What Is Earnest Money?
Earnest money is a deposit a buyer puts down when making an offer, showing the seller they're serious — it's held in escrow and typically applied toward the down payment or closing costs at closing.
Example
A buyer offering $400,000 might put down 1-2% ($4,000-$8,000) in earnest money.
Why It Matters
If a buyer backs out for a reason not covered by a contingency, the seller may be entitled to keep the earnest money.