Free RECO Simulation 1 Practice Questions: Buyer Search, Offers, Conditions, and Closing

RECO means Real Estate Council of Ontario. This page is for Ontario Real Estate Simulation 1: Residential Real Estate Transactions. Use this focused RECO Simulation 1 page as a short practice test for Buyer Search, Offers, Conditions, and Closing. The items are original Finance Prep sample exam questions built for scenario-based practice, not trivia, puzzle questions, official RECO questions, copied live-exam content, or exam dumps.

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These are original Finance Prep practice questions aligned to this topic area. They are not official RECO questions, copied live-exam content, or exam dumps. Use them to preview question style and explanation depth before continuing with topic drills, mixed sets, and timed mock exams in Finance Prep.

Question 1

Topic: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

A buyer client wants to make an offer on a single-family home listed at $799,900. Offers are being reviewed tonight. Recent comparable sales support a likely value range of $805,000 to $820,000, and the buyer has set a firm maximum of $830,000. The buyer has a written mortgage pre-approval, but it is still subject to lender review of the property and appraisal. During the showing, the buyer noticed a damp smell in the basement, and no pre-listing inspection report is available. The seller prefers an August 28 closing, which works for the buyer. The buyer can provide a $25,000 bank draft tomorrow morning, but not tonight. Which recommendation best balances offer strength with the buyer’s readiness and risk?

• A. Wait to make any offer until the buyer has the deposit in hand, the lender has fully approved the property, and an inspection has already been completed.
• B. Submit an offer near the buyer’s supported maximum, use the seller’s preferred closing date, provide the $25,000 deposit within an agreed short deadline, and include financing and inspection conditions.
• C. Submit an unconditional offer above $830,000, promise the $25,000 deposit tonight, and use the seller’s preferred closing date.
• D. Submit an offer at the list price, require a later closing date, provide a small deposit, and include all standard buyer conditions.

Best answer: B

What this tests: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

Explanation: The key point is to compare offer strength against actual buyer readiness. A higher price and seller-friendly closing date can make an offer more attractive, but the agent should not recommend terms the buyer cannot safely perform. Here, the buyer’s mortgage approval is not final because the lender still must approve the property and appraisal. The damp basement smell creates a practical reason to consider an inspection condition. The deposit is available tomorrow, so the offer should accurately state a short deposit deadline rather than falsely implying the buyer can deliver it tonight. A strong recommendation can still be competitive by using a price supported by market evidence and the seller’s preferred closing date, while protecting the buyer with conditions tied to the facts.

• An unconditional offer above the buyer’s maximum ignores the buyer’s stated limit, financing risk, and deposit availability.
• A list-price offer with a later closing and small deposit is likely weaker than necessary given the comparable sales and seller’s stated preference.
• Waiting until every risk is eliminated may cause the buyer to miss the offer deadline and is not the only reasonable way to manage the risks.

This compares the key offer terms and keeps the offer competitive without ignoring the buyer’s financing, deposit timing, and property-condition risks.

Question 2

Topic: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

A buyer client has an accepted agreement of purchase and sale for an Ontario single-family home. The agreement is conditional on financing and a home inspection, both for the buyer’s benefit, with written notice or waiver required by 6:00 p.m. today. The buyer phones their agent at 3:30 p.m. and says the lender and inspector are both “fine” and asks the agent to “keep the deal moving.” The agent’s draft follow-up plan says: “Leave the listing agent a voicemail that the buyer is satisfied, save the lender email to the file, and send a waiver tomorrow if anyone asks.”

Which revised follow-up plan is the best professional correction?

• A. Obtain the buyer’s signed written waiver or notice before the deadline, deliver it as required by the agreement, and keep evidence of timely communication in the brokerage file.
• B. Proceed as planned because the buyer’s phone instruction and lender email prove the buyer intended to waive the conditions.
• C. Ask the buyer’s lawyer to confirm the conditions after the deadline because the lawyer will manage closing.
• D. Send the inspection report to the seller and listing agent so they can decide whether the conditions have been satisfied.

Best answer: A

What this tests: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

Explanation: The key point is that post-acceptance follow-up must protect the conditional agreement and the brokerage record. If the agreement requires written notice or waiver by a deadline, a phone call, voicemail, or lender email is not enough. The agent should have the buyer sign the proper written document before the deadline, deliver it according to the agreement and brokerage process, and keep proof of delivery and related communications in the file. The agent should also coordinate appropriately with the brokerage and lawyer, but cannot rely on informal communications or later cleanup to preserve the deal.

