What is the primary purpose of earnest money?

The primary purpose of earnest money is to indicate serious intent in a real estate transaction. When a buyer submits earnest money with an offer, it demonstrates their commitment to purchasing the property. This financial deposit shows the seller that the buyer is serious about moving forward with the transaction, which can make the offer more attractive in a competitive market.

Earnest money acts as a good faith gesture, reassuring the seller that the buyer has a genuine interest and is willing to put some funds on the line while the transaction is finalized. If the deal goes through, the earnest money is typically applied toward the buyer's down payment or closing costs. If the buyer backs out without a valid reason, they may forfeit the earnest money to the seller as compensation for taking the property off the market.

The other options may pertain to aspects of the home buying process, but they do not capture the primary function of earnest money, which is strictly to signify the buyer's serious intent to proceed with the transaction.