Are you thinking of selling your home in 2023?!
Here’s 3 ways You Can Protect Yourself as a Seller in the new age of the Home Buyer Rescission Period

The Home Buyer Rescission Period (HBRP) came into effect Canada wide on January 3rd, 2023 to protect consumers during competition and blind bidding. As of January 3rd unless the property was exempt (ie. leasehold, new development, co-op) the buyer had a 3 business day window to rescind their offer and unlike a subject, the buyer would not be limited to a specific reason why BUT they would be required to pay a  rescission fee which equals .25% of the purchase price. ($2500 per million)

Since this legislation was enacted during a stale winter market that saw Days on Market triple in East Vancouver; subject free offers were a distant memory and the attitude was “too little too late” from consumers and industry professionals alike.

 But as January continued on, open houses got busier and the stale holiday inventory started to disappear. February 1st came and whether it was a reaction to the Bank of Canada’s hint that we may have seen the last increase to the policy interest rate on January 25th or consumers were listening to their agents telling them we were close to bottom price-wise; that open house activity turned to offers. 

Competition and subject free offers have returned much sooner than expected to Vancouver! This is great news for Sellers that have been waiting to list their home but how do Sellers protect themselves against a legislation that is skewing some of the power to the buyer?

As a seller, here are three things you should do to protect your interests!

1. Deposit Structure
   While the HBRP allows for the seller to access the rescission fee via a deposit (skirting the usual need for both parties to agree to release deposit funds); the deposit structure is still a negotiable term of the contract and neither realtor is responsible for helping you retrieve those funds directly from the buyer if they have yet to deliver a deposit.  So, as a seller if you are expecting competition, request at least a .25% deposit if not the full 5% deposit upon acceptance.
   
   
2. Back-up offer
   Timing is essential in Real Estate!
   Since a buyer exercising their right of rescission could set you back for the better part of a week depending on when the offer was accepted; if you had multiple offers, you should be lining up at least one back-up offer! A back-up offer is an offer that is subject to you (the seller) no longer being obligated in any way concerning the sale of the property. The key with the back-up offer here is that the rescission period begins at the time of acceptance, not the time of the other offer rescinding. Let’s say you hold offers until Tuesday at 12pm. You get 5 offers, accept the best, negotiate a back-up offer and both are accepted on Tuesday. Assuming no holidays that week, the rescission period for BOTH offers starts on the following business day (Wednesday) and ends at 11:59pm on Friday evening.  So if the first offer rescinds at any point, the back-up offer would only have until 11:59pm on Friday to rescind. Leaving you with much greater odds of a firm deal on Saturday!
   
   
3. Work with an agent that is well versed in the rescission period.
   You don’t need an agent to tell you that 1,300,000 is more $$$ than 1,250,000; use an agent that can talk you through a strategy to protect your time and energy instead of just “Sold For Over Ask”.
   
   If you have any questions, please reach out.
   Let's chat about whether it's the right to time to list your home!

Days on Market (DOM)- How many days the listing has been live or was live before it sold. Important stat but should be taken with a grain of salt as sellers will re-list their home when the listing is stale and this will restart the DOM count, bringing the listing to the top of the pile once again.

Open House- Window of time where the home will be shown to anyone that would like to have a look around. This will be hosted by a licensed agent but not necessarily the listing agent.

Open House by appt- Same as an open house but for more serious buyers who are either engaged with a Realtor or have contacted the agent directly to schedule an appointment.

Offers as they come- The seller will be reviewing offers as soon as they are received and can accept an offer the first day the listing is live. This is the typical listing strategy.

Holding Offers- The seller has set a date and time in which they have decided to look at offers (ie. 4pm Tuesday January 10th) . This is performed in writing and via a document called “Direction Regarding Presentation of Offers” (DRPO). What is not often understood is that the seller can change this direction (in writing) at any point. They can add a DRPO after originally taking offers as they come OR they can decide to look at strong offers presented before the offer deadline (Bully Offer). If they do choose to look at Bully Offers, they must notify everyone that requested to stay updated on the property in writing that they are moving up the offer deadline. So if you like a property, it’s best to let your agent know so they can express interest in writing and stay updated on the status.
This strategy is used when sellers are expecting multiple offers and in recent years has been combined with a listing price that is lower than the seller is willing to accept.
See my blog on Invitation to Treat for more details

Offer- A completed “Contract of Purchase and Sale” signed by the buyers stating the names of the buyers, sellers, the address of the home, offer price, terms and how long it is open for acceptance. Once the offer is sent, if the other seller signs without any changes, you have an accepted offer.  If they sign but change any terms, this is considered a counter-offer and the changes will need to be signed by the buyers in order to be considered a fully executed accepted offer.