• A phone instruction may guide the agent’s next step, but it does not replace the required written, signed condition document.
• Involving the lawyer can be appropriate, but waiting until after the deadline risks the agreement becoming void or disputed.
• Sending the inspection report does not waive or fulfill the buyer’s condition and may disclose unnecessary information.

A condition must be handled through timely written, signed documentation and retained delivery evidence, not informal verbal confirmation.

Question 3

Topic: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

Maya is representing a buyer in an Ontario resale home purchase. The agreement of purchase and sale was accepted on Tuesday at 8:30 p.m. The buyer delivered the deposit to the listing brokerage within the required 24 hours. The agreement includes a financing condition that must be waived or fulfilled in writing by Friday at 5:00 p.m. At 3:30 p.m. on Friday, the lender tells Maya it will not finish its review until Monday. The listing agent texts, “The seller will probably be fine giving more time, but I have not reached the seller yet.” The buyer wants to keep the property under contract and asks Maya what to do. What is Maya’s best action?

• A. Tell the buyer that the listing agent’s text is enough to extend the financing condition until Monday.
• B. Prepare a waiver on Monday and date it Friday, because the lender’s delay was outside the buyer’s control.
• C. Advise the buyer that no action is needed because the offer’s irrevocability period controls the financing deadline.
• D. Seek a written amendment extending the financing condition before 5:00 p.m., signed by all required parties, and explain the risk if no extension or waiver is completed on time.

Best answer: D

What this tests: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

Explanation: The key point is that each timeline in an agreement serves a different purpose. The deposit deadline has already been met, and the irrevocability period no longer controls once the offer has been accepted. The active risk is the financing condition expiry at Friday 5:00 p.m. If the buyer wants more time, the safe professional response is to seek a written amendment extending the condition before the deadline, with the required signatures. A text saying the seller will “probably” agree is not the same as an agreed amendment. If an extension cannot be completed in time, the buyer needs to decide whether to waive or fulfill the condition only if prepared to proceed, or accept the consequences of the condition not being satisfied under the agreement’s wording.

• An informal text from the listing agent does not amend the agreement or extend a condition deadline.
• Backdating a waiver is improper and creates serious documentation and integrity concerns.
• Irrevocability concerns how long an offer remains open for acceptance; it does not extend a later condition deadline after acceptance.

A condition deadline can only be safely extended by a timely written amendment agreed to by the parties, not by an informal assurance from the listing agent.

Question 4

Topic: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

A buyer client has an accepted agreement of purchase and sale for a single-family home. The agreement says the buyer must deliver the deposit within 24 hours of acceptance, and the buyer did so. It also includes a financing condition for the buyer’s benefit that expires at 6:00 p.m. today. The buyer has not received final lender approval and asks the agent to “send something so the deal stays alive for three more days.” The seller is open to the extension but has not signed anything yet.

What is the best next step for the buyer’s agent?

• A. Send a notice of fulfilment because the buyer delivered the deposit and still intends to obtain financing.
• B. Prepare a written amendment extending the financing condition deadline and have both parties sign it before the current deadline expires.
• C. Send a waiver of the financing condition and tell the buyer the lender can finalize approval after closing.
• D. Treat the seller’s verbal agreement as acceptance of the extension and update the brokerage file after the deadline.

Best answer: B

What this tests: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

Explanation: The key point is the difference between satisfying a condition and changing the agreement. Deposit delivery satisfies the deposit requirement only; it does not fulfil a financing condition. A notice of fulfilment or waiver is used when the buyer is prepared to proceed without relying on that condition. If the buyer needs more time, the agreement must be amended. Because an amendment changes the accepted agreement, both buyer and seller must agree to it in writing, ideally before the condition deadline expires. If the deadline is missed or the buyer is unsure about legal consequences, the agent should avoid giving legal advice and recommend the buyer speak with a lawyer.

• Deposit delivery does not prove financing approval and does not satisfy the financing condition.
• A waiver would make the buyer proceed without the protection of the financing condition, which is not appropriate when approval is still uncertain.
• A verbal extension is not a safe substitute for a written amendment signed by both parties.

Extending a condition deadline changes the accepted agreement, so it requires a written amendment agreed to by both parties before the existing deadline expires.

