Sell My House Closing Process and Legal Documents 2

Question 1

What is 'escrow' in a real estate transaction?

Accepted Answer

A neutral third-party arrangement where funds and documents are held until all closing conditions are met

Answer

Escrow is managed by a neutral third party (title company or escrow company) that holds money and documents and disburses them only when all contract conditions have been satisfied.

Question 2

What is 'earnest money' in a home purchase?

Accepted Answer

A good-faith deposit by the buyer held in escrow to demonstrate serious intent to purchase

Answer

Earnest money is a deposit (typically 1–3% of the purchase price) that shows the buyer is committed to the transaction and is held in escrow until closing or a contract dispute.

Question 3

Under what circumstances can a buyer typically get their earnest money back?

Accepted Answer

If the buyer exercises a valid contract contingency (financing, inspection, appraisal) within the allowed timeframe

Answer

Earnest money is refundable when the buyer cancels within the terms of a valid contingency, such as failing to get financing approval or unsatisfactory inspection results.

Question 4

What is a 'deed' in a real estate transaction?

Accepted Answer

The legal document that transfers ownership of property from seller to buyer

Answer

A deed is the legal instrument that conveys title (ownership) from the seller (grantor) to the buyer (grantee) and must be recorded with the county to be legally effective.

Question 5

What is a 'seller concession' in real estate?

Accepted Answer

When the seller agrees to pay a portion of the buyer's closing costs as part of the deal

Answer

Seller concessions are contributions toward the buyer's closing costs that are negotiated into the contract, often used to help buyers manage upfront cash requirements.

Sell My House Practice Test

Sell My House Practice Test

Sell My House Closing Process and Legal Documents 2