Earnest money is a good faith deposit that a buyer puts down when making an offer on a home. It shows the seller that you're serious about buying.

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How it works:

• You offer a certain amount (usually 1–3% of the purchase price).

• It’s held in a third-party account (often with a title company or escrow).

• If the sale goes through, the earnest money usually goes toward your closing costs or down payment.

• If you back out for a valid reason (like a failed inspection or financing issue), you often get it back.

• If you back out for no reason, the seller may keep it.