The purpose of earnest money is to qualify the buyer. To confirm that you do have SOME finances, SOME chance of making the down payment, and that you are committed to buying the boat--not just kicking tires.
It ensures that lookie-loos and dreamers aren't just wasting the broker's and seller's time.
Yes, I see the reason for the deposit, what I don't see is the reason for forfeiting it if the sale goes sour.
Yes, what hellosailor said and additionally, after the survey, counters, sea trails etc.etc., are completed to the buyer's satisfaction and all contingencies have been removed, it's a forfeitable incentive to complete the transaction
I still don't get it.
If you are buying a house for example, the house is worth what it is worth, and your money is worth what it's worth, and you make the deal, and later go to closing. At no time is there a deposit that is forfeit if the deal goes sour and somebody backs out.
And even if there were, the buyer is the one who would be "out". The buyer paid for the survey, paid to haul the boat, etc, if the deal doesn't go through it is the buyer not the seller who stands to lose money. You said, "completed to the buyer's satisfaction and all contingencies have been removed" as if that is to the buyer's benefit. That's just making a deal, a negotiation between the buyer and seller, it isn't like the seller is doing the buyer some great service by coming to terms on the deal.