Question 5

Topic: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

An Ontario buyer client is viewing a single-family home and says they need basement rental income to qualify for financing. The listing remarks say, “separate entrance and kitchenette - great income potential,” but no permits, retrofit documents, or municipal confirmation are available. The seller’s agent says only that a previous owner “may have rented it out.” During the showing, the buyer’s agent says, “This is a legal basement apartment, so you can use about $1,800 a month as income.” The buyer now wants to rely on that statement before making an offer. What is the best professional response by the buyer’s agent?

• A. Tell the buyer the issue can be left entirely to the lawyer after acceptance because it does not affect the property-viewing stage.
• B. Proceed with an offer using $1,800 monthly rent because the listing language and separate entrance support a reasonable income assumption.
• C. Ask the seller’s agent for a verbal confirmation and, if received, tell the buyer the basement apartment status is confirmed for offer purposes.
• D. Promptly correct the statement, explain that the basement apartment status and rental income are unverified, document the correction, and recommend appropriate due diligence before the buyer relies on it.

Best answer: D

What this tests: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

Explanation: The key point is that a buyer’s agent should not present unverified property assumptions as facts. Listing language such as “income potential,” visible features such as a separate entrance, and comments about past rental use do not confirm that a basement unit is legal, permitted, insurable, financeable, or able to produce a specific rent. Once the agent realizes an overstatement was made, the proper response is to correct it clearly and promptly, document the correction, and recommend verification through appropriate sources, such as municipal records, the buyer’s lawyer, lender requirements, and any needed inspection or document review. If the issue is important to the buyer’s decision, the offer strategy may need suitable conditions or other protections drafted with appropriate advice.

• Treating listing language and visible features as proof ignores the difference between marketing wording and verified property status.
• A verbal comment from the seller’s agent is not a substitute for reliable confirmation of legality, permits, or lender treatment.
• Leaving the issue until after acceptance may expose the buyer to avoidable risk if the rental status affects financing or willingness to proceed.

The agent must correct the unsupported statement and guide the buyer toward verification rather than treating assumptions as confirmed property facts.

Question 6

Topic: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

A buyer client has an accepted agreement of purchase and sale for a resale single-family home in Ontario. The agreement was accepted Monday at 7:00 p.m. and requires the deposit to be delivered to the listing brokerage within 24 hours of acceptance. It also includes financing and inspection conditions for the buyer’s benefit, both expiring Thursday at 5:00 p.m. On Wednesday, the inspection identifies an electrical issue. The buyer still wants the property, but only if the seller reduces the price by $8,000 and extends the condition deadline to Friday so the buyer can confirm insurance. The seller texts the buyer’s agent, “That sounds fine; just send over the waiver when financing is approved.” What is the best professional response?

• A. Have the buyer sign a waiver of the inspection condition because the seller’s text shows agreement with the requested changes.
• B. Send a notice of fulfilment for the inspection condition and record the $8,000 price reduction in an email to both agents.
• C. Wait until Thursday’s deadline passes because the seller’s text creates an accepted counteroffer and protects the buyer’s conditions.
• D. Prepare a written amendment for the price change and condition extension to be signed by both parties, ensure the deposit is delivered as the accepted agreement requires, and recommend legal advice if the buyer is unsure about the legal effect.

Best answer: D

What this tests: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

Explanation: The key point is the difference between removing a condition and changing the agreement. A waiver or notice of fulfilment deals with a condition, but it does not reduce the purchase price or extend a deadline. Those changes require a written amendment agreed to by both buyer and seller. The seller’s informal text is not a safe substitute for proper documentation. The deposit obligation is also separate: once the agreement is accepted, the deposit must be delivered according to the APS unless the parties properly amend that term. Because changing condition language and deadlines can affect rights under the agreement, the agent should recommend legal advice where the buyer needs guidance on legal consequences.

• Signing a waiver would remove protection without documenting the price reduction or extension.
• A notice of fulfilment is used when a condition has been satisfied; it does not amend purchase price or deadlines.
• Letting the deadline pass risks losing the buyer’s contractual protection and should not be treated as protected by an informal text.

A price change and deadline extension require an amendment signed by both parties, while the deposit deadline remains tied to acceptance unless the agreement is amended.

Question 7

Topic: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

During a showing of a resale detached home in Ontario, a buyer client asks whether the finished basement can be used as a separate rental unit and whether the electrical work is safe. The listing remarks say only “finished basement with kitchenette.” The buyer’s agent notices a separate side entrance, a bedroom-style room, a breaker panel, and newer-looking outlets. The agent starts to say, “It looks like a legal basement apartment and the wiring appears updated, so you should be fine.” The buyer is considering an offer that evening.

