As subject-free offers rise in B.C.’s hot real estate market, experts call for cooling off period

Click to play video: 'Consumer Matters: Should B.C. have a ‘cooling off’ period for home buying?'
Consumer Matters: Should B.C. have a ‘cooling off’ period for home buying?
Global's Consumer Matters reporter Anne Drewa looks at the push for a 'cooling off period', to better protect prospective home buyers. – May 12, 2021

Jennifer Simm says in one month alone, she bid on dozen of homes without success.

“I felt like we weren’t going to get a house and that we would be priced out of the area,” she said.

The Maple Ridge resident says each time she put down an offer subject to inspection she hit a roadblock.

Click to play video: 'Consumer Matters: The risks of subject free offers in a hot real estate market'
Consumer Matters: The risks of subject free offers in a hot real estate market

“They would not accept our offers. Our offers were not even looked at,” said Simm.

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Simm says it was only when she decided to go subject-free that her offer was considered.

“[There were] no subjects. There were seven people bidding on it and ours was the highest offer that was accepted,” she said.

Ted Gilmour, a Vancouver-based home inspector with more than 20 years of experience, says buyers who submit condition-free offers and forgo a home inspection are gambling with their future.

“They don’t know what’s in the next chamber and absolutely it’s a huge problem for their family life — their welfare is at stake,” he said.

Gilmour says home inspections should be mandatory and the B.C. government needs to do more to protect consumers.

“Some big brother needs to step in and say, ‘Listen, this is the minimal thing that you’ll have to do if you want to buy property,’” he said.

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“They are stacking everything against the buyer. Buyers don’t have a chance.”

John Grasty, a real estate agent and housing advocate who has served on the National Advisory Council for Canadians for Properly Built Homes since 2007, agrees, saying it’s crucial for prospective buyers to understand the risks of submitting a condition-free offer.

“In real estate, there’s a Latin term called caveat emptor, which has been around forever as related to property and it means ‘let the buyer beware’ and I don’t think our legislation allows the buyer to be aware. It allows the seller to force the hand of the buyer without them having done their proper due diligence,” Grasty said.

Under the Real Estate Development Marketing Act, a purchaser of a new or presale property has the right to rescind their signed contract of purchase and sale within seven days of making the agreement.

Grasty said he would like to see similar legislation for resale purchases.

“It would make it much more comfortable for the buyer,” he said. “It would give them the assurance to be able and go do their due diligence.”

However, Grasty wonders where the political will is to make real change for consumers. The Real Estate Council of BC (RECBC), which is responsible for regulating real estate professionals and a resource for consumers, has launched an awareness campaign to ensure buyers and sellers have the tools they need to make informed decisions.

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Complaints to the RECBC have doubled in the last quarter, the council says, and have been trending upwards in the last five years since 2016.

RECBC CEO Erin Seeley says it’s up to home buyers to choose their risk tolerance in today’s market.

“If you are choosing to buy in the market as fast-paced as it is now, it’s about being aware of how to get the best out of that decision, and if consumers choose not to put subjects on an offer, it does increase the risk,” Seeley said.

In addition, RECBC says the licensed real estate agent is obligated to act in their client’s best interest.

“They need to be advising their client of the risks of a no-subject offer,” she said.

Grasty says that puts a lot of pressure on realtors.

“It really is because the superintendent of real estate, the CEO of the Real Estate Council of BC, tells us realtors that we are the first line of consumer protection, but they aren’t providing us legislation to make sure we are doing the utmost we possibly can,” he said.

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Click to play video: 'Real estate board president endorses pre-listing home inspection service'
Real estate board president endorses pre-listing home inspection service

Consumer Matters contacted B.C.’s Ministry of Finance, asking if the province was considering a cooling-off period for resale properties.

We received the following statement from Minister Selina Robinson:

“In British Columbia, we are still catching up from years of an ignored, out-of-control housing market. While our provincial efforts to address housing affordability for British Columbians have had a positive and stabilizing effect over the last few years, at the moment we are seeing a number of external factors affecting the market across the country. This includes pent-up demand following the shutdown during COVID-19, very low interest rates and low inventory in the market.

These factors are contributing to increased housing sales, prices, and practices that are having a negative effect on prospective buyers. We are closely monitoring the housing market to see if these trends continue – and we will continue to use the tools at our disposal as needed.”

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Simm says the province must do more.

“The government needs to step in because the market is so hot right now everyone is afraid to lose out on any house they bid on,” she said.

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