If a seller does not accept an offer, what must the listing firm do with the earnest money?

When a seller does not accept an offer, the correct course of action for the listing firm is to promptly disburse the earnest money to the person(s) who paid it. This ensures that the earnest money, which is typically submitted by the buyer as a show of good faith, is returned to the buyer in a timely manner, maintaining trust and ethics in the transaction process.

The prompt return of earnest money is important for a few reasons. First, it reinforces the idea that the buyer's interests are respected, encouraging further engagement in real estate transactions with the firm. Additionally, failing to return the earnest money could lead to complications or disputes, potentially damaging the firm's reputation and the buyer's experience.

In contrast, retaining the earnest money as a processing fee or requiring a request from the buyer for its return could violate ethical standards and industry regulations. Furthermore, depositing the money in a separate trust fund without clear agreement on handling the earnest money could also lead to compliance issues and dissatisfaction from the buyer. Thus, the prompt disbursement not only aligns with best practices but also reflects the firm’s accountability and professionalism.