SU # 28__Buyer Counseling - Pre and Post Closing Issues Flashcards
What is important for the licensee to do during the escrow period?
The licensee should check frequently to see that things are happening on schedule and keep the clients informed about how things are progressing.
Why is the property inspection report often controversial?
Because the inspectors always find something the buyer wants repaired and the seller does not want to repair.
Describe three common items that often trigger a contract renegotiation.
- Items found during the inspection
- Personal circumstances that necessitate changing the closing date
- Title or survey issues that cannot be resolved prior to the scheduled closing date
What is important to know (and tell your buyer clients) regarding the CLUE Report?
CLUE is a database of insurance claims against a property from the past five to seven years.
It is not available to insurance companies until after closing (at which time the language in the insurance policy may allow them to reject coverage).
Buyers should make their offer subject to receiving and approving a copy of the seller’s CLUE report.
What does the coinsurance clause do?
Requires both the husband and the wife to be named as the insured.
Requires the lender to be named as an additional insured.
Requires the homeowner to have property insurance equal to 80% of the home’s replacement value.
Requires any loss to be settled for actual cash value.
Requires the homeowner to have property insurance equal to 80% of the home’s replacement value.
During the walk-through, the buyer sees that the seller did not do a proper cleaning of the house. What is the best way of handling this?
The buyer and his attorney should confer on how to handle the problem cleaning without delaying the closing.
The closing should be delayed until the cleaning is completed.
The broker should hire a cleaning crew and take it out of the commission.
The broker should prepare the Agreement to Amend/Extend Contract to change the purchase price.
The buyer and his attorney should confer on how to handle the problem cleaning without delaying the closing.
Buyer Jim’s loan is turned down the week before closing. What happens now?
The sales contract automatically terminates.
The seller needs to reduce the purchase price.
The contract will get an automatic 30-day extension.
The buyer could ask for an extension to allow Jim to find another lender.
The buyer could ask for an extension to allow Jim to find another lender.
If a property is located in a flood zone and the property owner does not obtain flood insurance, what are the consequences?
The property cannot be sold if the new buyer does not obtain flood insurance.
The homeowner’s insurance will cover the cost of damage related to flooding up to 80% of the cost.
A lender would not make a loan on the property.
The property owner can be sued by the lender.
A lender would not make a loan on the property.
If a general home inspection showed a possible crack in a foundation, what should the buyer do?
Request the general inspector to provide an opinion as to risk.
Contact a foundation repair company to repair the crack.
Ask a structural engineer to inspect and give an opinion.
Contact an attorney.
Ask a structural engineer to inspect and give an opinion.
Who is responsible for keeping track of all the dates listed in the contract?
The closing agent
The lender
The broker
The title agent
The broker
During the inspection period under a contract, the buyer discovered that there was a title defect that needed to be rectified. The parties are uncertain about the amount of time it will take to correct the problem. What should they do?
Amend the contract to extend the closing date to whatever date the title problem is solved.
Amend the contract to extend the time to a time certain to correct the problem.
Allow the contract to expire and rewrite it when the problem is solved.
Close and escrow funds to cover the cost of correcting the problem.
Amend the contract to extend the time to a time certain to correct the problem.
After the contract has been executed, the buyer needs to change the closing date. What should the broker do?
Have the buyer ask his attorney to prepare an amendment requesting the change.
Rewrite the entire sales contract.
The broker must have an attorney prepare an addendum.
The broker may use a form called the Agreement to Amend/Extend Contract.
Have the buyer ask his attorney to prepare an amendment requesting the change.
Since each home has an “insurance record” of its own, licensees should advise buyers to obtain a CLUE Report and:
Have the property assessed by an CLUE insurance investigator.
Not assume the sellers insurance, but purchase new insurance to avoid the CLUE issue.
Make their offer subject to receiving and approving a copy of the seller’s CLUE report.
Only purchase HO insurance from a CLUE certified insurance agent.
Make their offer subject to receiving and approving a copy of the seller’s CLUE report.
Bob Broker is representing a buyer and is assisting with the closing. He tells the buyer that Eagle Inspections will get the inspection done quickly and thoroughly. Has Bob acted properly?
No, because he recommended a specific company.
Yes, he was exercising diligence in representing his client.
No, because the broker should never make recommendations.
Yes, because he knew Eagle was the best.
No, because he recommended a specific company.
