Final answer:
A typical purchase and sale agreement includes a clause ensuring the property can be insured against fire risk. Escrow facilitates the payment of insurance and property taxes, offering convenience in real estate transactions. Sellers can alleviate concerns due to imperfect information with transparent practices and reassurances.
Step-by-step explanation:
In real estate transactions, it is typically true that a purchase and sale agreement will include a clause that requires the buyer to confirm that the property can be insured against the risk of fire prior to completion of the sale. This clause serves to protect the buyer's investment and to ensure that the property will be covered against potential damages due to fire, which is a common concern in real estate transactions. Additionally, the process of escrow plays a crucial role in the handling of insurance and property taxes, often making it more convenient for both parties by consolidating payments.When dealing with imperfect information, sellers can reassure potential buyers by providing comprehensive disclosures, offering warranties, allowing for professional inspections, and being transparent about the condition of the goods. Imperfect information can lead to challenges in agreeing on a price due to uncertainty about the value or condition of the goods involved. A seller's reassurances can help bridge these gaps and foster trust in the transaction process.