Chapter 6: The Purchase Agreement

Question 1

This form sets the amount or rate of real estate commissions which are negotiable between the seller and broker.

Answer 1

Commission agreement

Question 2

This form lets the buyers know, before making an offer, the approximate total costs of the purchase, including monthly payments.

Answer 2

Estimate of buyer costs

Question 3

This statement identifies items of value attached to the structure or land and states whether these items are operational.

Answer 3

Real Estate Transfer Disclosure Statement (TDS)

Question 4

How long does a buyer have to sue an agent for failure to make proper disclosures in the Transfer Disclosure Statement.

Answer 4

Two years

Question 5

Who is NOT legally required to fill out and complete the Transfer Disclosure Statement?

Answer 5

Buyer

Question 6

Who customarily pays for an active infestation of wood destroying pests on the property?

Answer 6

Seller

Question 7

As offers are rejected and new offers made, this form details the exact terms of the newest offer.

Answer 7

Counter offer

Question 8

If the buyer has not received the appropriate reports and disclosures from the seller, or other terms and conditions agreed upon in the purchase contract have not been met by the seller, this form is forwarded by buyer’s agent to seller’s agent. This notice gives the seller the right to cancel escrow within 24 hours (unless otherwise specified in the offer or counter offer).

Answer 8

Notice to Seller to Perform

Question 9

Requires carbon monoxide detectors to be installed in every dwelling unit intended for human occupancy.

Answer 9

Carbon Monoxide Poisoning Prevention Act

Question 10

Buyer can choose to remove certain terms and conditions of the purchase using this form.

Answer 10

Contingency removal

Question 11

Buyer’s final inspection of the property to determine if the property is in substantially the same condition as on the date of acceptance.

Answer 11

Verification of property condition

Question 12

Which of the following seller’s listing forms does the buyer NOT receive a copy of?

a) Residential Listing Agreement
b) Estimated Seller’s Proceeds
c) Both “a” and “b” are for seller’s eyes only
d) The buyer gets a copy of all listing documents

Answer 12

c) Both “a” and “c” are for seller’s eyes only

Question 13

“FIRPTA” refers to:

a) Fiduciary Information for Real Property Agency.
b) Federal Inspection of Real Property Act.
c) Foreign Interest in Real Property Acquisitions.
d) Foreign Investment in Real Property Tax Act.

Answer 13

d) Foreign Investment in Real Property Tax Act.

Question 14

When making an offer contingent on the sale of the buyer’s home:

a) the buyer and agent need not inform the seller of this contingency.
b) the buyer is still obligated to consummate the sale, regardless of whether his or her house hells.
c) the buyer is offering to trade properties with the seller in a 1031 exchange.
d) always use the Contingency for Sale or Purchase of Other Property (COP) form, and make this an amendment to the Purchase Agreement.

Answer 14

d) always use the Contingency for Sale or Purchase of Other Property (COP) form, and make this an amendment to the Purchase Agreement.

Question 15

Which of the following is TRUE concerning a selling agent’s commission?

a) The selling agent can ask for any acceptable commission split prior to close of escrow.
b) The selling agent must abide by the commission details placed on the MLS by the listing agent.
c) The selling agent can renegotiate his or her percentage of the commission with the seller regardless of the MLS information.
d) All of the above.

Answer 15

b) The selling agent must abide by the commission details placed on the MLS by the listing agent.

Question 16

After the physical inspection, the buyer requests the seller to repair the defects noted in the report. Which of the following is correct?

a) The seller must comply and do all the work.
b) The seller is responsible for making the repairs, but the buyer has to pay for them.
c) The seller may do some, all, or none of the repairs.
d) None of the above are correct.

Answer 16

c) The seller may do some, all, or none of the repairs.

Question 17

With regard to contingencies, the buyer must deliver designated documents to the seller within five days. If the buyer fails to do so, the seller:

a) may send the buyer a Notice to Buyer to Perform.
b) may cancel the Agreement in writing.
c) cannot cancel, even if the buyer does not remove the contingencies.
d) both a and b are correct.

Answer 17

d) both a and b are correct.

Question 18

Which of the following is true regarding the Carbon Monoxide Poisoning Prevention Act?

a) Requires owners of dwellings intended for human occupancy to install carbon monoxide devices in existing dwelling units.
b) Applies to units with a fossil fuel burning heater or appliance.
c) Includes any fossil fuel burning heater in a garage.
d) All of the above are true.

Answer 18

d) All of the above are true.

Question 19

The Agency Relationship Disclosure:

a) can be signed at any time prior to close of escrow.
b) is a requirement for the seller only.
c) is a requirement for buyer only.
d) is a requirement for both parties prior to entering into any real estate contract.

Answer 19

d) is a requirement for both parties prior to entering into any real estate contract.

Question 20

A Seller’s Affidavit (AS) must be provided from the seller to the buyer if the purchase price of the property:

a) exceeds $200,000.
b) exceeds $300,000.
c) is less than $200,000.
d) is less than $300,000.

Answer 20

b) exceeds $300,000.

Question 21

When doing the final walk-through:

a) the buyer and seller sign the Verification of Property Condition, after noting that the requested repairs have been performed and the property is in the same condition as when the offer was made.
b) the buyer checks for the first time for leaks, electrical outlets and switches, and checks all the windows.
c) the seller must be accompanied by his or her attorney.
d) all of the above.

Answer 21

a) the buyer and seller sign the Verification of Property Condition, after noting that the requested repairs have been performed and the property is in the same condition as when the offer was made.