Ace the PSI New Jersey Real Estate Test 2026 – Unlock Your Property Power!

The primary purpose of an earnest money deposit is to secure a buyer's intent to purchase and demonstrate good faith to the seller. When a buyer makes an offer on a property, the earnest money serves as a commitment, indicating that the buyer is serious about completing the transaction. This deposit gives the seller reassurance that the buyer is dedicated to moving forward, which is particularly important in competitive real estate markets. The funds are typically held in escrow until the transaction is finalized and can also be applied toward the buyer's closing costs or down payment.

The other choices do not accurately reflect the primary purpose of an earnest money deposit. For example, while funds for renovations might be necessary during the buying process, that is not the role of earnest money. Similarly, while closing costs and inspection fees are important aspects of a real estate transaction, they are not the focus of what earnest money is meant to achieve.