Originally Posted by wind_magic
Yes, I see the reason for the deposit, what I don't see is the reason for forfeiting it if the sale goes sour.
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.
That's not the case in the three states I've done real estate transactions, where ernest moneys were standard, up to 10%, payed into an escrow account.
The purpose is primarily as mentioned above, compensation for time off the market should the deal not go through.