Which of the following best describes the earnest money deposit?

The earnest money deposit serves as a commitment from the buyer and is essentially a financial tool used to indicate serious intent to purchase a property. By making this deposit, the buyer demonstrates their earnestness in following through with the purchase offer. This deposit is typically held in escrow until the transaction is completed or terminated, reflecting the buyer's genuine interest and giving the seller a degree of assurance that the buyer is willing to proceed with the purchase.

Although some may see aspects of the deposit as providing benefits to sellers, the primary purpose is to secure the buyer's offer and show they are ready to engage in the real estate transaction. This deposit not only acts as a show of good faith but can also be applied toward the down payment or closing costs once the sale is finalized.