What is the Buyer Protection Plan?
The Buyer Protection Plan (BPP) was developed by Calgary Mortgage Trainer, Greg Williamson of 180 Degrees Solutions. Williams says the Buyer Protection Plan is based on the fact that home buying is a decision based on emotion and the fear of falling prices and rising interest rates cause the potential buyers to retreat.
Interest rates are expected to rise over the next 5 years after record lows. The Interest Rate Protection program provides the buyer with protection from payment shock when the mortgage comes due in 5 years. This strategy also saves the buyer thousands of dollars by paying off the principal faster.
The Buyer Protection Plan protects home buyers if the home they buy falls in value after 12 months. This drop in value is measured by comparing the Median MLS Sales Price of similar homes in the same area both on the date the offer is made and then one year later. The Buyer Protection Plan provides up to a 10% price protection to the buyer.
For example suppose a home sold for $500,000 and the seller agrees to put 5% or $25,000 into a trust account to protect the buyer:
-if prices fall 5% or more in 1 year the buyer would get $25,000
-if prices fall but are back up or increase in 1 year the vendor would get the $25,000
-if prices fall 3% in 1 year then the buyer gets (3/5 X 25,000) $15,000 and the vendor gets (2/5 x 25,000) $10,000
Whoever gets the money from the trust account pays an administration fee of $499 plus HST.
The buyer and seller enter into a Buyer Protection Plan agreement which is referred to in the Offer to Purchase and 180 Degrees Solutions looks after the rest:
-setting up the trust account to guarantee the rebate if prices drop
- contacting the BPP approved lawyer to hold the funds for 1 year and issue cheques
- provide copies of the legal agreement
- assisting in the approval of the buyer with the BPP approved lenders and insurers
To offer Buyer Protection Plan (BPP) to vendors, a real estate agent must apply to a Certified Mortgage Agent for the BPP. There is no cost for realtors for this service and the realtor receives his/her own website. The realtor also receives a web page for each listing as well as marketing material. The marketing material includes videos to present to buyers and sellers as well as promotional ideas for offering the BPP on listings.
Please contact Laurie Baird or Scott Mason at (250) 862 1806, your Certified Buyer Protection Plan Mortgage Brokers.
