My opinion on the cooling off period legislation in BC Real Estate

You've gone into multiple offer presentations to no prevail. You've searched home after home after home, just to be beat by a buyer with a "No subject" offer. Well, this may be the great news you were looking for.

In a statement Thursday, the province said a so-called cooling-off period would allow purchasers to back out with no or diminished legal consequences. The B.C. Financial Services Authority said it also will be consulting with those in the real estate industry and other experts on more ways to protect consumers, including a review of the blind bidding system, which can significantly raise the price of purchase.

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The Germyn Group consists of Darin Germyn, Personal Real Estate Corporation, and Adam Howsam. Two realtors located in the Fraser Valley looking to help our clients get it right, the first time, when buying or selling real estate. Darin has been in the real estate industry since 2007, and has had the luxury of helping over 500+ families in real estate. Darin was the former President of the Fraser Valley Real Estate Board in 2019, and top 1% in the FVREB for volume.

Darin has also been featured on News 1130, CKNW, CTV News, Global News, Business Vancouver, Real Estate Video Influencers, Three Best Rated, The Georgia Straight, Country 105 & Real Estate Magazine

Transcript below:

So something surprising came out today, where the BC Government announced their intentions to really change the playing field of residential real estate in British Columbia. There were some really significant announcements of stuff that is due to come down the pipe. Nothing is here yet. It's gotta be fleshed out. It's got to figure out all the details of it, but it's some really interesting stuff and some stuff that hopefully is going to make real estate in British Columbia a little bit better.

Welcome to the Germyn Group's YouTube channel. Every time you like or subscribe to our channel, a new star, way up there starts shining in the night sky. We're here to help you with everything real estate related, and for those of you that are new to the channel or returning viewers, every time someone likes or subscribes to one of our videos, they're entered into our draw each month for two of our custom #DrinksWithDarin beer mugs and some beer of our choice, one that might even be featured on our next episode of #DrinksWithDarin, our monthly Market Update video.

So after you've done all that fun stuff, let's get into the meat of it because you're here for a reason.

So they're talking about various things that they can introduce, things like how to deal with blind bidding. That's where people feel the need to write an offer without having any subjects or conditions on their offer to protect themselves. They're talking about things like mandatory home inspections, how you make something mandatory like that? I don't know. It'll be interesting to see one thing that excites me is they're talking about this game of underpricing listings, and maybe there's some sort of penalty involved for doing that.

That's probably music to the ears of every would-be home buyer out there and kind of exciting. So we'll have to see what really happens and what really comes out of that. But what I really want to shoot this video for today is about the one that they kind of highlighted. And that was something called a cooling off period for when someone makes an offer to purchase a property. To give a little perspective, this is probably very similar to what happens when you buy new construction in British Columbia.

For those of you that don't know, when you write an offer on new construction, British Columbia. By law, you have something called a 7 day right of rescission. What this means is you can back out of that offer for absolutely any reason, completely, regardless of what that might be, whether you can't get your financing, your life plans change, or you simply just change your mind. It's certainly interesting to know why that was introduced and how that came about. And all the discussions that came up about how that would protect home buyers.

But likely the reason that came about is because when you work with a developer, you're going to get something called a disclosure statement. If you've never seen a disclosure statement, it is an incredibly thick, multi-page document, all written by lawyers.

They can be incredibly confusing, and it's really important and incumbent on the buyer to make sure that they understand what they're getting into when they buy a new construction. Now, if you relate all this back to the residential re-sale market, it's really important that a buyer has all the information they need when making a decision as well. So a cooling off period is an interesting idea. Effectively, what a cooling off period would be is when someone writes an offer, they kind of get a right of rescission.

The BC Government hasn't said whether this might be 1 day, 3 days, 7 days because they're going to release that information, probably in the spring of next year, along with addressing some of the other items I've already mentioned.

