Humber/Ontario Real Estate Course 4 Exam Practice

Buyer Smith is eager to buy due to rising prices and a limited number of listed properties. What should be the proper advice?

1. Advise Smith to submit an offer with no conditions, despite having only the minimum downpayment needed for financing.

2. Recommend Smith submit an offer that includes a large earnest money deposit, minimal conditions, and matches the seller's desired closing date.

3. Tell Smith that his high motivation to buy places him in the best negotiating position as prices are rising.

4. Encourage Smith to submit an initial offer that allows room for negotiation.

The correct answer is: Recommend Smith submit an offer that includes a large earnest money deposit, minimal conditions, and matches the seller's desired closing date.

Recommending that Smith submit an offer that includes a large earnest money deposit, minimal conditions, and matches the seller's desired closing date is sound advice in a competitive market context. This approach demonstrates to the seller a serious commitment to the purchase, which can make Smith's offer more attractive compared to others. A substantial earnest money deposit signals financial stability and a genuine intention to proceed with the transaction, which could set Smith apart from less serious buyers. Additionally, minimizing conditions on the offer can make it easier for the seller to consider, as it reduces potential complications or hurdles in the sale process. Aligning with the seller’s desired closing date also shows flexibility and an understanding of the seller's needs, which can be a significant factor in a fast-paced real estate environment. In contrast, the other approaches could lead to issues. Submitting an offer with no conditions when the buyer has only a minimum down payment can expose them to risks if unforeseen issues arise. Overemphasizing the buyer's eagerness as a negotiating tool may lead to overconfidence and could negatively affect the negotiation dynamics. Finally, suggesting an initial offer that allows room for negotiation in a highly competitive market could diminish Smith’s chance of securing the property if competing offers are more aggressive.