reference
glossary.
25 terms
definition
Earnest money is a deposit made by a buyer to demonstrate serious intent to purchase a property. This good faith deposit is typically 1-3% of the purchase price and is held in an escrow account until closing. If the sale completes, earnest money is applied toward the down payment or closing costs; if the buyer backs out without valid reason, the seller may keep the deposit.
examples
- —The buyer submitted a $10,000 earnest money deposit along with their offer on the $350,000 home to show they were serious.
- —When the inspection revealed major foundation issues, the buyer was able to withdraw and recover their earnest money due to the inspection contingency.
- —The seller was impressed by the substantial earnest money deposit, which helped the buyer's offer stand out among multiple bids.