What is the term for money given by the buyer for the seller's benefit when an offer to purchase is made?

The term for money given by the buyer for the seller's benefit when an offer to purchase is made is "earnest money." This is a deposit that demonstrates a buyer's serious intent to purchase a property. By providing earnest money, the buyer signals their commitment to follow through with the transaction, which helps protect the seller by ensuring that the buyer has a financial stake in the deal.

When a buyer submits an offer, the earnest money is typically held in escrow until the sale is finalized. If the buyer decides to walk away from the deal without a valid reason as stipulated in the purchase agreement, the seller may retain this money as compensation for the time and effort spent on the transaction. Thus, earnest money serves both parties by facilitating a more secure and trustworthy negotiation process.

Other options like conversion, trust fund, or inspection fee do not specifically refer to the deposit made at the time of an offer. Conversion generally refers to a legal term involving the improper use of someone else’s property, while a trust fund encompasses a wider array of financial arrangements. An inspection fee is related to the cost associated with examining the property, which is separate from the initial offer.