New York Real Estate Salesperson ExaminationNew York State Specific Laws and RegulationsMedium
A New York real estate salesperson is involved in a transaction where they represent the seller. The buyer's agent tells the salesperson that their buyer is pre-approved for a mortgage but does not provide the pre-approval letter. The salesperson relays this information to their seller client. What is the salesperson's ethical duty regarding the verification of this information?
- AThe salesperson has no duty to verify information provided by another licensed professional.
- BThe salesperson should advise the seller to request the pre-approval letter from the buyer's agent.
- CThe salesperson should assume the information is accurate since it came from a licensed agent.
- DThe salesperson must independently contact the lender to verify the buyer's pre-approval.
Show answer & explanationAnswer & explanation
Correct answer: B. The salesperson should advise the seller to request the pre-approval letter from the buyer's agent.
While a salesperson can relay information received, they also have a duty to not misrepresent facts and to provide competent advice. Advising the seller to request the actual pre-approval letter is best practice to verify the buyer's financial capability and protect the seller's interests, rather than simply accepting unverified verbal claims.
Why the other options are wrong
- A. An agent has a duty to provide accurate information and avoid misrepresentation. Simply accepting unverified information from another agent without advising verification is not diligent.
- C. Assuming accuracy without verification, especially for critical information like financial capability, is a breach of the duty of reasonable care and diligence to the client.
- D. Contacting the lender directly without the buyer's explicit consent could violate privacy laws and is not the primary duty of the seller's agent; their role is to advise the client on obtaining verification.
Verification of Buyer's Financials
A seller's agent should advise their client to obtain verifiable proof of a buyer's financial capability (e.g., pre-approval letter) rather than relying solely on verbal assurances, to protect the client's interests.
- Verbal claims may be insufficient.
- Advise client to request documentation.
- Protects seller's interest against unqualified buyers.
Memory trick: For buyer's cash, 'Advise to Ask for the Paper Flash'.