The regulator for British Columbia’s real estate sector has recommended that the province adopt a so-called “cooling-off” period of three business days to protect people buying a home, through legislation tabled this spring.
A report from the B.C. Financial Services Authority released Thursday advises that sellers be required to provide reasonable access for a property inspection during the three-day homebuyer protection period, which would start the day after an offer is accepted.
It also advises that B.C. implement a “modest” termination fee of 0.1 to 0.5 per cent of the price of a home to be paid by buyers who pull out of a deal.
The fee “strikes a balance between discouraging frivolous offers and recognizing the disruption in the selling process,” the report said.
Additional recommendations include a five-day “pre-offer” period after a property is listed, when a seller may not accept any offers, along with suggestions aimed at enhancing transparency in the transaction process.
For example, the report advises that key strata documents should be made available when a strata property is listed. The province could also require buyers to disclose to sellers any other active offers they’ve made, it suggests.
The report also recommends ending blind bidding and exploring an open bidding process used in many Scandinavian countries.
Homebuyers pressured to take ‘unreasonable risks’
The B.C. government introduced amendments to property legislation in March. Finance Minister Selina Robinson tasked the independent regulator with consulting the real estate industry on the parameters of a cooling-off period and other potential measures.
Robinson says the province is reviewing the report, and her aim is to move “relatively quickly” with the bill that passed its third reading last month, but the real estate industry also needs time to adjust and adapt to the changes.
The province has heard in recent years about homebuyers feeling pressured to take “unreasonable risks,” such as waiving home inspections, which has led to “horror stories,” Robinson said at a news conference on Thursday.
“I’m eager to move on these elements. I do need to have more discussion with [the B.C. Financial Services Authority] and others around what time frame is needed to act, certainly around the buyer protection period,” Robinson said, noting there’s a “whole range” of other recommendations.
Aims to increase transparency, consumer protections
Blair Morrison, CEO of the B.C. Financial Services Authority, said at a news conference there would be “adjustments” to the current real estate transaction process to bring the homebuyer protection period into force.
In developing the report, Morrison said the authority hosted 20 consultation sessions with more than 140 people from across B.C.’s real estate sector.
“We think this is core, basic, good consumer protection that should apply throughout British Columbia,” he said.
“We want to make sure this works for the sector, for the real estate [agents], for the lawyers and other parts of that process,” he added.
He said the review was not intended to address housing affordability in B.C.
The report also considers “blind bidding,” a common practice in which sellers are not compelled to tell prospective buyers about competing offers.
That lack of transparency can “skew the perception of market fairness and potentially lead to distrust in the real estate transaction process,” it said, pointing to concerns about inflated valuations or buyers overpaying for a home by offering a price that significantly exceeds the next highest offer.
The regulator looked at open-bidding alternatives, advising B.C. to consider options such as live auctions and anonymous disclosure of other offers.