Contracts
Earnest money in a real estate transaction is best described as:
AThe commission paid to the listing broker
BA deposit made to demonstrate the buyer's good faith and intent✓ Correct
CA non-refundable down payment
DMoney held by the title company for closing costs
Explanation
Earnest money is a good-faith deposit made by the buyer to show serious intent to complete the purchase. It is credited toward the purchase price at closing.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Closing CostsFees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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