Contracts
In a real estate contract, 'earnest money' serves as:
AA non-refundable fee paid to the broker upon signing
BEvidence of the buyer's good faith and part of the consideration for the contract✓ Correct
CThe first installment of the down payment wired to the seller
DThe buyer's commission contribution
Explanation
Earnest money is a deposit that demonstrates the buyer's good faith intention to complete the purchase. It is held in escrow and applied 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.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
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.
Math Concepts
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