Humber/Ontario Real Estate Course 3 Exam Practice

Salesperson Michelson has been working with a buyer to find a suitable house and then negotiate the best terms. The buyer hasn't signed a representation agreement at this point, but is ready to make an offer after seeing several homes. Which of the following is correct?

1. Michelson can prepare the offer once verbal disclosures are provided.

2. The buyer is automatically considered a customer.

3. Michelson is obligated to prepare, sign, and review a representation agreement with the buyer prior to preparing an offer.

4. The buyer can refuse to sign a representation agreement and instead complete a customer service agreement.

5. The buyer must sign a dual agency agreement.

6. Michelson needs to consult with his brokerage before proceeding.

The correct answer is: Michelson is obligated to prepare, sign, and review a representation agreement with the buyer prior to preparing an offer.

The correct answer is that Michelson is obligated to prepare, sign, and review a representation agreement with the buyer prior to preparing an offer. This requirement is rooted in the ethical and legal obligations of real estate professionals. A representation agreement establishes a formal relationship between the salesperson and the buyer, delineating the terms of service, responsibilities, and the nature of the relationship. By having this agreement in place before preparing an offer, Michelson ensures that the buyer is aware of and agrees to the level of service and obligations involved in their relationship. This helps protect both the buyer’s interests and Michelson’s legal standing in the transaction. It is a standard practice designed to foster transparency and trust between the parties involved. Other answers may suggest different scenarios, but they do not align with the requirement for formalizing the buyer's representation before moving forward with an offer.