If the transaction goes according to plan, when the sale is closed your earnest money comes back to you as a credit toward the price of the property. For example, your $1,000 earnest money deposit becomes a credit of $1,000. You will see this on the settlement statement prepared by the closing attorney.

However, you can lose your earnest money if you default on the contract and do not close the sale. That is, if you enter into a contract to buy a property, but change your mind and don't close the sale, you stand to lose your earnest money. Real estate contracts are legally binding. Don't enter into one unless you intend to stay in it and complete the purchase.