When you make an offer on a home, your agent will ask for a check to accompany it , usually 1-3 % of the purchase price. Earnest money is made in good faith to demonstrate that the buyer’s offer is genuine, and it provides the incentive for the seller to accept your offer and open escrow with you.

The money is deposited in a trust or escrow account for safekeeping. If a deal is agreed upon, the earnest money is applied to the down payment and closing costs. If the deal falls through, the money is returned to the buyer.

There are some instances, when buyer fails to perform, that earnest money may not be returned to the buyer. Ask your agent about how to protect yourself.