British Columbia introduces a three-day cooling-off period for homebuyers

British Columbia is now the first province with a three-day cooling-off period for homebuyers after they’ve signed a deal to purchase a property.

The new measure aims at providing buyers with more time to manage financing or home inspections after an offer has been accepted. According to the provincial government, such things were neglected before amid the red-hot market.

The government says the additional days would also give homebuyers more time to think the purchase over amid high-pressure sales or in case of interest rates growth.

Meanwhile, Tsur Somerville, a professor at the University of British Columbia’s Sauder School of Business, believes the measure, which took effect on Tuesday, is addressing the issue that is no longer a problem as the market is now cooler.

According to the B.C. Real Estate Association, there were 4,512 residential sales made in November, marking an annual decline of more than 50%. The average housing price in B.C. in December 2021 was $984,000, while November 2022 reported $904,000.

Somerville says home sellers don’t face multiple buyers ready to give up such protections as home inspections just to win the house, like they did when the plan was announced in 2021.

In his opinion, the plan is important for the next time the market becomes hot again, but the situation should be monitored for a possible power imbalance.

“We’ll get back to a seller’s market. It’s a cycle,” – he explained.

“That’s why I believe it’s important to have the protection in place, but also to monitor it and see what’s happening.”

Trevor Koot, CEO of the B.C. Real Estate Association, says the new rules were not what was necessary when they were announced in 2021 and they will not have a strong influence on today’s market.

“Every home sale now has conditions on it, and home inspections, and appraisals, and we’re back to a balanced market where buyers can act reasonably,” – he noted.

Even in a red-hot market, a three-day wait period will be not enough to change anything, as it takes more time to get access to home inspections and other supports, he added.

The province says home buyers who decide to cancel the deal within the three-day period will have to pay a fine of $250 for every $100,000 of a property’s price.

According to Finance Minister Katrine Conroy, the measures will protect home buyers and strengthen public confidence in the housing market.