Humber/Ontario Real Estate Course 4 Exam Practice

When advising a buyer client about the risks in a competing offer situation, which statement is accurate?

1. Offering well above the list price carries little risk in winning a bidding war.

2. Prequalification for a mortgage eliminates risk when removing a financing condition.

3. Removing a property inspection condition increases the buyer's risk.

4. Changing any terms in an offer significantly reduces risk.

5. Withdrawing any condition in an offer generally has no risk.

6. Risk is inherent only when changing the closing date.

The correct answer is: Removing a property inspection condition increases the buyer's risk.

When advising a buyer client in a competing offer situation, acknowledging that removing a property inspection condition increases the buyer's risk is accurate. This is because a property inspection is an important safeguard that allows the buyer to assess the condition of the property and identify any potential issues that could result in costly repairs or decreased property value post-purchase. By waiving this condition, the buyer may inadvertently expose themselves to unforeseen problems, such as structural issues, electrical or plumbing deficiencies, or pest infestations, which they would not have been aware of without a professional inspection. Removing this safeguard places the buyer in a more vulnerable position, as they do not have the opportunity to negotiate repairs or reconsider their offer based on the findings of an inspection. In a competitive market, while buyers may feel pressured to make their offers more appealing by removing conditions, it is crucial to weigh the risks involved. In contrast, the other statements downplay the inherent risks associated with various decision-making aspects in the offer process. For instance, offering significantly above the list price does come with risks related to appraisal values and the buyer's financial limits. Prequalification might give confidence but does not eliminate the risk of the buyer being unable to secure financing once they are deeper in the purchasing process. The idea