The industry association representing real estate agents around B.C. says the provincial government is well-intentioned but misguided as it forges ahead with plans to implement a cooling-off period to protect homebuyers.
In an interview Tuesday, the day after Finance Minister Selina Robinson outlined plans to introduce what the government is calling a “homebuyer protection period,” Darlene Hyde, chief executive of the B.C. Real Estate Association, said the measure will create more problems than it solves.
Hyde said the association backs anything that will ensure consumer protection, but the cooling-off period is “fraught with problems.”
She suggested the cooling-off period could increase competition for property, could drive up prices and does nothing to protect sellers.
The province has not yet released details of how the cooling off period would work — those are due later this spring — but in theory it would give buyers a limited amount of time to consider their offers, ensure financing, obtain a home inspection and cancel a purchase.
The province said it’s an attempt to address concerns that would-be buyers are feeling pressured into submitting offers for homes without basic conditions in order to ensure they have a chance of buying in a hyper-competitive market.
Hyde said the sentiment is in the right place, but the province is using the wrong tool.
She said implementing a cooling-off period could result in sellers adjusting their prices upward to factor in the uncertainty created and the chance a would-be buyer could pull out of a deal, it could also lead to an increased number of offers because buyers can rescind their term sheet at any time.
“We think there’s market disruption in this, but the intention in terms of protecting consumers from this crazy market is what (agents are) there for,” she said, noting they offered the government plenty of alternatives in a paper released this year.
That paper offered 30 recommendations that included establishing five-day, no-offer periods from when a property is listed that would give buyers time to research a property before making an offer; creating a more transparent process for properties where there are multiple offers; making property disclosure statements mandatory and available when a property is listed; and making all strata documents available with a listing.
Hyde said those recommendations protect customers and result in less market disruption.
She said there are still details to come on how long the cooling-off period will be and what kind of financial penalty would be imposed if would-be buyers backed out of deals.
“It’s a process and we will be meeting with the minister next month,” she said. “Hopefully we will have an opportunity to outline some of our thinking face-to-face with the minister.”
The real estate association rejects any suggestion real estate agents are not invested in consumer protection and housing affordability — in an earlier statement Robinson said a commission-driven industry has a vested interest in the market being hot.
Hyde said the industry does not benefit from over-heated market conditions that leave most of their clients frustrated and discouraged when they lose out on a new home.
“It’s time to let go of that harmful preconception and acknowledge the important contributions (real estate agents) can make to better protecting consumers and improving housing affordability,” she said.