PSI New Jersey Real Estate State Practice Exam

What should a broker do if a seller requests the release of earnest money prior to a buyer's property inspection?

1. Release the earnest money to the seller immediately

2. Wait until after the inspection

3. Consult with the legal advisor

4. Negotiate the release condition

The correct answer is: Wait until after the inspection

Waiting until after the inspection is the appropriate course of action because earnest money typically serves as a form of security for the buyer's commitment to purchase the property. If the seller requests its release before this critical stage, there could be implications for the buyer's interests, especially if issues are identified during the inspection that could affect the transaction. By holding off on releasing the earnest money, the broker ensures that the buyer is protected in the event that the inspection reveals significant problems with the property. It also maintains the integrity of the transaction process, as the earnest money is often tied to the successful completion of all contingencies, including inspections. This approach allows for the opportunity to address any inspections results before deciding on the fate of the earnest money.