While the thought of a cooling off period is kind of a cool idea, there is, of course, pros and cons to everything. We can't forget that there's two sides to this equation. There's those that are selling a home and those that are buying a home and both deserve an equal shot. So when it comes to a cooling off period, obviously, the intention is to make sure that the buyer is still making a clear decision and still happy with their decision once they got an accepted offer on a property.

This is a really great idea, but I'm sure you can see, thinking about it, that that's also something that can easily be taken advantage of.

One of the cons. Of course, for a seller is what happens if buyers go and they make multiple offers on properties with no intention of buying them. They could kind of game the system, especially when the market is quite busy. And what's negative for a seller in this respect is they might lose out on other great potential offers because the buyer has done this. Another thought is a seller might lose out on a lot of opportunity from other potential buyers, while buyer number one or whoever is successful in their offer kind of cools off, right?

This means that sellers would have to be very aware and very cognizant of the offers they're accepting, especially if there's a cooling off period. So we don't know if there'll be any potential consequence to a buyer who writes an offer with no intention of actually completing on it. That's something the BC Government will have to discuss and decide how that's going to work. One of the positives that might come out of this, though, for a seller is a seller might choose to do some due diligence for themselves ahead of time.

Maybe things like a pre-inspection on their home.

It's probably better for all parties involved that the due diligence on the home is done as much as possible in advance. Now, hopefully, the cons for a seller don't necessarily outweigh the positives for a buyer. I think this is a really incredible step for a buyer. If it's something that comes to fruition, it's really great to think that all buyers would have an equal shot at buying a home in any way that we can allow for that, the better. There's fundamentally some things wrong with our industry and how it functions to begin with, which automatically puts certain buyers at a disadvantage.

The number one disadvantage most home buyers end up being in is whether they need a mortgage or not.

The way to get a mortgage is completely backwards. It's slow, it's frustrating, and it takes a lot of time, and it's a very closed door process. Allowing for something like a cooling off period would allow a buyer to go and secure a mortgage without having to take a risk or a chance of putting an offer on a property without a condition that is subject to making sure they can get financing on the property. This could also allow for a home buyer to do an inspection during this due diligence period as well.

Now, the important thing is this is called a cooling off period, not an opportunity to do an inspection and contracts matter, and everything written in the contract makes a difference.

I would assume the BC Government is going to think that if somebody puts into a contract that they don't have the need for an inspection. As an example, there's no obligation on behalf of the seller to allow for one, but that might be another way that the system ends up getting abused. You don't allow me to do a home inspection. I'm going to walk away from the house during my cooling off period. The number one thing you can do as a seller to get your home ready for sale is be prepared and have all the information available for the home and make it available to the buyers so they can make a really great decision.

And it's kind of similar for a buyer as well. If you're buying a home and you're excited about it, do as much due diligence as you can about that home and about your financial situation in advance. So if you do find yourself in a multiple offer situation, which is obviously happening all the time right now, you can be better prepared than others and also have a better chance of getting the house that you really want. In the end, our whole housing market needs to be fair and it needs to be equitable.

And the most important point is people need to have trust in it.

We saw what happened with the financial market with banks and stocks and stock brokers and all that in the 2008 financial crisis and that lost a lot of trust in the banking industry. And there was a lot of reform that came out of it. Whenever anything gets stretched to be too thin and it gets tested and manipulated and people maybe feel like things are happening that just simply aren't fair. The positive that comes out of that is once the system gets tested, it gets fixed. It shines a light on the areas that need to be improved so everybody can be better.

Both buyers and sellers having trust in how the real estate market functions is critical to maintaining a healthy ecosystem for home buyers and home sellers. If you liked this video, be sure to like and subscribe. We are releasing new value added videos each week for both buyers and sellers, and you certainly don't want to miss any of them. Also, since you're already staring at your phone or already on your computer, be sure to check out our website as well where you can download one or two of our free PDFs. Either 4 things you can do in only a weekend to increase your home's value by up to 5%.

6 things Home buyers get wrong every time and how to avoid them at the Germyn Group, we know you only got one chance to buy or sell your next home, so we're here to help you get it right. Thanks for watching. We'll see you next time.


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