Effective January 1^st, British Columbia announces a required 3-day cooling off period for all homebuyers. B.C is the first province to instate this cool off period once buyers have signed the contract for a new home.

In efforts to help regulate the real estate market, the B.C. government shared its new protocol that is designed to offer homebuyers an additional layer of protection and more time to get necessary affairs in order. This new mandatory 3-day cooling off period is one of the first steps the B.C. government is taking following the findings in the B.C. Financial Services Authority’s (BCFSA) Report on improving consumer protection in the real estate market.

What Does This Cooling Off Period Mean?

This new policy gives homebuyers 3 business days to back out of their purchase should finances fall through or the purchase no longer feels right. The hope is that homebuyers will now have a little more breathing room and not feel trapped in any sales tactics and high pressure purchase situations. The 3-day cool off period will also give the extra gift of time when it comes getting finances secured and lining up a home inspection. With interest rates soaring some buyers after signing may have second thoughts. For many purchasing a home is the biggest financial transaction in their life, and as such, the aim of this policy is to recognize that and give the perspective buyer time to make an informed decision and due their due diligence.

The province shared that anyone who backs out during the 3 business day cooling period will not go consequence free. In efforts to attract only serious offers, the penalty for backing out during this cool off period will be $250 for every $100,000 of the home’s sale price. This penalty fee is to discourage any disingenuous offers and ensure the transactional process runs smoothly.

What Are the Experts Saying?

While this 3-day cooling period offers protection for buyers now, it will become of even greater service when the market heats up again when the protection is really needed. Some industry experts, such as Trever Koot, CEO of the B.C. Real Estate Association, are skeptical of how beneficial this protection plan will be. Koot shares that this new rule may show little impact with the current market conditions as we’ve once returned to a more balanced market. Many professionals feel that this new mandatory period would have been most useful during the peak of the buying frenzy in B.C., where houses were seeing multiple bids and homes were going well beyond asking price. Higher interest rates have cooled the market and no longer are buyers needing as much protection from high pressure sales and astronomical prices.

This is the first policy of its kind in Canada to offer more consumer protection in the real estate market. And, since the market has cooled off, it may take a little while to see how this new 3-day cool off policy fares once things heat back up.