Humber/Ontario Real Estate Course 3 Exam Practice

Which BEST describes a significant deposit in real estate transactions?

1. It shows good faith and credibility

2. It indicates buyer reluctance

3. It must be a certified cheque

4. It is irrelevant to negotiations

5. It guarantees offer acceptance

6. It lowers the asking price

The correct answer is: It shows good faith and credibility

A significant deposit in real estate transactions serves as a demonstration of the buyer's good faith and credibility. This deposit reflects the buyer's commitment to the acquisition of the property and acts as an assurance to the seller that the buyer is serious about the transaction. By providing a substantial deposit, the buyer signals their willingness to follow through with the purchase, which can enhance their negotiating position. This financial commitment is crucial in the context of real estate negotiations, often impacting perceptions of the buyer's reliability. Sellers tend to view a larger deposit as a positive sign, reducing their concerns about potential default by the buyer. The deposit may be part of the purchase agreement and typically becomes part of the down payment upon successful transaction completion. Other elements, such as certified cheques or their implications on the negotiation process, play a role but do not encompass the primary function of the deposit as an expression of the buyer's intent and seriousness regarding the property.