PSI Virginia Real Estate Practice Exam

What is true regarding electronic signatures in real estate transactions?

1. They are not legally binding

2. They may require a significant initial investment

3. They are only valid for purchase agreements

4. They do not involve any cost savings

The correct answer is: They may require a significant initial investment

In the context of electronic signatures in real estate transactions, the assertion that they may require a significant initial investment is valid as electronic signature solutions often come with costs related to software, training, and implementation. Professionals and firms looking to adopt electronic signature systems may need to invest in technology that supports e-signatures, including various software, security systems, and potentially staff training. While the long-term cost savings can be considerable due to increased efficiency and reduced paperwork, the initial investment can be a barrier for some. The other statements reflect misunderstandings about electronic signatures. They are indeed legally binding under the Electronic Signatures in Global and National Commerce (ESIGN) Act and other relevant laws, meaning option A is incorrect. Furthermore, electronic signatures are not restricted solely to purchase agreements; they can be used for a wide variety of documents in real estate, including leases and disclosures, which makes option C inaccurate. As for cost savings, electronic signatures typically lead to a reduction in the materials and processes needed for traditional handwritten signatures, thus contradicting option D.