CRS Buyer Representation and Counseling 2 — Questions and Answers
Question 1: A first-time homebuyer asks about earnest money. Which statement is most accurate?
- Earnest money is always refundable regardless of circumstances
- Earnest money is a good-faith deposit that may be forfeited if the buyer defaults without a valid contingency (Correct answer)
- Earnest money is paid directly to the seller at closing
- Earnest money replaces the down payment
Correct answer: Earnest money is a good-faith deposit that may be forfeited if the buyer defaults without a valid contingency
Earnest money demonstrates the buyer's commitment; if the buyer backs out without a valid contingency, the seller may retain the deposit as liquidated damages.
Question 2: When counseling a buyer about choosing a neighborhood, which factor is a CRS agent legally prohibited from steering buyers toward or away from?
- School district quality
- Commute distance
- Racial or ethnic composition of the neighborhood (Correct answer)
- Property tax rates
Correct answer: Racial or ethnic composition of the neighborhood
Steering buyers based on the racial or ethnic composition of a neighborhood violates the Fair Housing Act.
Question 3: What is the purpose of a home inspection contingency in a purchase agreement?
- To lower the listing price automatically if defects are found
- To allow the buyer to renegotiate or withdraw if significant defects are discovered (Correct answer)
- To require the seller to make all requested repairs
- To extend the closing date indefinitely
Correct answer: To allow the buyer to renegotiate or withdraw if significant defects are discovered
An inspection contingency protects the buyer by giving them the right to renegotiate terms or terminate the contract based on inspection findings.
Question 4: Which type of buyer is most likely to benefit from a 203(k) FHA loan?
- A buyer purchasing a new construction home
- A buyer purchasing a fixer-upper that needs rehabilitation (Correct answer)
- A buyer with a large down payment seeking a jumbo loan
- A buyer purchasing a vacation property
Correct answer: A buyer purchasing a fixer-upper that needs rehabilitation
The FHA 203(k) loan allows buyers to finance both the purchase price and rehabilitation costs of a property in a single mortgage.
Question 5: A buyer is under contract but loses their job before closing. What should a CRS agent advise?
- Proceed to closing and inform the lender after funding
- Immediately notify the lender and review contingency options with an attorney (Correct answer)
- Cancel the contract without notification
- Transfer the purchase agreement to a family member
Correct answer: Immediately notify the lender and review contingency options with an attorney
A job loss can jeopardize loan approval, so the buyer must inform the lender immediately and explore contingency options to avoid legal and financial liability.
Question 6: What does RESPA require lenders to provide buyers within three business days of a loan application?
- A final closing disclosure
- A Loan Estimate detailing projected costs and terms (Correct answer)
- A title commitment
- A home warranty certificate
Correct answer: A Loan Estimate detailing projected costs and terms
RESPA and the TRID rules require lenders to deliver a Loan Estimate within three business days, enabling buyers to compare loan offers.
CRS Buyer Representation and Counseling 2
A first-time homebuyer asks about earnest money.
Which statement is most accurate?