Affiliate Broker Tennessee (TN PSI) National Practice Exam `

What typically must a real estate agent disclose when they know of a material condition affecting a property?

1. Only conditions specified in the sales contract

2. Nothing, unless legally required

3. All known material defects

4. Only issues the seller refuses to disclose

The correct answer is: All known material defects

A real estate agent is obligated to disclose all known material defects affecting a property. Material defects refer to significant issues that could impact the value or desirability of a property, such as structural problems, water damage, or pest infestations. This requirement stems from the agent's duty of honesty and fair dealing with all parties involved in a real estate transaction. In the context of real estate transactions, transparency is crucial. Disclosing material defects allows potential buyers to make informed decisions, and it protects the agent and the seller from potential legal repercussions later on. By being upfront about any known issues, the agent builds trust and helps ensure a smoother transaction process. Other options suggest limitations on what must be disclosed. However, only disclosing conditions specified in the sales contract, expecting no disclosure unless legally mandated, or only focusing on issues that the seller is unwilling to disclose do not align with the comprehensive approach required by ethical and legal standards in real estate practices.