Iowa Real Estate Practice Exam 2026 – Full Prep Resource

In this scenario, when a seller instructs the broker to keep the earnest money check after it has been deposited, the appropriate action for the broker is to withdraw the funds and transfer them to the broker's business account. This is correct because the seller has indicated that they do not wish to return the earnest money and are allowing the broker to retain it, which implies that the funds are now considered as compensation for the services rendered.

This scenario often arises when there is a complication in the transaction and the seller decides that they would like to keep the funds, possibly due to a breach of agreement by the buyer or another significant issue. The broker's responsibility is to act according to the seller's instruction; hence, transferring the funds to the broker's business account is suitable given the seller's direct instruction.

The other options do not align with the seller's instruction. Transferring the funds to an escrow account is typically done when both parties agree to hold the funds until certain conditions are met, which is not the case here. Keeping it as payment for services might imply agreeing to the funds without a seller instruction or establishing a formal agreement that may not exist. Lastly, refunding the earnest money to the buyer contradicts the seller’s directive and would not