Earnest money (also called a “good faith deposit”) is a sum a bidder must deposit before participating in certain high-value auctions — most commonly real estate. The deposit demonstrates the bidder’s serious intent and provides the auctioneer recourse if the winner fails to close.
Real estate auctions typically require 5–10% earnest money, paid by certified check at registration. If the bidder wins and closes, the deposit applies to the purchase price. If they win and walk away, they forfeit the deposit. Vehicle auctions, equipment auctions, and online platforms with high lot values may require similar deposits in cashier-check or pre-authorized credit-card hold form.