So a report was just released by The British Columbia Financial Services Authority, all about strengthening the home buying process for home buyers in British Columbia. They were tasked to provide recommendations to the BC government to help make the system better.
Well, they've done just that. They just released this report right here, which gives a ton of recommendations about how the landscape of buying and selling a home in British Columbia should change to really better benefit the buyer. There's a lot less to benefit the seller in here. In fact, a lot of the sellers advantages might be removed.
But what we're here to do today. Is break down this report, let you know what's in it and what might be good, what might be bad, and. What maybe they should have thought about a little bit more before they made the suggestion. So if you're into learning about how. BC real estate is going to be completely turned upside down. Let's get into it.
So as I said, the BCFSA was tasked to get recommendations about how to strengthen the home buying process and protect home buyers. This was actually something that was quietly even passed as a bill about a couple of weeks ago that was almost blank. This means our lovely politicians thought the whole concept was a really good idea and passed a bill without having any details into it. So is that the best way of going about it? I don't know, but that's okay.
We'll go into the report, because what is in the content of this report Is what's really going to change things. For people buying and selling homes. The BCFSA was tasked with a few things, and that was mainly how to create more transparency in the buying process and how to really balance the unique needs of both buyers and sellers because they are really competing interest in a real estate transaction.
There were really four buckets of recommendations. That came out in this report, and those buckets included the following things like, The home buyer protection period, the pre offer period, the bidding process, and the post offer period. And all different suggestions were really made through each of these.
So let's dive into the first one.
About the home buyer protection. They made several points on this home buyer protection period that they think is really good ideas, and I think some of it actually is quite a good idea. So the first point that they made on there is having 3 clear business days where a buyer can absolutely walk away from a property.
So this means that they could make an offer on a home. It could be completely condition free and just decide anytime within those 3 business days that they just no longer want to work at the property and walk away. So we do have things like this in Canada. A lot of it is more so for new construction type properties. So if you buy like a townhome or you buy a condominium in British Columbia, as an example, you have a 7 day right of rescission. You can walk away for anything. There is one province in Canada in Manitoba, in fact, that has a seven day right of rescission for condominium purchases.
So they're thinking this three day ability. To walk away from an offer is a good idea. This could affect Sellers. It could reduce the speed in which they can get their offer accepted and. Kind of move on with their life and whatnot. But all in all, I don't necessarily think it's a bad idea. I don't love the whole 3 business days thing because we live in a world where things are open all the time and it really should probably just be 3 days, not 3 business days. But that's just my opinion.
So on to the next one.
The next kind of point that they think is that that three business days should be non-waivable. You can't get out of that. That's just into the law, and it is what it is. Now. There's always going to be ways around things like a buyer could offer a non-refundable deposit if someone was to accept their offer just to make sure to show the seller that they're not going to back out. But essentially they're saying that you should not be able to waive that right to your 3 day rescission period.
They are also recommending that there are some narrow exemptions so that non-waivable period might not apply to absolutely everybody. But kind of interesting to see what comes out of that. They also did suggest a modest termination fee, which I thought was great to make sure that they're avoiding frivolous offers.
And so what that suggestion is as an example, if you have a $1 million home, if you just made an offer and you decided to go condition free, but you still got your 3 day right of rescission and you pull out, they don't want that happening because what could happen, of course, is buyers could go out and plug offers into all these different properties and just wait and back out of all of them with no repercussions.
So this termination fee, they are suggesting. Is anywhere from 0.1% to 0.5% of a percent, which, as an example, on a million dollar home could be anywhere between. $1000 to $5,000 of a penalty for backing out of likely a non conditional offer. My biggest concern about that is who collects that how is that dispersed? Getting money out of people can be incredibly difficult and as Realtors we just structure the contracts and help provide advice and negotiate to our clients. But we can't get money out of other people, obviously. So I'm not quite sure how that part of it is really going to play out. So something they're going to need to consider.
They also suggested that the sellers have to disclose other active buyers to the current winning buyers, which is totally fine. I think that's a great idea. And lastly, the sellers have to provide reasonable access to the buyers to the home to be able to do better due diligence, like things like home inspections or allow for an appraiser to get in the property. So all in all, I'm actually quite happy with this list of recommendations.
