What term refers to funds given in advance to demonstrate commitment to purchasing a property?

The correct term for funds provided in advance to show commitment to purchasing a property is earnest money. This money is typically deposited with a real estate broker or in an escrow account and serves as a good faith gesture from the buyer, indicating their intention to follow through with the purchase. An earnest money deposit helps reassure the seller that the buyer is serious and is often applied to the buyer's down payment or closing costs if the transaction proceeds.

While a deposit generally refers to any initial payment made to secure a contract, it lacks the specific legal implications associated with earnest money in real estate transactions. A down payment pertains to the amount of money a buyer pays upfront towards the purchase price at closing, which is different from the initial funds intended to signify commitment. An option fee may grant the buyer the right to purchase a property within a specified time frame, but it does not necessarily serve the same purpose as earnest money.