Which response best corrects the agent’s explanation before the buyer relies on it?

• A. Avoid discussing the basement or electrical issue further because zoning and electrical safety are outside a real estate agent’s expertise.
• B. Ask the listing agent to confirm by text that the basement apartment is legal and the electrical work is safe, then rely on that confirmation when preparing the offer.
• C. Clarify that the observations are not verification, recommend checking municipal and property records, inspection and qualified electrical advice, discuss appropriate offer conditions, document the discussion, and seek brokerage guidance if needed.
• D. Tell the buyer the basement is likely legal because it has a separate entrance and kitchenette, but add a condition that the seller warrants the unit can be rented.

Best answer: C

What this tests: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

Explanation: The key point is that a real estate agent must not present assumptions from a viewing as verified property facts. A separate entrance, kitchenette, breaker panel, or newer-looking outlets may be relevant observations, but they do not prove legal use, zoning compliance, building permit status, fire code compliance, or electrical safety. The buyer needs a clear correction before deciding whether and how to offer. A prudent response explains what is known, what is unknown, and what evidence should be obtained. That may include municipal or property records, seller disclosures or supporting documents, a home inspection, qualified electrical advice, lawyer review, and offer conditions that give the buyer time to investigate. The agent should document the advice and consult the brokerage when the risk or wording is beyond the agent’s competence.

• Treating visible features as proof of legality repeats the flawed assumption, and a seller warranty alone may not give the buyer enough time or evidence to verify the issue.
• Refusing to discuss the concern at all is too passive; the agent can identify the risk, recommend due diligence, and refer to qualified sources without giving technical or legal advice.
• Relying only on a text from the listing agent is not enough for high-risk facts such as legal use and electrical safety; the buyer should be directed to verifiable evidence and suitable conditions.

This response protects the buyer by separating visible observations from verified facts and directing the buyer to evidence, conditions, documentation, and appropriate expertise.

Question 8

Topic: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

A buyer client wants to make an offer on an Ontario single-family home that has been on the market for 9 days. The listing notes a finished basement and a 5-year-old roof. At the showing, the buyer’s agent notices a faint musty smell in one basement room but sees no visible staining. The buyer has not obtained an inspection, and the seller has not made any written disclosure about water problems. The buyer tells the agent, “Tell them we found basement moisture and that our inspector says the roof is near the end of its life. That should make them accept $40,000 under asking.” The agent wants to negotiate firmly but avoid an inaccurate or unfair approach. What should the agent do?

• A. Tell the listing agent only the observed concern, avoid claiming an inspection or roof opinion that does not exist, recommend an inspection condition or other due diligence wording, document the buyer’s instructions, and seek brokerage guidance if the buyer insists on unsupported statements.
• B. Tell the listing agent that the agent personally believes the home has water and roof defects, but state that the buyer is willing to proceed if the seller accepts the lower price quickly.
• C. Submit the low offer without saying anything about the basement or roof, because raising property concerns during negotiation could weaken the buyer’s position.
• D. Use the buyer’s wording because negotiation naturally involves pressure, and the seller can accept, reject, or counter the offer after deciding how much weight to give the statements.

Best answer: A

What this tests: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

Explanation: The key point is that negotiation strategy must not depend on inaccurate or unsupported statements. A buyer’s agent may advocate strongly for a client, but statements about property condition should be tied to what is actually known, observed, or supported by appropriate evidence. Here, the agent observed only a faint musty smell and has no inspection report or roof assessment. The safer approach is to communicate the concern accurately, help the buyer protect themselves through an inspection condition or other appropriate offer terms, keep a clear communication record, and involve the brokerage if the client pressures the agent to make unsupported claims. This balances representation duties with fairness, transaction accuracy, and risk control.

• Using the buyer’s wording would turn unsupported claims into leverage and could mislead the seller.
• Staying completely silent about the concern may be too cautious if the buyer wants the issue addressed through price or conditions.
• Reframing unsupported claims as the agent’s personal belief does not solve the problem and may increase risk.

This approach supports the buyer’s negotiation position while keeping communications accurate, evidence-based, documented, and within proper professional boundaries.

Question 9

Topic: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

A buyer client has an accepted agreement of purchase and sale for a 35-year-old detached home in Ontario. The agreement is conditional on the buyer obtaining a satisfactory home inspection by 6:00 p.m. tomorrow. During the inspection, the inspector notes active moisture staining near the basement wall and says further evaluation by a foundation specialist is recommended before the buyer decides whether to proceed. The buyer asks the real estate agent, “Is this just normal seepage, or should I waive the condition?”

