Earnest money is a deposit a buyer may provide after an offer is accepted to show the seller that they are serious about purchasing the home. The amount can vary based on the purchase agreement, local real estate practices, and transaction terms, and it is typically held in escrow until closing or another specified point in the transaction.
Earnest money may be applied toward the buyer’s closing costs or down payment at closing, depending on the terms of the agreement. If the transaction does not close, the deposit may be returned to the buyer or potentially released to the seller based on the contract, contingencies, and applicable real estate rules. Understanding the terms before making an offer can help buyers protect their interests.
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