Humber/Ontario Real Estate Course 4 Exam Practice

Which scenario would likely be advantageous to a seller in a real estate transaction?

1. Lower mortgage rates.

2. Closure of a large nearby factory, a major employer in the area.

3. Significant rise in the unemployment rate.

4. Increasing inventory of similar homes on the market.

5. Decline in local property values.

6. Decrease in demand for houses in the neighborhood.

The correct answer is: Lower mortgage rates.

Lower mortgage rates present a favorable scenario for a seller in a real estate transaction because they typically encourage more buyers to enter the market. When mortgage rates are lower, the cost of borrowing decreases, which makes home buying more accessible and attractive to potential buyers. This increased access can lead to a higher volume of interested buyers, enhancing competition and potentially driving up home prices or shortening the time a property stays on the market. In contrast, the other scenarios present challenges for sellers. The closure of a major factory might lead to economic decline in the area, affecting demand negatively. A significant rise in unemployment would similarly reduce buyers' purchasing power and confidence. Increasing inventory of similar homes can lead to more competition, which may drive prices down. A decline in local property values generally means that sellers might have to lower their expectations or prices. Lastly, a decrease in demand for houses indicates that there are fewer buyers, which is not beneficial for sellers hoping to sell at a desirable price.