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BC Real Estate Association criticizes cooling-off period for housing

The British Columbia Real Estate Association says a cooling-off period the province is looking to introduce will not take the edge off the market's heated conditions.

The proposed legislation is slated to be introduced this spring and will give homebuyers a window to back out of deal for a property with no or diminished legal consequences.

But the association, which represents 24,000 BC realtors, said Monday that an analysis it conducted of similar cooling-off periods in other global jurisdictions has shown the policy to be "ineffectual at best."

“A ‘cooling-off period’ is not the answer to alleviating the stresses consumers are currently facing in real estate transactions,” said the association's chief executive, Darlene Hyde, in a release.

<who> Photo credit: File

“It won’t stand the test of changing market conditions, regional market differences and doesn’t equally serve buyers and sellers. It also does nothing to address the root of BC’s housing affordability problem; namely, lack of supply.”

Hyde's remarks came as BCREA released a white paper called "A Better Way Home: Strengthening Consumer Protection in Real Estate."

It contains 30 recommendations for addressing the bidding wars, scarcity of supply and soaring prices that have become hallmarks of BC's housing market.

Earlier this month, the Real Estate Board of Greater Vancouver revealed January home sales slowed from a record-setting pace last year, but the benchmark price reached about $1.2 million, up 18.5 per cent from last January.

The association wants to see the province tackle these conditions by introducing a mandatory “pre-offer period” that will block offers from being made at least five business days after a property is first listed, so prospective buyers have enough time to research a home.

BCREA also wants the province to bring more transparency to the homebuying process, so people can make more informed decisions, when they are caught in multiple offer scenarios.

BCREA envisions this working like Ontario’s Stronger Protection for Ontario Consumers Act, which prevents listing brokerages from indicating they have an offer unless they receive a form declaring an offer has been signed.

The act requires brokerages to keep copies of all written offers to the seller and counter offers, and allows buyers who made offers to request a regulator validate the number of offers that were presented.

BCREA said it likes these processes instead of restricting blind bidding, a process where prospective buyers don't get to see details contained in competing bids for homes they make an offer on.

The federal government plans to ban blind bidding and BC is investigating the process too.

However, critics have doubts about whether it will do much to alleviate supply constraints and high prices because of what they've seen in other markets.

BCREA, for example, points out that Sweden does not permit blind bidding, but has experienced even faster home price growth during the pandemic than Canada, and comparable home price growth over the previous 20 years.

New Zealand has not banned “blind bidding,” but uses open auctions, where all parties know each others offers, and has experienced the fastest-growing home prices in the world over the last 20 years, BCREA said.

The association also wants the province to give more information to people considering moving to strata housing, where people purchase a portion of a property rather than the entire building. More than 1.5 million British Columbians live in strata housing.

BCREA thinks documents — strata bylaws, depreciation reports, information on contingency reserve funds and copies of insurance paperwork — should be made available with listings.

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