What is earnest money?

In the process of buying a home, you are expected to show your intent to buy by providing the seller with earnest money (which is usually between 1% and 2% of the home’s purchase price), which is held in an escrow account until the sale is completed. If the buyer backs out, the seller generally gets to keep the earnest money unless the house doesn’t appraise high enough or the inspection reveals serious defects with the home. If the transaction goes through, the buyer keeps the earnest money and can use it as part of the down payment on the house.