Humber/Ontario Real Estate Course 3 Exam Practice

What risk does a buyer face by removing a property inspection condition to make an offer more appealing in a competing offer situation?

1. No significant risk if the buyer is prequalified for a mortgage.

2. Minor risk if the offer price is significantly higher than list price.

3. Increased risk by removing the property inspection condition.

4. Significant risk by changing any terms to make the offer more attractive.

The correct answer is: Increased risk by removing the property inspection condition.

Removing a property inspection condition from an offer significantly increases a buyer's risk because it eliminates the opportunity to have the property thoroughly evaluated for potential issues before the purchase is finalized. This condition typically allows the buyer to hire a professional to inspect the property for structural problems, environmental hazards, or other significant defects that could incur costly repairs after the purchase. Without it, the buyer could end up investing in a property with undisclosed issues, leading to unexpected financial burdens. It's important to understand that property inspections can reveal critical information that affects a buyer’s decision and negotiations. Without this safeguard, the buyer may have to accept the property in its current state, including any hidden problems, potentially resulting in substantial expense and hardship down the line. Although buyers may feel that omitting such a condition makes their offer more competitive, the associated risks can far outweigh the benefits, especially in a volatile real estate market. Each decision regarding what conditions to include in an offer should be made carefully, weighing the risks against the competitive environment.