In Colorado, a seller's broker who inadvertently discovers that the buyer's lender has a lower pre-approval amount than the contract price should:
Why B. Discuss the situation with the seller and help evaluate options, as this is information that may affect the seller's decision to proceed Is Correct
Answer B: B. Discuss the situation with the seller and help evaluate options, as this is information that may affect the seller's decision to proceed
In Colorado, a seller's agent must promote the seller's interests with utmost good faith, disclose to the seller adverse material facts actually known to the broker, and counsel the seller about material risks of the transaction that the broker actually knows (C.R.S. 12-10-404(1)(c)). A buyer whose lender pre-approval is below the contract price is a known financing risk, so the broker should discuss it with the seller and help evaluate options. Terminating the contract is the seller's decision, not the broker's.
Exam Tip: Agency
Agency questions are among the most tested on the exam. Focus on the difference between client and customer, and memorize the fiduciary duties (OLD CAR). Watch for questions that try to blur the line between a general agent and a special agent.
Key Agency Terms in This Question
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Key Terms to Know
A lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
AgencyA legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
Dual AgencyA situation where a single real estate agent or brokerage represents both the buyer and the seller in the same transaction.
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