In real estate, when is a contract formed?

• A. When the buyer signs
• B. When the offeree communicates acceptance to the offeror
• C. When earnest money is deposited
• D. When the seller signs

Answer: (B)

The key idea is mutual agreement through a communicated acceptance. A real estate contract comes into existence only after the offeree notifies the offeror that they accept the terms of the offer. This communication completes the agreement and creates a binding contract.

Signing by the buyer or the seller, or depositing earnest money, alone does not form the contract. Signing indicates intent but isn’t acceptance unless it’s communicated back to the offeror. Earnest money shows seriousness, but it doesn’t by itself establish the agreement. The contract becomes binding only when acceptance is communicated to the party who made the offer.