Hawaii Pre-Licensing National Practice Exam 2025 – Your Complete Prep Guide

The correct answer emphasizes the necessity of a mutual agreement between the seller and the buyer regarding earnest money. In real estate transactions, earnest money serves as a deposit that shows a buyer's intention to complete the purchase. It is typically held in trust until the sale is finalized or certain conditions are met.

For earnest money to be valid, both parties must understand and agree on its amount and terms. This agreement is often documented in writing, which helps protect both parties and clarifies the terms of the deposit. A clear agreement also helps avoid misunderstandings and provides legal recourse if one party fails to comply with the agreed-upon terms.

While options such as industry practice or written communication may play roles in the process, they do not substitute for the explicit agreement between the buyer and seller. Without agreement, enforcing or recalling the earnest money could become contentious, highlighting the importance of this mutual understanding in real estate transactions.