Question

Which of the following would not be a normal amount of earnest money?

Select one:
a. $800
b. 15% of the offer
c. 4% of the offer
d. $500

Answer 1

15% of the offer for earnest money is not a typical amount as earnest money usually ranges from 1% to 3% of the home's purchase price. Therefore, that percentage is higher than the normal range.

Step-by-step explanation:

The question pertains to earnest money, which is a deposit made to a seller that represents a buyer's good faith to buy a home. The amount of earnest money depends on a variety of factors including local custom, market conditions, and the price of the home.

While there is no standard amount, it typically ranges from 1% to 3% of the home's purchase price. An amount like 15% would be unusually high for earnest money and isn't normally considered a standard practice.

Amounts like $800 and $500 could be considered normal if they align with that percentage depending on the purchase price of the home, and similarly, 4% could also be reasonable under certain market conditions.