Humber/Ontario Real Estate Course 3 Exam Practice

A for sale by owner (FSBO):

1. May require additional due diligence from the buyer, as the seller's actions are not regulated under real estate laws.

2. Must be informed of all real estate laws before any sale.

3. When dealing with a buyer's agent, can expect the agent to protect the seller's best interests.

4. When dealing with a buyer's agent, the seller must prepare the sale agreement themselves.

5. Must have legal representation at all negotiations.

6. Is exempt from all regulatory requirements about property disclosure.

The correct answer is: May require additional due diligence from the buyer, as the seller's actions are not regulated under real estate laws.

The correct choice highlights the potential challenges associated with a for sale by owner (FSBO) transaction, particularly regarding the due diligence that a buyer must undertake. In FSBO situations, the seller is not represented by a real estate agent, which means they might not be fully aware of all the complexities related to real estate laws and disclosure requirements. As a result, the buyer may need to conduct additional investigations to ensure that the property is compliant with relevant laws and regulations, and that there are no undisclosed issues. This is significant in understanding the dynamics of FSBO transactions because buyers may be at a greater risk of not receiving important information typically provided in agent-led transactions. Sellers could unintentionally overlook legal obligations or property disclosures, thus increasing the responsibility on the buyer to ask the right questions and seek out any necessary documentation, such as title reports or inspection results, to ensure a safe purchase. Other options do not effectively capture the unique challenges posed by FSBO transactions. For instance, while the seller might benefit from being informed about real estate laws, it is not mandated that they must be fully educated about every legal requirement before selling. Additionally, the role of a buyer's agent in such transactions should primarily be to represent the buyer’s interests, not the seller