Minnesota State Real Estate Practice Test

What must a real estate agent do with earnest money upon receiving it?

1. Deposit it into their personal account

2. Hold it until the transaction is complete

3. Submit it along with the offer for deposit by the listing broker

4. Keep it until the seller accepts the offer

The correct answer is: Submit it along with the offer for deposit by the listing broker

When a real estate agent receives earnest money, the proper procedure is to submit it along with the offer for deposit by the listing broker. This practice is crucial as earnest money serves as a good faith deposit, showing the seller that the buyer is serious about the purchase. By submitting the earnest money with the offer, it establishes the agent's commitment to the transaction and ensures that the money is held securely in the appropriate escrow account, rather than being kept in a personal account or held by the agent themselves. This action also helps facilitate the transaction process, providing assurance to both parties that the earnest money will be properly managed according to the terms of the purchase agreement. Holding the earnest money until the transaction is complete or waiting for seller acceptance are not advisable practices, as they do not comply with standard protocol and could create issues regarding trust and security in the transaction process.