When is earnest money typically deposited in a real estate transaction?

In a typical real estate transaction, earnest money is commonly deposited at the time of signing the contract. This deposit serves as a demonstration of the buyer's good faith and commitment to proceed with the purchase. By providing earnest money upfront, the buyer reassures the seller that they are serious about the offer and intend to fulfill the terms of the contract.

This practice helps to solidify the agreement between the buyer and the seller right at the outset of the transaction process. The earnest money is usually held in an escrow account until the sale concludes, at which point it may be applied to the buyer's closing costs or the down payment.

In contrast, the other options focus on actions that occur after the initial agreement is established, which is not the standard timing for earnest money deposits. For instance, drawing the deposit to a period after inspections or tied to the closing of the sale does not align with common practices, as earnest money is essentially a part of the initial contractual obligations.