Humber/Ontario Real Estate Course 1 Exam Practice

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What is the primary purpose of a deposit in a real estate transaction?

To cover the cost of the down payment
To demonstrate the buyer's commitment to the purchase
To pay the seller’s loan balance
To finance initial repairs after the purchase

The correct answer is: To demonstrate the buyer's commitment to the purchase

The primary purpose of a deposit in a real estate transaction is to demonstrate the buyer's commitment to the purchase. When a buyer provides a deposit, it shows the seller that the buyer is serious about proceeding with the transaction. This deposit is a show of good faith that the buyer intends to move forward with the purchase, and it is often held in trust until the closing of the transaction. The other options are incorrect because a deposit is not meant to cover the cost of the down payment, pay the seller’s loan balance, or finance initial repairs after the purchase.