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Burnaby realtor sees 'chaos' coming with B.C.'s new 'cooling-off' period

Amendments to legislation would allow people buying a home more time to consider offers, ensure financing and get a home inspection.
burnaby-single-family-homes
Don't expect home prices in Burnaby to get cheaper anytime soon.

After the province announced proposed amendments to the Property Law Act earlier this week, a Burnaby realtor is wondering how well the cooling-off period presented would actually work. 

On March 28, Finance Minister Selina Robinson announced what the government is calling a "home-buyer protection period" allowing buyers a limited amount of time to consider their offers, get financing in order, obtain a home inspection or cancel a purchase. 

“Too often, buyers are feeling forced to submit no-condition offers just to have a chance in a multiple-bid situation,” Robinson said. 

“People need to have protection as they make one of the biggest financial decisions of their lives. A home buyer protection period is about improving consumer protection and balancing the risk in the marketplace.”

Robinson said the current situation — where the speed of transactions puts buyers in a position where they can’t properly evaluate the property — is only working for people who profit from an overheated market.

The province has not announced how long the cooling-off period will be, or what the financial costs of retracting an offer would be.

Seven-day cooling-off periods for pre-construction sales of multi-unit development properties such as condominiums are already in place under the Real Estate Development and Marketing Act.

'How does the government expect their idea of a cooling-off period, to actually cool anything off?': Burnaby realtor

Paul Prade, managing broker at Burnaby's Macdonald Realty, told the NOW that while he understands the idea behind the government's proposal, he wonders how much of a positive impact it will actually have.

He also noted that it could have negative impacts on those selling. 

"My question would be this: how does the government expect their idea of a cooling-off period to actually cool anything off?" Prade asked. 

"On the surface, it looks to me like you're going to be able to make an offer on a property. And you don't have to commit to the offer for seven days. That may very well be beneficial to buyers. But what about if they're speculators and people who decide they're just going to throw offers at properties? Because they've got seven days before they have to commit? If that is, in fact, what the government's proposing, I see chaos. 

"You don't want to create situations where you help one side and not the other." 

Prade says that until there's more clarity and answers from the government, it's hard to say how well the province's proposed amendments would work out.

Home prices in Burnaby continue to surge

According to the Real Estate Board of Greater Vancouver's February 2022 report, prices on residential, single-family detached homes, townhomes and condos continue to increase month over month. 

The benchmark price of a single-family detached home was $1,729,300 in Burnaby East (+8.4% in one month), $1,927,300 in Burnaby North (+3.3% in one month) and $1,983,000 in Burnaby South (+3.8% in one month). 

“Despite having a higher volume of people listing their homes for sale in February, the region’s housing market remains significantly undersupplied, which has been pushing home prices to new highs month after month,” Real Estate Board of Greater Vancouver chair Taylor Biggar said in the report. 

“A lack of housing supply is at the heart of the affordability challenges in Metro Vancouver today. We need more coordinated action from stakeholders at all levels to help create an ample, diverse supply of housing options for residents in the region today and into the future." 

Lack of supply driving the hot market: Prade 

Prade added that the source of the problem is supply, something he has seen consistently over the past 44 years of his career. 

"It's a supply-and-demand business, always has been," he said. 

"At the end of the day, if there is not enough supply and there are all these buyers lining up, how is making it a seven-day delay going to cool it off?" 

He said similar rules already now in place for pre-sales, haven't done much to help slow down buyers. 

"The right of rescission allows the buyer seven days to review what's called a disclosure statement, which explains to a buyer of a new product, everything that's going to be built in how and all the rules and every it's a large document, that's actually a legal document, that allows a buyer of new products and time to fully understand what they're undertaking.

"But the seven-day right of rescission certainly hasn't cooled the pre-sale market. The real estate market is hot because there's a lack of supply." 

Cooling-off period leaves Metro Vancouver buyers lost in multiple offers: past Real Estate Board of Greater Vancouver president

In an open letter to Robinson published on March 6, 2022, former Real Estate Board of Greater Vancouver president Phil Moore recommended the government take the following actions instead: 

  • Commit to undertaking fulsome consultation with real estate professionals and the public prior to announcements of any intention to implement policy 
  • Ensure each proposed policy has a corresponding problem statement, objectives, goals and metrics to evaluate its effectiveness, making those available to the public 
  • Provide public timeframes for monitoring and evaluating new policies
  • Ensure that any new rules are harmonized with existing rules and other regulatory requirements 
  • Consider the specific impacts of potential policies on B.C.'s diverse regional markets, especially in rural, northern and remote communities
  • Ensure that a policy does not lead to an increase in unrepresented buyers or sellers
  • Consider the impacts of potential policies on commercial real estate 
  • Consider the impacts to all parties in the transaction, balancing differing priorities and needs
  • Consider the impacts on a seller's market compared to a buyer's market
  • Ensure that measures don't negatively impact affordability
  • Consider how these policies would interact with each other if multiple measures were adopted 
  • Provide adequate notice for consumers and real estate professionals. Resources, education and adequate time to adjust practices and develop new standard forms for brokerages will help with compliance 
  • Provide adequate information about data requested from brokerages, including its uses and how it would be reported to licensees, as well as the frequency and complexity of the reporting required by brokerages. This will ensure licensees understand what is expected of them, how they would benefit and how consumers would benefit

"For a full list of recommendations forwarded by the BC Real Estate Association, please read their paper, A Better Way Home: Strengthening Consumer Protection in BC Real Estate. Thank you for your time and I look forward to your response." 

- with files from Andrew Duffy, Times Colonist