Funds committed to the seller by the buyer as an expression of good faith to purchase real property are referred to as?

The correct answer is "earnest money." This term specifically refers to the funds that a buyer provides to a seller to demonstrate their seriousness and intent to follow through with the purchase of real property. This initial monetary commitment acts as a good faith deposit, indicating to the seller that the buyer is genuinely interested in the transaction and is willing to put down a financial commitment.

Earnest money is typically held in an escrow account until the transaction is finalized or the terms of the sale are met. If the transaction fails to close, the handling of earnest money can vary: it may be returned to the buyer under certain conditions, or it may be forfeited to the seller if the buyer backs out without valid reason.

In terms of context, due diligence typically pertains to the research and analysis phase a buyer engages in before finalizing a purchase, rather than representing a financial commitment. Allowable costs relate to expenses that can be deducted under specific regulations, particularly in rental or investment properties. Buyer incentives usually refer to benefits or discounts offered to attract buyers rather than a monetary deposit signifying commitment. Thus, "earnest money" accurately captures the essence of the good faith funds being discussed.