Completion- aka Closing- The date on which the money goes from the buyer’s lawyer or notary to the seller’s lawyer or notary and the Title is officially registered in the Buyer’s name. The buyer becomes responsible for the property at 12:01 am on the completion day which is why we advise our clients to have the home insured for completion day not possession day.

Adjustment- The date that the lawyers use to make adjustments between the buyer and seller for the other costs associated with the property. For example, the seller will be responsible for their share (100/365 days) and the buyer responsible for the remainder (265/365 days) of the Property Tax or Strata fees. The adjustment date is typically the same as the possession date.

Possession- The date and time in which the buyer is entitled to physical possession of the property (assuming there is no tenancy in place).

Firm Deal- An accepted offer which is subject free or the buyer and seller have removed their subjects; the deal is now firm and binding meaning that the parties must perform their obligations set out in the contract (buyer releasing funds for completion and the seller providing a free and clear title and possession) or face legal consequences.

Conditional Offer- an accepted offer that contains Subjects (aka conditions). While there is a conditional offer in place, the seller may accept back-up offers.

Back-up Offer- an accepted offer between a second buyer and the seller that is subject to the first accepted offer falling through. 

Subjects- these are clauses in the contract that allow the benefitting party to walk away from the sale if their subject is not satisfied within the time specified. Typically subjects are for the benefit of the buyer and include financing, inspection, document and title review, etc. but can be for the benefit of the seller.

Deposit-aka earnest money- Money provided by the buyer to secure the sale. This is usually about 5% of the purchase price, due once the deal is firm and deposited into the buyer’s agent’s brokerage trust account. If the buyer is unable to perform their contractual obligations, the seller will be entitled to the deposit but the buyer may be liable for even more than the deposit should the seller have incurred additional damages.
The deposit is considered part of the down payment at completion.

Down Payment- Initial money the buyer pays towards the home (not including the closing costs) to complete the purchase. Purchase price - mortgage= Downpayment 

Appraisal - In terms of Real Estate, an appraisal is when an unbiased and impartial professional determines the value of a home or property. An appraisal can be physical, where the appraiser comes on-site to view the home OR a desk appraisal where they use recent comparable sales to determine the value. Required by lenders for home purchases and home-owners that are looking to re-finance as the lender wants to make sure the value of the home covers their risk, should the borrower default.

Are you thinking of selling your home in 2023?!
Here’s 3 ways You Can Protect Yourself as a Seller in the new age of the Home Buyer Rescission Period

The Home Buyer Rescission Period (HBRP) came into effect Canada wide on January 3rd, 2023 to protect consumers during competition and blind bidding. As of January 3rd unless the property was exempt (ie. leasehold, new development, co-op) the buyer had a 3 business day window to rescind their offer and unlike a subject, the buyer would not be limited to a specific reason why BUT they would be required to pay a  rescission fee which equals .25% of the purchase price. ($2500 per million)

Since this legislation was enacted during a stale winter market that saw Days on Market triple in East Vancouver; subject free offers were a distant memory and the attitude was “too little too late” from consumers and industry professionals alike.

 But as January continued on, open houses got busier and the stale holiday inventory started to disappear. February 1st came and whether it was a reaction to the Bank of Canada’s hint that we may have seen the last increase to the policy interest rate on January 25th or consumers were listening to their agents telling them we were close to bottom price-wise; that open house activity turned to offers. 

Competition and subject free offers have returned much sooner than expected to Vancouver! This is great news for Sellers that have been waiting to list their home but how do Sellers protect themselves against a legislation that is skewing some of the power to the buyer?

As a seller, here are three things you should do to protect your interests!

1. Deposit Structure
   While the HBRP allows for the seller to access the rescission fee via a deposit (skirting the usual need for both parties to agree to release deposit funds); the deposit structure is still a negotiable term of the contract and neither realtor is responsible for helping you retrieve those funds directly from the buyer if they have yet to deliver a deposit.  So, as a seller if you are expecting competition, request at least a .25% deposit if not the full 5% deposit upon acceptance.
   
   
2. Back-up offer
   Timing is essential in Real Estate!
   Since a buyer exercising their right of rescission could set you back for the better part of a week depending on when the offer was accepted; if you had multiple offers, you should be lining up at least one back-up offer! A back-up offer is an offer that is subject to you (the seller) no longer being obligated in any way concerning the sale of the property. The key with the back-up offer here is that the rescission period begins at the time of acceptance, not the time of the other offer rescinding. Let’s say you hold offers until Tuesday at 12pm. You get 5 offers, accept the best, negotiate a back-up offer and both are accepted on Tuesday. Assuming no holidays that week, the rescission period for BOTH offers starts on the following business day (Wednesday) and ends at 11:59pm on Friday evening.  So if the first offer rescinds at any point, the back-up offer would only have until 11:59pm on Friday to rescind. Leaving you with much greater odds of a firm deal on Saturday!
   
