Michigan License Law Practice Test

Broker Dan must inform seller Gary about which of the following material facts?

1. Recent renovations of the property

2. The buyer's lender will require private mortgage insurance (PMI)

3. Common neighborhood issues

4. Other properties for sale nearby

The correct answer is: The buyer's lender will require private mortgage insurance (PMI)

The correct choice highlights the importance of transparency in real estate transactions, particularly concerning the buyer's lender's requirements. Informing the seller about the buyer's lender requiring private mortgage insurance (PMI) is crucial as it directly impacts the buyer's ability to secure financing. PMI is often mandated for buyers who are unable to make a substantial down payment, which could indicate to the seller that the buyer is financially constrained. This information allows the seller to make informed decisions about the offer, understanding any potential complications that could arise during the closing process. Knowledge of other factors, such as recent renovations, common neighborhood issues, or nearby properties for sale, while relevant, do not carry the same weight in affecting the fundamental dynamics of the transaction between the buyer and the seller. Rather, they fall more into the categories of marketing aspects or general neighborhood information. Hence, they are typically not classified as material facts that must be disclosed by the broker to the seller in the context of financing and contractual obligations.