It's not that bad. Let's get into the next bucket though. Because there are some things in there. That are going to take some further consideration.
The next bucket was the free offer period bucket. And one of the first suggestions is that they wanted a minimum of 5 Days from when a property goes to the market before they are actually able to accept offers. I don't love this one so much. And I'll give you an example.
Why don’t I love this one? We had a new listing come on the market just a few days ago and we got an offer on Day 1. The market is not nearly as busy as it once was a couple of months ago. So we got an offer on Day 1 and because it was Day 1, The seller has a lot of leverage. Therefore they can probably negotiate more on Day 1 out of a potential buyer than they can on day five or day ten, whatever that might be. So if we have to wait five days as a seller to be able to accept offers, buyers can reasonably know that more people have come into the property and that prevents rather the seller. From likely negotiating a better offer because they start to lose some of that leverage from being a brand new listing on the market. So I'm not super excited about this one. It is very beneficial for the buyer, but I think you've removed a lot from the seller.
Also, it is beneficial for buyers, but It might not be beneficial for a buyer. If I am decisive and I know what I want and I want to get a property right away, I have to wait 5 days now for everybody else to see it. So as a buyer I have also lost a lot of steam and ability. The other enhancement that they have suggested is that proper documentation and things that are needed to really sell a property effectively are provided to the buyer and available when the listing goes live. An example that would be Strata documentation. So a buyer can get all the information they need on a very significant purchase prior to making that purchase or making that offer.
Now, in practice, we do this in our real estate practice. We have all these forms available for people right away because that's what a good realtor should really do. But that's okay. Not everybody does that. That's fine. But if that came into law, I think that would be a really beneficial thing for the public who are buying homes.
The third bucket was all about the bidding process and they didn't commit a whole lot to this because it is quite a complicated subject. In fact, I did do a video on the blind bidding, kind of ideas floating around by the federal government and whatnot, but they definitely said that they thought it should be further explored. It's a whole other can of worms, but I'll make sure to link that below so you can take a peek at it.
In addition to that, they also figured that some more standard type clauses that we see on our contracts all the time being included in the standard contract of purchase and sale. Now they would still be optional, but just to make sure that I guess maybe the public are aware that those were options that they could put into the offer, which their realtor would likely be suggesting to them anyway if it was important or needed for their particular offer. So this one's kind of moot to me.
And the last bucket that was on there was post sale. So the whole post sale process was really making sure that after the offer is accepted and it's firmed up, there's no backing out at this point. All other parties who had either made offers or possibly inquired on the property are made aware of the competing bids. Not necessarily the details of the competing bids, I don't believe, but that's going to have to be flushed out a little bit further as well but that was kind of one of the recommendations that the BCFSA had had.
So there you go. That's kind of the four buckets explained. There is obviously going to be quite a few things affected by these proposals. Contract law is one of them. That's a whole other video. The whole general flow of real estate and how it plays out, that's a really big one that's going to be affected. It's going to take a while for the public if these measures get introduced to really start to adopt them and understand that's the way we need to perform things in British Columbia, we are trailblazers whether it's for good or bad in terms of how we regulate our real estate. So we'll have to kind of learn. It as it goes. The only other comment I would make is some of these things are detrimental for either the buyer or the seller. You can't introduce something great for a Buyer without it affecting the Seller.
So while the BCFSA was tasked to help maintain a balance without giving too much advantage to one party or the other, some of these things are going to hurt one of the parties and it's going to change the ability of a buyer who has no financing needs. They've got cash. That's going to change their ability to be stronger and make a stronger offer than somebody who doesn’t. Based on what the proposals are in here, it's going to affect the ability of a seller to move quickly. It's going to affect the ability of a seller to pick different strategies on how they sell their home.
So it's great that some of these things are going to be improved but there is going to be some effects on both Buyers and Sellers. So there you have it, everybody. That is what is in the report. I've linked the report down below as well and while you are searching down there, make sure you pick up one of our two copies of some of our new PDFs for both home buyers or home sellers, rather. They are pretty awesome. We just created created one of them too and I think you're going to love it. So make sure you check those out. And we will look forward to seeing you on the next one.