Hawaii Broker Practice Exam 2026 - Free Broker License Practice Questions and Study Guide

An earnest money deposit is a financial commitment made by a buyer to show their intent to proceed with a real estate transaction. The purpose of this deposit is to demonstrate seriousness about the purchase and to secure the property while the terms of the deal are finalized.

A check, cash, and a promissory note are all recognized forms of earnest money deposits in real estate transactions. A check is a common method, as it can be made out directly to the seller or the listing brokerage. Cash is straightforward and provides immediate assurance of the buyer's intent. A promissory note, while less common, indicates that the buyer is promising to pay a certain amount in the future and can also serve as a form of earnest money under specific circumstances.

In contrast, a credit card is not typically accepted as a form of earnest money deposit. This is due to the nature of credit card payments, which can be easily reversed or disputed by the cardholder, potentially undermining the security that earnest money is meant to provide in a transaction. Because of this characteristic, it does not fulfill the purpose of demonstrating commitment in the same way as other methods.