Bringing you important insight to our real estate market, driven by years of experience and proven success in any market.
This month we are looking at the Buyer Rescission Period!
This month we want to talk about the new Home Buyers Rescission Period which will come into effect on Jan 3, 2023. The BC Provincial Government enacted the Home Buyers Rescission Period to help cool off the Real Estate Market and allow a Buyer to take 3 days to determine whether they would like to go through with the purchase of property after entering into an accepted offer. In order to take advantage of this privilege, a Buyer will be required to pay a fee of 0.25% of the purchase price, or $250 for every $100,000. Buyers are still able to write an offer with subject conditions, the rescission period will run concurrently with those subject conditions.
How does this affect you as a Buyer?
You have three days to rescind your offer to purchase a home even if you have written an unconditional offer. This is especially helpful for buyers in a frenzied market who may be competing with other parties for the same property and want to ensure they are able to conduct their due diligence.
The three-day period would allow you a short amount of time to conduct due diligence, however this period does NOT guarantee or give you the right to be able to get a home inspection or appraisal done on the property. The legislation simply allows you time to “cool off” after your offer has been accepted. A savvy realtor would be able to write a term into the contract requesting a Seller to allow access to their property.
Previously, motivated buyers would attempt to conduct due diligence before making an unconditional offer, which isn’t the most ideal scenario. This legislation provides buyers with a moderate solution to this problem.
How does this affect you as a Seller?
The deposit amount and timing is going to become more important to a seller. A good listing agent should be asking for a deposit upon acceptance that is at least equal to the amount of the rescission fee. This will be especially important during times of a frenzied market when buyers are making unconditional offers. In the case that a Buyer decides to exercise their right to rescind the rescission fee will already be held in a real estate brokerage account to be paid out. The legislated rescission fee is meant to try to help sellers by discouraging Buyers from rescinding an accepted offer strictly for reasons of “cold feet”.
Something that this new legislation does not address, which in our opinion is at the root of the problem, is that we have too many people chasing too few homes. Penticton is a destination market and is considered a desirable place to live, with two beautiful lakes and mountains on either side of the valley. New development sites are limited, so we believe this imbalance of supply/demand will continue for the foreseeable future.
