If a seller requests earnest money prior to a property inspection, what should the principal broker do?

When a seller requests earnest money prior to a property inspection, it is essential to adhere to the established protocols that protect the interests of all parties involved in the transaction. The correct response is to refuse to release the earnest money at that moment.

This is based on the standard practice of ensuring that earnest money, which serves to demonstrate a buyer's commitment to purchasing the property, is not released until certain conditions are met. Typically, an inspection is an essential part of the buying process, and earnest money should remain in escrow until both the buyer and the seller have agreed on the terms following the inspection. This allows for any potential issues discovered during the inspection to be addressed through negotiation and preserves the buyer's rights.

Releasing earnest money before the inspection could lead to complications, such as the buyer feeling pressured or undermined in their negotiating position. Therefore, it is prudent for the principal broker to hold onto the earnest money until all necessary inspections and discussions have concluded, ensuring that both parties are treated fairly and their interests protected.