It's also known as a good faith deposit. For example, earnest money is held by a 3 rd party until closing or termination. Typically it’s 1–5% of the purchase price. What Is Earnest Money? A sum of money given to a seller in order to bind a contract, or as a show of a buyer’s good faith in his intent to finalize the deal. Post the Definition of earnest money to Facebook Share the Definition of earnest money on Twitter Earnest money helps protect the seller if the contract falls through under circumstances not covered by a contingency or a condition that must be met for the sale to continue. Here’s how it works. Paying Earnest Money deposit is a usual practice when you are showing your intent of buying an asset, which is high in value. What is Earnest Money. Origin . It tells the real estate seller you’re in earnest as a buyer, and it helps fund your down payment. Often the contract provides for Forfeiture of this sum if the buyer defaults. Learn more. In most cases, earnest money funds are typically held in escrow until closing, meaning sellers can’t access those funds until closing. Earnest money is different from a down payment and often a lot less. The earnest money may be held by the seller’s real estate broker, but the money may also be held in escrow by a third-party title company, … This is a reason why paying of a token amount is a standard practice followed in real estate transactions across the world.. Earnest money is a way for a buyer to prove to a seller that he is serious about making the purchase in question. earnest money meaning: money that someone pays when they sign an agreement in order to show that they will do what the…. What is earnest money? Legal definition of earnest money: money used as earnest. earnest money definition: money that someone pays when they sign an agreement in order to show that they will do what the…. 1550-1560 English. Noun. There are a number of factors that go into ensuring your earnest money satisfies the seller and that you get it back if things don’t work out. In simple terms, Earnest Money deposit is the amount a buyer pays to show that his interest in a said property is genuine. Earnest money says to a seller, ” I’m serious about buying your house, and this proves it.” This article explains what earnest money is, who to give it to, and how to protect yourself and ensure you don’t lose the money. Definition of Earnest Money. Normally such earnest money is applied against the purchase price. Depositing earnest money is an important part of the home-buying process. Learn more. Well, earnest money is just like that. An earnest money deposit is simply money you put down as a good-faith gesture to indicate you’re serious about buying a house. You know the old storytelling cliché it’s better to show than tell? Earnest money is a sum that you, the buyer, put down to show a seller that you're serious about purchasing a specific home. It’s basically a good-faith gesture and says to the seller that you are serious about purchasing the home. Earnest money funds can be held by the real estate brokerage, the title company, closing attorney or other 3 rd party. earnest money: A sum of money paid by a buyer at the time of entering a contract to indicate the intention and ability of the buyer to carry out the contract.