Humber/Ontario Real Estate Course 4 Exam Practice

What should happen if a real estate agent discovers unreported water damage during a property inspection?

1. Inform the seller about potential liability to ensure disclosure.

2. Ignore it if the seller claims it is not a problem.

3. No further discussion is needed as such issues are common.

4. Refuse to list the property due to structural concerns.

5. Directly disclose to potential buyers about the damage.

6. Suggest the seller conduct professional repairs before listing.

The correct answer is: Inform the seller about potential liability to ensure disclosure.

The most appropriate action for a real estate agent who discovers unreported water damage during a property inspection is to inform the seller about potential liability to ensure disclosure. This approach upholds the ethical and legal obligations of the agent, which include representing the best interests of all parties involved while ensuring transparency in the property transaction. By informing the seller about the discovery of water damage and the potential liability it might incur, the agent facilitates a responsible approach to property transactions. This disclosure not only protects the seller from future legal ramifications—for instance, lawsuits stemming from nondisclosure—but also ensures that the property is marketed in an honest manner. A seller's failure to disclose known issues can lead to significant complications, including undermining trust and possibly resulting in financial penalties. The other options do not align with the professional conduct expected in real estate dealings. Ignoring the problem, dismissing it as common, or prematurely refusing to list the property might prevent proper handling of a serious issue that could affect the property’s value and the safety of its future inhabitants. Suggesting the seller conduct repairs, while well-intentioned, does not address the immediate obligation to disclose the damage. The agent's primary role includes ensuring that the seller is aware of their responsibilities to disclose important issues to potential