An earnest money deposit is money that a buyer puts forth, to guarantee their contract on a property.  The earnest money shows that the buyer is serious...so serious they are putting their own money on the line.

Earnest money goes toward closing costs or down payment at settlement.  However, if all the buyers closing costs are covered by the seller, and the buyers is purchasing the home with a rare 100% financed loan, it is possible for the buyer to receive a refund at settlement.  However, the buyer can never get more money back, than they orignally put down in their earnest money deposit.

For example, the buyer puts down $2,000 earnest money with a contract for a $200,000.  (Traditionally, the earnest money deposit is 1% of the proposed sales price...or close to that amount.)  The seller has agreed to give $6,000 in closing cost assistance to the buyer.  The closing costs end up being $5,800.  The buyer can only receive a refund of their orginial $2,000.  The extra $200 of the closing cost assistance offered by the seller will be lost if not spent on closing costs, or prepaids.  A good lender, and good Realtor, never let that excess money go to waste.  (Read about closing costs and prepaids here.)

Earnest money can also be lost if the buyer ends up in default of the contract.  You can read about that here.

In a Northern Virginia Short Sale, buyer and seller can mutually agree to deposit the Earnest Money after Short Sale Approval.  From the Seller's standpoint, it is ill-advised and asking a Buyer to continue house hunting.  Obviously, from a Buyer's standpoint, it is preferred.