Michigan License Law Practice Test

Tim expresses interest in purchasing a property to Will, but what must Tim do first?

1. Inspect the property

2. Sign a buyer agency agreement

3. Get pre-approved for a mortgage

4. Complete a property disclosure

The correct answer is: Sign a buyer agency agreement

In real estate transactions, establishing a formal relationship between the buyer and the realtor is crucial. By signing a buyer agency agreement, Tim ensures that he has legal representation in the home-buying process. This agreement outlines the obligations of the agent, including loyalty to the buyer, and establishes clear communication and expectations. The buyer agency agreement is foundational because it protects Tim's interests and ensures that the realtor is legally obligated to act in Tim's best interests throughout the transaction. This formal relationship can also facilitate other important steps, such as property inspections, mortgage pre-approval, and understanding property disclosures. While getting pre-approved for a mortgage is important for serious buyers and conducting a property inspection is essential for assessing a property, these steps usually occur after the buyer has committed to working with an agent through an agency agreement.