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!

Most Rental and Age Restrictions are no longer valid with the passing of historic legislation last month!

David Eby followed through on the promise he made in his leadership campaign and introduced Bill 44 which has amended the Strata Property Act so that is no longer legal for Strata’s to adopt bylaws which restrict rentals or impose a minimum age for owners or residents below 55 years (senior housing). This Bill 44 was effective as soon as it passed on November 24th and any bylaws that were previously in place are now unenforceable. 

Owners will still need to follow their Municipal bylaws when it comes to short term rentals. A strata can not restrict rentals but they can refuse permission to obtain a short term rental business license as required in Vancouver when renting for a period of less than 30 days. 

The Premier stated that 2900 homeowners asked for exemptions from the speculation and vacancy tax based on the fact that their Strata would not allow them to rent their unit out. 2900 homes could be added to the rental pool, a rental pool which is in dire need after an over 40% increase in rents year over year in some parts of BC. 

 If you are a buyer in this current market, make sure you go back and look at the units you crossed off of your list because of the age restrictions or rental restrictions. You can now look a bit more freely knowing that if life throws you a curveball; you won’t be as stuck as you may have been in a Strata that doesn’t allow rentals or children.

For homeowners in a previously restricted building, your options just opened up big time. Talk to your Realtor about how this affects the value of your home as well as your Mortgage broker. Depending on your situation, maybe you have grown out of your studio apartment, you may be able to keep this unit and rent it out while you upsize into something bigger and start earning passive income!

Either way, your home will have many more eyes on it when it comes time to sell.

Reach out if you have any questions, let's chat about how this affects the value of your home!

-Kade

We are less than two months away from the Cooling-Off Period that the government hinted at in 2021. I’m going to break this down for you as of the beginning of November 2022 but as with many regulatory changes; it may take some time to figure out how this change will effect Real Estate practice and strategy moving forward.

The seller’s market of 2020 and 2021 was an awful time for buyers. Subject-free offers were the hot ticket for sellers and desperate Buyers were feeling pressured to remove their subjects in order to stay competitive. The BC Government aiming to protect those consumers introduced the idea of the cooling off period which we are now calling the Home Buyer Rescission Period (HBRP).

The HBRP comes into effect on January 1st, 2023 and will be applicable to most Real Estate transactions in BC. There are a few exemptions the notable ones being;
1)leaseholds
2)pre-sale homes which are regulated under the Real Estate Development Marketing Act (REDMA) and already allow buyers an automatic 7-day right of rescission period.

Okay so what is the HBRP?

The HBRP and amendment to the Property Law Act state that a buyer is allowed to rescind their offer at any point during a 3-business day period starting on the first business day after the offer is accepted. So if a buyer’s offer is accepted on Thursday and assuming there are no holidays; they have until 11:59pm on the following Tuesday to rescind the offer in writing. The penalty for rescinding an offer is 0.25% of the purchase price paid by the Buyer to the Seller. 

Currently, deposits are typically presented when the deal is firm (subjects are removed or the offer was subject-free).
Time will tell what new standards the HBRP will bring to the Real Estate transaction but I foresee a first 0.25% deposit along with the offer and the remaining deposit due upon a firm deal. The new amendment also allows a brokerage to release the 0.25% to the seller and any remaining deposit to the buyer within the rescission period. That way the seller feels comfortable that they will not have to chase down their 0.25% upon rescission as previously both parties had to agree in writing in order for the deposit to be paid out of the Trust account.

This rescission period does not replace the need for other subjects and subjects will run concurrently with the 3 business day window. In order to ensure access for an inspector or appraisal, the subject should still be written into the contract. But, unlike typical subjects which allow the benefitting party to back out of a deal for a specific reason (ie. failed inspection or financing/appraisal issue), the buyer does not need to provide a reason for exercising this right of rescission.

Most importantly; the buyer is not allowed to waive this option. This makes sense as to allow it would render this regulation completely ineffective. Buyers would feel pressured to waive it in order to compete in the next competitive Vancouver Real Estate market.

It may feel like too little too late but while new construction of condos dropped 46% in Metro Vancouver in the first half of 2022 compared to 2021 according to CMHC; we still have a supply issue on our hands and we have not seen our last Multiple Offer-Over Ask competitive market.

While there are ways an educated buyer and a prudent buyer’s agent can lessen the risks of a subject-free offer; I think subject-free offers should be the exception and not the rule for the average buyer. Time will tell how effective this regulation is but I support the government’s goal and hope buyers feel more protected in competitive markets moving forward.

