Buyer Resources
Buying a home, land, or farm property is an exciting journey, but it can also come with a lot of questions. Our Buyer Resources page provides helpful guides, tools, and educational information designed to help you navigate the home buying process with confidence. Whether you're a first-time buyer, relocating to East Tennessee, or planning your next move, you'll find resources to help you make informed decisions every step of the way.
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What is Earnest Money in a Real Estate Purchase Contract?
Earnest money, often called a "good faith deposit," is a sum of money provided by the buyer at the time of entering a purchase contract. This deposit shows the buyer's serious intent to purchase the property and assures the seller of their commitment.
The earnest money is typically held in escrow until closing, where it is applied toward the buyer's down payment or closing costs. In most cases, if the transaction falls through due to contingencies outlined in the contract (such as financing or inspection issues), the earnest money is refunded to the buyer. However, if the buyer breaches the terms of the agreement, the seller may retain the deposit as compensation.
The earnest money is held typically by the buyer's agent, seller's agent, or title company depending on which is specified in the purchase agreement.