Real estate industry disappointed as B.C. mandates 3-day cooling off period

The BC Real Estate Association (BCREA) is expressing disappointment with the province’s plan to bring in a mandatory three-day waiting period before an offer from a buyer can formally be accepted.

The three-day period is intended to allow buyers to secure financing and get a home inspection done, and prevent them from feeling pressured into making no subject offers in multiple bid situations.

The BCREA had written a white paper with its own proposals, once it learned the government was working on a policy change.

But given what the province has outlined, the association’s chief executive Trevor Koot says he feels let down.

He also claims the regulator isn’t being given enough power under this policy change.

“When they were announced, that [BC Financial Services Authority] was taking over the real industry as part of their regulatory mandate, they were announced as going to be a world leading real estate regulator, and they’re not being empowered to their job,” Koot told CityNews. “They’re at the whim of political will and it’s ultimately not allowing them to protect the public, which is their primary mandate.”

If a buyer backs out after making an offer during the three-day period, they will have to pay 0.25 per cent of the previously agreed-upon purchase price to the seller as a penalty.

The three-day period was one of many recommendations outlined in a BC Financial Services Authority (BCFSA) report released earlier this year.

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While the BCFSA released detailed recommendations to government, the province has essentially only taken one recommendation in isolation, while discarding others.

“We’re all about public protection,” Koot said. “We want any measures that are research based, evidence based policy that can move forward with the times. It’s not just reactionary to a moment in time. All of that we’re very supportive of. We want more of that, and we do that as an industry, which is why we put out recommendations more broadly than what was implemented.”

Another aspect that the industry is upset about is the hint that there will be further changes to come, given this has been described as Phase 1. Koot argues if changes are going to be made, it would be better to roll them all out at once to avoid confusion.

Some industry stakeholders hope the three-day period will help people make sound decisions, rather than find themselves in difficult situations.

“Home inspections help to eliminate some of the potential costly risks involved in purchasing while helping to make an informed decision,” said Jonathan Sheppard, president of Home Inspectors Association BC.

Others say the period is much needed to modernize the way British Columbians make real estate purchases.

“It is important to balance the interests of buyers and sellers. A key objective is to level the playing field and allow buyers to avoid having to make decisions under unreasonable time pressure. It addresses the very important goal that buyers feel trapped into buying a property without an inspection,” said Tsur Somerville, a senior fellow at the UBC Centre for Urban Economics and Real Estate.

This new cooling off period will come into place at the start of 2023.

With files from Hana Mae Nassar