Wait what? A cooling off period

The Government announced some details regarding the Homebuyer Protection Period (HPP) also known as "cooling off period". What does that mean?

For quite some time housing has been used as a political point bringer by political parties in British Columbia's vast and expensive real estate market. Over the past three years in particular and long before then housing prices creeped up to ever higher levels and buyers often had to compete against each other, trying to secure their next home. This shortage of housing options was leading to times, in which multiple offers became the daily norm and buyers started trying to make their offers look as best as they can.

Looking back to the last 2+ years through the pandemic, the real estate market especially in the Lowern Mainland and the Fraser Valley saw some extrem conditions of competition for houses, townhouses and condos. Potential buyers tried to secure their homes with offers, which had less and less due diligence provisions in them until many buyers took the due diligence process completely out of the equation. This means, that any of these highly competitive offers when accepted, represented a firm sale. Period.

Some buyer, who didn't have enough advice or the right advice regarding the ramnifications of their doings had to endure some unfortunate situations, because of the lack of due diligence being done prior to writing the offer. No this is where the government comes in to play the Messiah.

It is the governments opinion, that the market needs to be regulated. And so they started a process of consultations to find some ways to end the practice of highly competitive, subject free offers. And the industry, the governments own regulatory body (BCFSA) and others shared their thoughts of how the consumer could be better protected in a situation like this. WELL, the government decided to chuck out all the consulation and just forge ahead with their own idea of what they think will help the people. The problem is, that noone at the BC legislative level has the slightest understanding of the British Columbia real estate market and they basically screwed up again by announcing this "cooling off period".

Starting on January 1, 2023 a mandatory three-day period is intended to allow the buyer to secure financing and conduct home inspections after an offer is accepted. So no more subject free offers leading to a firm sale, even if the offer is subject free. The buyer can, within this time frame, rescind from the accepted offer and face a small penalty of 0.25% from the agreed upon purchase price  (e.g. $1,000,000.- purchase price = $2,500.- penalty). Now you know what we are talking about. Does it really protect the consumer? What about the sellers rights? Is it even necessary, now that the market has cooled down all by itself without government intervention? Many questions remain unanswered as it happens so often when governments try to intervene in markets they know nothing about.