Earnest money is a deposit a buyer puts down when signing a purchase contract to show they are serious about the deal, held in escrow by a title company or attorney. It is credited toward the purchase price at closing. If the buyer backs out for a reason a contingency covers, the money is typically returned; if they walk away without one, the seller may keep it.
Why it matters
A buyer's earnest money deposit is a rough measure of how serious, and how financially able, they actually are.