Humber/Ontario Real Estate Course 2 Exam Practice

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

1. There is little risk if the offer price is significantly above the list price.

2. A prequalified buyer faces no risk by removing a financing condition.

3. A buyer increases risk by dropping a property inspection condition.

4. Every change to make an offer more attractive significantly increases risk.

5. Eliminating conditions altogether is a safe strategy.

6. A buyer is safe to submit an unconditional offer if the price is high enough.

The correct answer is: A buyer increases risk by dropping a property inspection condition.

In a competing offer scenario, dropping a property inspection condition can indeed increase the buyer's risk. By forgoing a property inspection, the buyer may not be aware of any potential issues or defects with the property, which could lead to unexpected costs or problems down the line. Therefore, it is important for a buyer to proceed with caution when considering removing a property inspection condition in a competitive situation. The other options are not accurate because: A. While offering significantly above the list price may make the offer more attractive to the seller, it does not eliminate all risks for the buyer. B. Even though a prequalified buyer has taken steps towards securing financing, removing a financing condition can still pose risks as unforeseen circumstances may arise during the closing process. D. Making changes to an offer to make it more attractive does not necessarily significantly increase risk, as long as these changes are made thoughtfully and with full understanding of the potential consequences. E. While eliminating conditions may make an offer more appealing to the seller, it can expose the buyer to various risks, especially if important protections such as property inspection or financing conditions are removed. F. Submitting an unconditional offer, even with a high price, can still expose the buyer to risks, especially if essential protections like property inspection or financing conditions are not included.