When a buyer makes an offer to purchase a property, that offer is accompanied by earnest money.  Earnest money is a deposit toward the buyer's down payment, closing costs and prepaid interest, taxes and insurance.

What's the point?  If a buyer doesn't perform their end of the bargain (the purchase and sale agreement) and close on the transaction, they forfeit their earnest money.  This very rarely happens.  It's not because transactions don't close, but because they don't close for specific contingencies allowed for in the purchase and sale agreement.

Contingencies such as?  Happy you asked!  Here are the typical contingencies (there are a few less common ones for very specific situations):

• Inspection: a buyer typically has a week or so to have the property inspected.  The inspection is to the buyer's subjective satisfaction, meaning the buyer may disapprove the inspection without telling the seller exactly why they were dissatisfied with the inspection.  Earnest money gets returned to the buyer, the deal dies, the house goes back on the market and everyone goes back to square 1.  In some situations, buyers may do an inspection in advance of making an offer on a property and make their offer without an inspection contingency.
• Financing: if the buyer can't get a loan, they can't buy the house.  Earnest money gets returned to the buyer, the deal dies, the house goes back on the market and everyone goes back to square 1.  There are specific steps and timelines a buyer must adhere to in the financing contingency to not invalidate the contingency, and if the buyer can't get a loan the lender needs to write a letter telling the seller exactly why. A cash buyer doesn't need a financing contingency.
• Resale Certificate: for a condo, a buyer receives a package of information about the condominium association called the Resale Certificate (Public Offering Statement for new construction.)  That package includes the basic information a buyer can use to evaluate the financial health of the building and become aware of any special assessements or litigation and upcoming projects.  More specifics here: https://www.bencarr.com/articles/digging-up-the-dirt.  A buyer typically has 5 business days to review the resale certificate to their subjective satisfaction.  If they disapprove the certificate, earnest money gets returned to the buyer, the deal dies, the house goes back on the market and everyone goes back to square 1 (you can see the theme here.)