ContractsQuestion 52 of 100
Earnest money in a purchase contract primarily serves to:
a.Pay the listing broker's full commission
b.Show the buyer's good-faith intent to complete the purchase
c.Reduce the property taxes owed
d.Replace the need for a down payment
Explanation
Earnest money is a deposit that demonstrates the buyer's serious, good-faith commitment to the transaction. It is typically held in escrow and applied to the purchase price or closing costs at closing. If the buyer defaults without a valid contingency, the deposit may be forfeited.
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