Deposit
Money paid upfront to demonstrate serious intent and secure a real estate transaction, most commonly the earnest money deposit submitted with a purchase offer. The deposit is typically held in escrow and applied toward the down payment and closing costs at settlement.
Example
“The buyer submitted a $5,000 earnest money deposit along with their offer to show the seller they were serious about purchasing the home.”
Memory Tip
You 'deposit' money to 'posit' (put forward) your serious position in the deal.
Why It Matters
A substantial deposit shows sellers you're a serious buyer and provides financial protection if the buyer defaults on the contract without valid cause.
Common Misconception
Many buyers think deposits are non-refundable, but they can often be recovered if contingencies aren't met or the seller defaults.
In Practice
A buyer submits a $10,000 earnest money deposit with their $400,000 home offer, which will be credited toward their down payment if the sale closes successfully.
Etymology
From Latin 'depositum' meaning 'thing put down,' as money was literally placed down to show commitment in ancient transactions.
Common Misspellings
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