Michigan License Law Practice Test

What is the basis for Gordon's refusal to accept Juan's offer?

1. Insufficient home price

2. Inadequate earnest money

3. Potential discrimination

4. Lack of buyer pre-approval

The correct answer is: Inadequate earnest money

The basis for Gordon's refusal to accept Juan's offer lies in the inadequacy of the earnest money. Earnest money serves as a good faith deposit that shows the seller the buyer's commitment to the purchase. If the earnest money amount is deemed insufficient, it can signal to the seller that the buyer may not be serious or financially capable of following through with the transaction. When an offer lacks adequate earnest money, the seller might worry about the buyer's intentions or financial stability, which can lead to a refusal of the offer. This situation is particularly relevant in competitive real estate markets, where sellers often expect substantial earnest money to ensure that only serious buyers are entering into agreements.