In this episode, we will cover what the BC rescission periods are, how they protects you and why they seem to be working.
The majority of people still don’t seem to know what this means, so I felt compelled to create a podcast around it.
Hello there! I’m Jessi Johnson, best-selling author of “Rockstar Real Estate Investing”, a Greater Vancouver realtor with eXp, and your guide through the sometimes intricate world of mortgages since 2006.
So, what exactly is the rescission period?
In simple terms, the rescission period is a set amount of time that allows you, the buyer, to change your mind and rescind or cancel a contract.
This period ensures you’re completely comfortable with your decision, particularly in high-stakes transactions like real estate.
You likely have heard of the rescission in presale contracts, which was somewhat successful.
This was introduced to protect unrepresented buyers from pushy presale salespeople who convince them to sign a contract without them doing the due diligence.
An unrepresented buyer means a buyer working on their own without the guidance of a realtor
Very similar to presale contracts which have a 7-day rescission period, there are 3 business days permitted for resale contracts.
Here is why this is great when dealing in presale contract?
1. Protection for Buyers:
- The rescission period is there to protect the buyer.
- It ensures the buyer is not rushed into a decision
2. Time to Review:
- This period allows you to review all disclosures, from property reports to financial implications, thoroughly.
- If something doesn’t add up or if you discover a detail that changes your perspective, you have an out.
3. Seek Expert Opinions:
- The 7-day window gives you ample time to consult professionals, whether that’s a mortgage advisor, a lawyer, an accountant, a friend or a trusted family member, ensuring you’re making the best possible decision.
Prior to having the 7-day pre-sale rescission period, buyers had to do all of this research and due diligence before writing a contract.
This takes time and often you would lose out on hot properties, so people were buying without taking the time to research the product which caused problems.
Enough about presale contracts, now let’s talk about the new-ish 3 business day resale rescission period.
Originally called the “Cooling off period” by the government, it was intelligently renamed before release in 2023.
Does every province do this?
No, the provinces govern themselves, this is not a federal requirement
What started the need for this?
Well, the Greater Vancouver real estate market has been a gong show for many years.
We are constantly in bidding wars and I do not see any end in sight for a very long time.
Buyers were forced to skip crucial due diligence steps in order to win bidding wars
Inspections, time to review strata documents or mortgage payment options were getting missed.
This was terrible so, the government intervened and it seems to be working great.
I am not going to lie, I am surprised and happy with its success thus far.
The 3-day recession period made bidding wars a little better
Speaking of bidding wars, I did a fantastic podcast on how to Win bidding wars 😉
So why is this 3-day recession period good for me?
It gives you time to get an inspection, a final thumbs up from a mortgage broker and to do your due diligence on the home or stratified property.
What is the cost to “rescind”?
The simple math is .0025% of the purchase price
So, $2,500 on a $1,000,000 property.
They want it to be high enough, so buyers don’t write multiple contracts at the same time, with no intention of completing more than one
They want it low enough, so that way if you do have to exercise this option, it won’t break the Bank
If you cancel your contract due to an existing condition within the contract, the rescission period payment or fee is not required.
I remember when this first came out I was thinking oh great, this is gonna be a disaster.
But it’s actually worked out well and I’m glad I did it.
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Thanks for joining me. I am Jessi Johnson, reminding you to always make informed decisions and Own Your Life!