Free Pennsylvania Real Estate Practice Exam Practice Question
For a property manager, earnest money deposits that are held by a broker until settlement will be on the closing statement as a:
Correct Answer: A
Rationale: Earnest money deposits are funds provided by the buyer to demonstrate their serious intent to purchase a property. When these deposits are held by a broker until closing, they are considered a credit to the buyer on the closing statement, reducing the amount the buyer needs to pay at settlement.
Option B, credit to the seller, is incorrect as the seller does not receive this money until the transaction is finalized.
Option C, debit to the buyer, is wrong because debits indicate amounts owed, not credits.
Option D, debit to the seller, is also inaccurate since the seller does not incur a cost from the buyer's earnest money.
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