What does "earnest money" imply in a real estate deal?

Earnest money is a deposit made by the buyer that demonstrates their serious intent to purchase a property. This amount is typically submitted with an offer to buy and acts as a reassurance to the seller that the buyer is committed to the transaction. It reflects the buyer's good faith and can help secure the property while both parties complete the necessary steps in the closing process. If the transaction goes forward, this earnest money is usually applied toward the buyer’s down payment or closing costs. In cases where the sale does not close due to a breach by the buyer, the seller may retain the earnest money as compensation for taking the property off the market. This practice is a common element in real estate transactions, helping facilitate trust and commitment between buyers and sellers.