Humber Real Estate Course 2, Module 4, Factors Impacting Residential Real Estate Negotiations Questions and Answers with complete solution

A high family formation rate may predict what kind of market? - A seller's market (in the short term, in a strong economy). As more couples marry and acquire financing, the new couples will often want to establish an independent household in their own dwelling. This is known as what? - The Family Formation Rate Do economic downturns typically indicate a weakened or strengthened real estate market? - Weakened How long do you and your brokerage need to keep a record of all offers on file? - 1 year If a leakage in a basement was fully remediated, does it need to be disclosed to a potential buyer? - No. A salesperson should verify the accuracy of a seller's representation before preparing the listing, and only if the leakage is still an ongoing problem, that is when it should be disclosed. If a salesperson sees evidence of past leakage in the basement and the seller explains it was repaired the prior year, should the salesperson recommend that the seller get the problem inspected by a third-party professional before putting the home on the market? - No. If the salesperson can verify the accuracy of a seller's representation by obtaining the documentation regarding the repairs from the seller, a third-party professional inspection may not be necessary. In a situation with competing offers, what pieces of information do you need to provide to potential buyers when you are working for a seller? - - The number of competing offers - If a competing offer has been made by a buyer representative within their brokerage - If a competing offer has been made by the listing salesperson - If 2 buyer representatives from the same co-operating brokerage have submitted offers (as this may be a multiple representation situation for the co-operating brokerage and consent needed)In a situation with competing offers, what pieces of information do you NOT need to provide to potential buyers when you are working for a seller? - - The amounts of competing offers or any terms included Is a seller obligated to disclose a latent defect or a material latent defect during the sale of their home? - Yes Is seller disclosure required for a patent defect? - No, because it's readily visible upon reasonable inspection. Note: A good way to to remember this term ... think "It's PATENTLY clear that there is a hole in this wall!" Stable employment rates across the labour force can sometimes predict what type of market? - A balanced market. What are some common factors affecting market conditions? - - Demographic changes - Employment conditions - Interest rates and mortgage availability - Building activity What are some examples of common material facts for a seller? - - Credit report of the buyer - Zoning designation (e.g. bylaws, land use or fence height requirements) - Proximity to schools or other public activities / amenities - Dwelling measurements - Recent neighbourhood property sales - New developments - Structural conditions and results (e.g. age, maintenance issues like roof leaks, foundation damage, mechanical or electrical deficiencies, basement water seepage, mould or insect infestations) - Outdated materials that can be personally or environmentally hazardous (e.g. asbestos, know-and-tube wiring, lead or Kitec plumbing or underground storage tanks)- Building and/or dwelling measurements or lot size (e.g. discrepancies in measurements cited in listings or specific measurements of a balcony) - Previous use of a property (e.g. former illicit activity such as a grow-op, meth lab or murder) - Government limitations (e.g. HST, property taxes or any expropriation plans) - P What are some recommended ways to advise a buyer during a Buyer's Market? - - Make informed choices that focus on their priorities and consider making offers on properties that satisfy most (if not all) their wants and needs - Take their time in viewing properties and putting together an offer - Submit a conditional offer to protect their best interests by including conditions (e.g. inspection or repairs to be done) - Make an offer that allows room for negotiation rather than one that is based on their maximum budget - Consider adding a clause making the purchase conditional upon the sale of their property, as applicable What are some recommended ways to advise a buyer during a Seller's Market? - - Offering the highest price within the buyer's means and/or accompanying their offer by a larger deposit than expected in current market conditions, preferably in the form of a bank draft or certified cheque on offer presentation so they are taken more seriously by sellers - Weighing the benefits and risks of submitting an offer without conditions What are some recommended ways to advise a seller during a Buyer's Market? - - Keep their home in good condition so that the property's potential is apparent - Make the property available for as many viewings as possible - Expect to receive conditional offers, and be aware of the risks of making counter offers when there is a surplus of properties on the market - Expect that they may receive offers at a lower price point than desired with less interest in negotiations