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!

Most Rental and Age Restrictions are no longer valid with the passing of historic legislation last month!

David Eby followed through on the promise he made in his leadership campaign and introduced Bill 44 which has amended the Strata Property Act so that is no longer legal for Strata’s to adopt bylaws which restrict rentals or impose a minimum age for owners or residents below 55 years (senior housing). This Bill 44 was effective as soon as it passed on November 24th and any bylaws that were previously in place are now unenforceable. 

Owners will still need to follow their Municipal bylaws when it comes to short term rentals. A strata can not restrict rentals but they can refuse permission to obtain a short term rental business license as required in Vancouver when renting for a period of less than 30 days. 

The Premier stated that 2900 homeowners asked for exemptions from the speculation and vacancy tax based on the fact that their Strata would not allow them to rent their unit out. 2900 homes could be added to the rental pool, a rental pool which is in dire need after an over 40% increase in rents year over year in some parts of BC. 

 If you are a buyer in this current market, make sure you go back and look at the units you crossed off of your list because of the age restrictions or rental restrictions. You can now look a bit more freely knowing that if life throws you a curveball; you won’t be as stuck as you may have been in a Strata that doesn’t allow rentals or children.

For homeowners in a previously restricted building, your options just opened up big time. Talk to your Realtor about how this affects the value of your home as well as your Mortgage broker. Depending on your situation, maybe you have grown out of your studio apartment, you may be able to keep this unit and rent it out while you upsize into something bigger and start earning passive income!

Either way, your home will have many more eyes on it when it comes time to sell.

Reach out if you have any questions, let's chat about how this affects the value of your home!

-Kade

We are less than two months away from the Cooling-Off Period that the government hinted at in 2021. I’m going to break this down for you as of the beginning of November 2022 but as with many regulatory changes; it may take some time to figure out how this change will effect Real Estate practice and strategy moving forward.

The seller’s market of 2020 and 2021 was an awful time for buyers. Subject-free offers were the hot ticket for sellers and desperate Buyers were feeling pressured to remove their subjects in order to stay competitive. The BC Government aiming to protect those consumers introduced the idea of the cooling off period which we are now calling the Home Buyer Rescission Period (HBRP).

The HBRP comes into effect on January 1st, 2023 and will be applicable to most Real Estate transactions in BC. There are a few exemptions the notable ones being;
1)leaseholds
2)pre-sale homes which are regulated under the Real Estate Development Marketing Act (REDMA) and already allow buyers an automatic 7-day right of rescission period.

Okay so what is the HBRP?

The HBRP and amendment to the Property Law Act state that a buyer is allowed to rescind their offer at any point during a 3-business day period starting on the first business day after the offer is accepted. So if a buyer’s offer is accepted on Thursday and assuming there are no holidays; they have until 11:59pm on the following Tuesday to rescind the offer in writing. The penalty for rescinding an offer is 0.25% of the purchase price paid by the Buyer to the Seller. 

Currently, deposits are typically presented when the deal is firm (subjects are removed or the offer was subject-free).
Time will tell what new standards the HBRP will bring to the Real Estate transaction but I foresee a first 0.25% deposit along with the offer and the remaining deposit due upon a firm deal. The new amendment also allows a brokerage to release the 0.25% to the seller and any remaining deposit to the buyer within the rescission period. That way the seller feels comfortable that they will not have to chase down their 0.25% upon rescission as previously both parties had to agree in writing in order for the deposit to be paid out of the Trust account.

This rescission period does not replace the need for other subjects and subjects will run concurrently with the 3 business day window. In order to ensure access for an inspector or appraisal, the subject should still be written into the contract. But, unlike typical subjects which allow the benefitting party to back out of a deal for a specific reason (ie. failed inspection or financing/appraisal issue), the buyer does not need to provide a reason for exercising this right of rescission.

Most importantly; the buyer is not allowed to waive this option. This makes sense as to allow it would render this regulation completely ineffective. Buyers would feel pressured to waive it in order to compete in the next competitive Vancouver Real Estate market.

It may feel like too little too late but while new construction of condos dropped 46% in Metro Vancouver in the first half of 2022 compared to 2021 according to CMHC; we still have a supply issue on our hands and we have not seen our last Multiple Offer-Over Ask competitive market.

While there are ways an educated buyer and a prudent buyer’s agent can lessen the risks of a subject-free offer; I think subject-free offers should be the exception and not the rule for the average buyer. Time will tell how effective this regulation is but I support the government’s goal and hope buyers feel more protected in competitive markets moving forward.

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.