The inclusion of earnest money in a contract serves which primary purpose?

The inclusion of earnest money in a real estate contract primarily serves to ensure that the buyer is serious about their intention to purchase the property. Earnest money is a deposit made by the buyer to demonstrate their commitment to the transaction. It signifies that the buyer is acting in good faith and is willing to follow through with the purchase, helping to provide the seller with a level of assurance.

By providing earnest money, the buyer shows that they are not merely exploring options but are serious about moving forward. This deposit typically becomes part of the down payment or closing costs if the sale successfully reaches completion. If a buyer were to back out of the deal without a valid reason as outlined in the contract, the seller may have the right to keep the earnest money as compensation for the time and effort lost.

The other choices do not reflect the primary purpose of earnest money. While it may indirectly relate to market value or negotiating leverage, these are not the fundamental reasons for its inclusion in a contract. Additionally, earnest money does not play a role in establishing the closing date.