New ‘cooling off’ period in real estate comes too late, says Maple Ridge realtor

Real estate purchases in B.C. are now subject to a new three-day home buyer protection period, effective Jan. 3.

Creating a mandatory three-business-day “cooling off” period is intended to give homebuyers more time to secure financing or arrange home inspections. Government says it’s the first key action the province is taking following the B.C. Financial Services Authority’s (BCFSA) report on improving consumer protection in the real estate market. The cooling off time will help buyers fully consider whether a purchase is right for them under any market conditions, including in the face of rising interest rates and any high-pressure sales.

Maple Ridge Realtor Steve Hamilton said the new rules might have been useful during the hottest days of the market, when multiple bidders made offers well above the asking price, with no conditions attached. But now the market has returned to normal, as high interest rates cooled sales, but awkward regulations have been added.

“It was the government trying to protect the public, but it was too little, too late,” he said. “The market has already turned down on its own.”

He noted buyers can now back out of a purchase anytime in the three-day period, for an arbitrary reason. However, backing out would still leave the buyer responsible for paying a cancellation fee of 0.25 per cent of the purchase price. So, the fee for a $1 million home would be $2,500.

The enforcement process to get that rescission fee is unclear at this time, and Hamilton said it will apparently be up to disappointed sellers to collect it.

“It’s cumbersome, and the rules, I would say, are incomplete,” said Hamilton of the new regulations. “But they expect us to work with them.”

During the hottest days of the market, and it was still hot in early 2022, there would be about 70 parties come to an open house to view a property, said Hamilton.

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As rising interest rates cooled the market, that dropped to two or three. Now, he said, a realtor can expect to see four to six prospective buyers when they host an open house, which is back to a normal pace.

Rising borrowing costs have caused a 34 per cent drop in sales, from 44,000 transactions in 2021, to 28,900 in 2022, according to the Real Estate Board of Greater Vancouver. Last year’s sales total was 13.4 per cent below the 10-year sales average.

Last month’s sales were about half of what they were in December 2021 across the region.

“The headline story in our market in 2022 was all about inflation and the Bank of Canada’s efforts to bring inflation back to target by rapidly raising the policy rate. This is a story we expect to continue to make headlines into 2023, as inflationary pressures remain persistent across Canada,” said Andrew Lis, REBGV director economics and data analytics.

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