What is the agent’s best next step?

• A. Contact the seller directly to demand a price reduction before telling the listing brokerage about the inspection concern.
• B. Advise the buyer to obtain appropriate expert advice before the condition deadline, discuss available agreement steps with the brokerage or lawyer if needed, and document the buyer’s instructions.
• C. Ignore the inspection comment unless the lender refuses financing, because inspection findings are not part of the agreement once it is accepted.
• D. Tell the buyer the issue is likely normal for the age of the home and prepare the waiver if the buyer still wants the property.

Best answer: B

What this tests: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

Explanation: The key point is that a potential property condition issue discovered during a conditional period should be handled through informed due diligence, not by the agent diagnosing the defect. A real estate agent may explain the transaction process, condition timing, and communication steps, but should not give engineering, construction, or legal opinions. Here, the inspector has recommended further specialist evaluation and the inspection condition deadline is imminent. The agent should encourage the buyer to obtain appropriate expert advice promptly, consider whether legal or brokerage guidance is needed for any notice, amendment, waiver, or decision not to proceed, and document the buyer’s instructions. The buyer decides whether the inspection is satisfactory, but that decision should be based on qualified information before the condition expires.

• Minimizing the moisture concern gives an unsupported technical opinion and may pressure the buyer to waive the condition without adequate information.
• Negotiating through the wrong channel and bypassing the listing brokerage is improper; any request should be handled through appropriate transaction communication and documentation.
• Treating the inspection concern as irrelevant ignores the purpose of the inspection condition and the buyer’s due diligence rights before the deadline.

The agent should stay within competence, support timely due diligence, and document the buyer’s informed instructions before the condition deadline.

Question 10

Topic: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

A buyer client wants to make an offer on a single-family home listed at $799,900. The buyer instructs the agent to offer $790,000, include the fridge, stove, dishwasher, washer, dryer, and existing window coverings, and use August 15 as the closing date. The listing says the dining room chandelier is excluded and the hot water tank is rented. The buyer has a $30,000 deposit available, but the bank draft cannot be obtained until the next banking day. The buyer also wants financing and home inspection conditions for five business days after acceptance. The seller is reviewing offers at 8:00 p.m. tonight and asks that offers remain open until noon tomorrow. The buyer agrees to that irrevocability timing after the agent explains the effect.

What should the buyer’s agent do when preparing the offer?

• A. Prepare the offer at $790,000, include the chandelier because fixtures normally stay with the property, make the deposit due on acceptance, omit the inspection condition, and set irrevocability to 8:00 p.m. tonight.
• B. Prepare the offer at $790,000 with the buyer’s requested conditions and closing date, but leave the deposit timing, rental item, inclusions, and irrevocability for the seller’s agent to correct in a counteroffer.
• C. Prepare the offer at $799,900 with no conditions, include all light fixtures, require the deposit on acceptance, use August 15 for closing, and set irrevocability to noon tomorrow.
• D. Prepare the offer at $790,000, provide for the $30,000 deposit to be delivered within 24 hours of acceptance, include the listed appliances and window coverings, exclude the chandelier, note the rental item, add the financing and inspection conditions, use August 15 for closing, and set irrevocability to noon tomorrow.

Best answer: D

What this tests: Buyer Search, Property Review, Offer Preparation, Conditions, and Closing Follow-Up

Explanation: The key point is that an offer should be internally consistent and should reflect the buyer’s informed instructions, the listing facts, and practical performance requirements. Here, the buyer has chosen the price, closing date, conditions, and irrevocability period. The deposit term must be realistic because the buyer cannot obtain the bank draft until the next banking day. Inclusions and exclusions should not be assumed: listed appliances and window coverings can be included, but the chandelier is specifically excluded, and the rented hot water tank should be handled as a rental item. Financing and inspection conditions should be included because the buyer has not authorized a firm offer. Leaving important terms vague or inconsistent creates avoidable risk and may lead to misunderstanding or breach.

• A firm offer at the list price ignores the buyer’s price instruction and condition requirements.
• Treating the excluded chandelier as included misreads the listing and creates an avoidable fixture dispute.
• Leaving core terms for a counteroffer fails to prepare a clear offer that reflects the buyer’s instructions.

These terms match the buyer’s instructions while accurately reflecting the listing facts and making the deposit, conditions, closing, and irrevocability workable.

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