Before You Buy

Two checks come up right after your offer is accepted on a Texas home: earnest money and the option fee. First-time buyers ask about these more than almost anything else, and the most common question is, "Do I lose it?" Here's how they work in the standard Texas resale contract.

Earnest money

Earnest money is a deposit that shows the seller you're serious. It goes to the title company (the escrow agent), not to the seller. If you close, it's applied to your purchase.

The option fee

The option fee is a smaller amount paid for the right to back out for any reason during a set number of days, called the option period. You and the seller agree on the fee and the number of days in the contract. Most buyers use the option period for inspections.

When they're due

Under the current Texas Real Estate Commission resale contract (TREC 20-18), you deliver both to the title company within 3 days after the effective date of the contract. If that deadline lands on a weekend or legal holiday, it moves to the next business day. Deadlines in Texas contracts are strict. Put this one on your calendar the day your offer is accepted.

What happens if you back out

  • During the option period (notice by 5:00 p.m. local time on the last day): you get your earnest money back. The seller keeps the option fee.
  • If you close: the option fee is credited toward your purchase price, along with the earnest money.
  • If the option fee is late or missing: you don't get that right to back out for any reason.
  • After the option period ends: backing out depends on the other terms of the contract, such as financing or appraisal provisions, and your earnest money can be at risk. That's the time to talk with your agent before you do anything.

The short version

Earnest money says you're serious. The option fee buys you a window to inspect and change your mind. Deliver both on time, use the option period well, and you'll know exactly where you stand.

Buying your first home in Taylor, Hutto or nearby? We'll walk you through every step. Book a time to talk, or call 512-269-5278.

This is general information, not legal advice. Your contract governs, and you should talk with your agent or a real estate attorney about your situation. Source: TREC One to Four Family Residential Contract (Resale), TREC No. 20-18, 11-04-2024, Paragraph 5, checked 7 October 2026. Top Notch Properties · Brad Robbins, Broker · TREC License #610974 · 512-269-5278.