Humber/Ontario Real Estate Course 4 Exam Practice

Which characteristic best describes a straw buyer in real estate?

1. Conducting transactions under false pretense.

2. Inflating property values artificially.

3. Concealing the true identity of the actual purchaser.

4. Securing multiple loans under different names.

5. Selling properties below market value.

6. Using fraudulent documents to obtain a mortgage.

The correct answer is: Concealing the true identity of the actual purchaser.

A straw buyer in real estate is primarily recognized for concealing the true identity of the actual purchaser. This practice typically occurs when an individual or entity uses a third party to purchase a property on their behalf. The real purpose of involving a straw buyer often relates to circumventing certain barriers, such as credit issues or legal constraints, while maintaining anonymity in the transaction. This characteristic aligns with the practices that can lead to various forms of real estate fraud or mortgage fraud, as the true intentions of the purchase are obscured. Moreover, understanding the dynamics of straw buying emphasizes the legal and ethical implications it can have on the real estate market, as these transactions often undermine transparency and can affect market integrity. The other choices, while relevant to different fraudulent activities in real estate, do not encapsulate the primary defining characteristic of a straw buyer as effectively as concealing the true identity of the actual purchaser does.