   
3. Work with an agent that is well versed in the rescission period.
   You don’t need an agent to tell you that 1,300,000 is more $$$ than 1,250,000; use an agent that can talk you through a strategy to protect your time and energy instead of just “Sold For Over Ask”.
   
   If you have any questions, please reach out.
   Let's chat about whether it's the right to time to list your home!

Days on Market (DOM)- How many days the listing has been live or was live before it sold. Important stat but should be taken with a grain of salt as sellers will re-list their home when the listing is stale and this will restart the DOM count, bringing the listing to the top of the pile once again.

Open House- Window of time where the home will be shown to anyone that would like to have a look around. This will be hosted by a licensed agent but not necessarily the listing agent.

Open House by appt- Same as an open house but for more serious buyers who are either engaged with a Realtor or have contacted the agent directly to schedule an appointment.

Offers as they come- The seller will be reviewing offers as soon as they are received and can accept an offer the first day the listing is live. This is the typical listing strategy.

Holding Offers- The seller has set a date and time in which they have decided to look at offers (ie. 4pm Tuesday January 10th) . This is performed in writing and via a document called “Direction Regarding Presentation of Offers” (DRPO). What is not often understood is that the seller can change this direction (in writing) at any point. They can add a DRPO after originally taking offers as they come OR they can decide to look at strong offers presented before the offer deadline (Bully Offer). If they do choose to look at Bully Offers, they must notify everyone that requested to stay updated on the property in writing that they are moving up the offer deadline. So if you like a property, it’s best to let your agent know so they can express interest in writing and stay updated on the status.
This strategy is used when sellers are expecting multiple offers and in recent years has been combined with a listing price that is lower than the seller is willing to accept.
See my blog on Invitation to Treat for more details

Offer- A completed “Contract of Purchase and Sale” signed by the buyers stating the names of the buyers, sellers, the address of the home, offer price, terms and how long it is open for acceptance. Once the offer is sent, if the other seller signs without any changes, you have an accepted offer.  If they sign but change any terms, this is considered a counter-offer and the changes will need to be signed by the buyers in order to be considered a fully executed accepted offer.

Completion- aka Closing- The date on which the money goes from the buyer’s lawyer or notary to the seller’s lawyer or notary and the Title is officially registered in the Buyer’s name. The buyer becomes responsible for the property at 12:01 am on the completion day which is why we advise our clients to have the home insured for completion day not possession day.

Adjustment- The date that the lawyers use to make adjustments between the buyer and seller for the other costs associated with the property. For example, the seller will be responsible for their share (100/365 days) and the buyer responsible for the remainder (265/365 days) of the Property Tax or Strata fees. The adjustment date is typically the same as the possession date.

Possession- The date and time in which the buyer is entitled to physical possession of the property (assuming there is no tenancy in place).

Firm Deal- An accepted offer which is subject free or the buyer and seller have removed their subjects; the deal is now firm and binding meaning that the parties must perform their obligations set out in the contract (buyer releasing funds for completion and the seller providing a free and clear title and possession) or face legal consequences.

Conditional Offer- an accepted offer that contains Subjects (aka conditions). While there is a conditional offer in place, the seller may accept back-up offers.

Back-up Offer- an accepted offer between a second buyer and the seller that is subject to the first accepted offer falling through. 

Subjects- these are clauses in the contract that allow the benefitting party to walk away from the sale if their subject is not satisfied within the time specified. Typically subjects are for the benefit of the buyer and include financing, inspection, document and title review, etc. but can be for the benefit of the seller.

Deposit-aka earnest money- Money provided by the buyer to secure the sale. This is usually about 5% of the purchase price, due once the deal is firm and deposited into the buyer’s agent’s brokerage trust account. If the buyer is unable to perform their contractual obligations, the seller will be entitled to the deposit but the buyer may be liable for even more than the deposit should the seller have incurred additional damages.
The deposit is considered part of the down payment at completion.

Down Payment- Initial money the buyer pays towards the home (not including the closing costs) to complete the purchase. Purchase price - mortgage= Downpayment 

Appraisal - In terms of Real Estate, an appraisal is when an unbiased and impartial professional determines the value of a home or property. An appraisal can be physical, where the appraiser comes on-site to view the home OR a desk appraisal where they use recent comparable sales to determine the value. Required by lenders for home purchases and home-owners that are looking to re-finance as the lender wants to make sure the value of the home covers their risk, should the borrower default.