California Real Estate Broker ExaminationReal Estate PracticeMedium
A buyer's agent is assisting a client with purchasing a home. During the inspection, significant structural damage is discovered that was not apparent during the initial viewing. The seller's agent claims they were unaware of the damage. What is the buyer's agent's primary responsibility regarding this discovery?
- ANegotiate a lower price with the seller's agent without informing the buyer of the full extent of the damage.
- BEnsure the buyer is fully informed of the damage and their options, including renegotiating or withdrawing the offer.
- CSuggest the buyer overlook the damage if the price is significantly reduced.
- DAdvise the buyer to proceed with the purchase, as the seller's agent was unaware.
Show answer & explanationAnswer & explanation
Correct answer: B. Ensure the buyer is fully informed of the damage and their options, including renegotiating or withdrawing the offer.
A buyer's agent has a fiduciary duty of disclosure and loyalty to their client. Upon discovering significant damage, the agent must ensure the buyer is fully informed of all material facts and understands their options, empowering them to make an educated decision.
Why the other options are wrong
- A. Withholding information from the client, even to secure a better deal, is a breach of fiduciary duty.
- C. Suggesting the buyer overlook significant damage is not acting in the buyer's best interest and is a breach of professional responsibility.
- D. This neglects the agent's duty to protect the buyer's interests regarding material facts.
Buyer's Agent Disclosure Duty
A buyer's agent has a fiduciary duty to disclose all known material facts about a property to their client, even if those facts are detrimental to the sale.
- Material facts include physical defects, encumbrances, and environmental hazards.
- Disclosure must be clear, complete, and timely.
- Empowers the buyer to make informed decisions.
Memory trick: A buyer's agent must be a detective and a truthful reporter for their client.