trying to get more inventory onto the market. And a big problem that has hindered that substantially is the municipalities not bringing more product on because they're not approving lots of projects that could be coming forward even if they are in the community plan.
For more information on that, check out the video linked below where I talk a little bit about David Ebe and what his plans are for the municipalities if they don't start playing along. So look everybody, even though the BC government is a little late to the party on this and we don't really know that it's a good idea. It's something that they seem to be marching forward with at this current time. The biggest concern I have is how they went about getting to the formulation of where they are today and what their plans are without talking to industry. I think the BC government has done a lot of incredible things and they've done a lot of things right, but this is certainly one where they get a failing grade.
We need to constantly remind our government to not govern us by populist ideologies. Don't make decisions based off what you see on Twitter, make your decisions based on stats, facts, and consultation with industry and the public that will make it better for everybody. If you use those things along with a little common sense, we can definitely fix the problems in the real estate industry that we're having in British Columbia. More specifically, getting people into the homes that they want in the communities that they love. I'm Darin from the Germyn Group where we know you've only got one chance to either buy or sell your next home so we're here to help you get it right.
Watch the full video here: https://youtu.be/n2uLCttxpqs