Sell My House Real Estate Contracts and Closing 1

Question 1

What is earnest money in a real estate transaction?

Accepted Answer

A good-faith deposit the buyer makes when submitting an offer

Answer

Earnest money is a deposit that signals the buyer's serious intent to purchase and is typically applied toward the down payment or closing costs at settlement.

Question 2

What is a contingency in a real estate purchase contract?

Accepted Answer

A condition that must be met for the sale to proceed

Answer

Contingencies protect both parties by allowing the contract to be voided without penalty if specific conditions — like financing or inspection — are not satisfied.

Question 3

What does 'closing costs' refer to in a home sale?

Accepted Answer

Fees and expenses paid at settlement to complete the transaction

Answer

Closing costs include title insurance, attorney fees, transfer taxes, lender fees, and other expenses paid by buyers and sellers at settlement.

Question 4

What is a seller's disclosure statement?

Accepted Answer

A legally required document where sellers reveal known defects or issues with the property

Answer

Seller disclosure laws in most US states require sellers to inform buyers of known material defects to prevent fraud and protect all parties.

Question 5

What happens to earnest money if a buyer backs out of a deal without a valid contingency?

Accepted Answer

The seller typically keeps the earnest money as liquidated damages

Answer

When a buyer defaults without a valid contingency, the earnest money typically goes to the seller as compensation for taking the home off the market.

Sell My House Practice Test

Sell My House Practice Test

Sell My House Real Estate Contracts and Closing 1