The Quiz: A deposit made to show a buyer is serious is known by what term?
Trade equity
Right of first refusal
Earnest money
Rescission
Earnest money is given to the seller of a home to demonstrate one’s seriousness about going through with the purchase. Also known as a “good faith deposit,” the payment is typically 1% to 3% of the total sale price and is applied to the buyer’s down payment or closing costs. If the deal falls through, however, a buyer’s earnest money is lost to the seller, who then has to relist the home.
The correct answer to this quiz is Earnest money.