A real estate broker wrote a full price offer of $350,000 for a buyer. The amount of the earnest money deposit was $25,000. The offer was accepted and the broker placed the deposit in her escrow or trust account. The next week, the buyer and the seller decided to cancel their agreement and notified the broker in writing to return the deposit. Which of the following is TRUE?

This statement is incorrect because the broker is not entitled to negotiate for her commission from the earnest money deposit unless there is an agreement in place that specifies such terms. In this scenario, since the agreement was canceled, the broker must return the deposit in full unless otherwise directed by both parties.

This choice is incorrect because there is no basis for the broker to subtract any portion of her commission from the earnest money deposit when the agreement is canceled. The deposit is meant to be returned to the buyer unless there is explicit authorization to retain any amount for commission.

This option is also inaccurate. The broker does not automatically earn a commission simply because a transaction was initiated. Without a completed transaction or specific contractual authority to retain the deposit for commission, the broker must return the full amount to the buyer.