You hear both “earnest money” and “option fee” the moment you write an offer in Southwest Fort Worth. They sound similar, but they work very differently in Texas. Mix them up and you could miss a deadline or lose money you did not plan to risk. In this guide, you will learn what each payment does, typical local amounts, how refunds work, and how to use both to strengthen your offer in Tarrant County. Let’s dive in.
Earnest money vs option fee
Both payments show you are serious, but they serve different purposes in Texas.
Earnest money
- What it is: A good faith deposit that shows you intend to perform under the contract.
- Who holds it: Usually the title company named in the contract, acting as escrow agent.
- When it is due: Commonly within 1 to 3 business days after the contract’s effective date.
- What happens at closing: It is applied to your purchase funds if you close.
- Refundability: It can be refundable under contract contingencies and termination rights.
Option fee
- What it is: A separate payment that buys you an unrestricted right to terminate during a negotiated option period.
- Who receives it: Typically the seller, or as instructed in the contract. It is not held as earnest money.
- When it is due: Often due within the same short window as earnest money. Follow the contract instructions exactly.
- What it buys: Time for inspections and due diligence during the option period.
- Refundability: Generally non-refundable once paid, even if you terminate during the option period.
How funds move in SW Fort Worth
Earnest money: timing and escrow
In Southwest Fort Worth and across Tarrant County, the TREC One to Four Family Residential Contract is commonly used. It names the escrow agent, who is most often the title company. You will usually deliver earnest money within 1 to 3 business days after the effective date. Many buyers use a cashier’s check or a wire to meet the deadline. The title company holds the funds and disburses them based on the contract and any signed releases.
Option fee: timing and delivery
Your contract will set the amount, payee, and deadline for the option fee. In local practice, you pay the seller directly or as the contract instructs, often within the same few business days after the effective date. If the option fee is not delivered on time and in the manner stated, you may lose the option period. That means you would not have the unilateral right to terminate during that window.
Refunds and risks: what to expect
Option fee refund rules
The option fee is typically non-refundable. Think of it as payment for the right to walk away during the option period. If you terminate during that period, you usually keep your earnest money, but the seller keeps the option fee. The fee compensates the seller for taking the home off the market while you inspect and evaluate.
Earnest money refund rules
Earnest money can be refundable, but only if you exercise your contract rights properly and on time. Common refundable scenarios include terminating under a valid option period, timely exercising a financing contingency, or terminating for title issues not cured as allowed in the contract. If you default without a valid contract reason after contingencies expire, the seller may claim the earnest money as liquidated damages, or pursue other remedies stated in the contract.
Disputes and releases
If buyer and seller disagree about who gets earnest money, the title company follows the contract and will hold the funds until both sides sign a mutual release or a court decides. When in doubt, ask your agent to help you follow the instructions and meet every deadline.
Typical local amounts in SW Fort Worth
While every deal is different, here are common local norms in Southwest Fort Worth and greater Tarrant County:
- Earnest money
- Entry-level homes: often 1,000 to 3,000 dollars.
- Mid-priced homes: commonly 2,500 to 10,000 dollars, with 3,000 to 5,000 dollars a frequent starting point.
- Higher-priced homes: often 1 to 2 percent of price or a larger flat sum such as 10,000 to 25,000 dollars.
- Option fee
- Often 100 to 400 dollars for many listings in SW Fort Worth.
- In hotter segments or more complex properties, 500 to 1,000 dollars is common to signal seriousness.
- Option period length
- Often 5 to 10 days for inspections.
- Competitive offers sometimes use 2 to 3 days or no option period at all.
Example: For a 375,000 dollar home in Southwest Fort Worth, you might see earnest money at 3,000 to 5,000 dollars and an option fee of 200 to 400 dollars with a 5 to 7 day option period. Your exact numbers depend on the home, the seller’s expectations, and how competitive the listing is.
Make a stronger offer without taking on too much risk
Sellers in Tarrant County generally prefer bigger earnest money, little or no option period, and quick delivery of funds. You can compete while still protecting yourself by adjusting a few levers.
- Increase earnest money to show commitment. A slightly larger deposit can help your offer stand out.
- Keep an option period, but shorten it. A 3 to 5 day option period reduces seller uncertainty while giving you time for key inspections.
- Offer a higher option fee. A higher fee compensates the seller and can help you keep the inspection window.
- Move fast on delivery. Wire or drop off funds right after the effective date and provide proof to the listing agent.
- Avoid overexposing yourself. Waiving the option period or making earnest money non-refundable increases your risk if inspection or financing issues arise. Consider these moves only if you fully understand the tradeoffs.
Step-by-step after your offer is accepted
- Confirm the effective date. This starts the clock for delivery deadlines and the option period.
- Calendar your deadlines. Note the exact day and time earnest money and the option fee are due, and when the option period ends.
- Deliver earnest money to the named title company. Use the payment method authorized by the escrow instructions, often a cashier’s check or a secure wire.
- Pay the option fee exactly as the contract states. Follow the payee and delivery method carefully so your option period is valid.
- Schedule inspections immediately. With 5 to 10 days typical in SW Fort Worth, you need to book inspectors fast to avoid running out of time.
- Review results and decide. Before the option period ends, decide whether to move forward, negotiate repairs, or terminate.
- Keep your lender informed. If you have financing contingencies, meet all lender milestones and provide documents on time.
Common mistakes to avoid
- Missing delivery deadlines. Late earnest money or option fee payments can cost you important contract rights.
- Paying the wrong party. The title company typically holds earnest money. The seller usually receives the option fee. Read the contract instructions closely.
- Assuming the option fee is refundable. It is generally not refunded, even if you terminate during the option period.
- Skipping a written release. If a deal terminates, work with your agent to complete any required releases so funds can be disbursed promptly.
- Over-committing in a bidding war. Larger earnest money and shorter or no option period may win you the house, but increase your risk if surprises come up.
If you are moving from another state
Texas uses an option period that gives you a short, unilateral right to terminate in exchange for a separate option fee. Many other states rely on inspection contingencies without a separate fee. In Texas, the title company usually holds earnest money escrow, and the option fee commonly goes directly to the seller. Local timing and forms follow widely used TREC contracts, and delivery deadlines are short. If you are new to Texas, make sure you understand how these parts work before you write your first offer.
Local strategy tips for SW Fort Worth
- Start with conservative local ranges. On many homes, earnest money between 3,000 and 5,000 dollars and an option fee between 100 and 400 dollars is a practical starting point.
- Adjust by property and demand. For a hot listing, consider a higher earnest money deposit or a higher option fee. In a slower segment, standard amounts may work fine.
- Use the option period wisely. Book inspections the day your offer is executed so you have time to review and respond.
- Communicate early and often. Quick confirmation of funds delivered and inspection timing builds confidence with the seller’s side.
The bottom line
Earnest money and the option fee do different jobs in a Texas contract. Earnest money sits in escrow to secure the deal and may be refundable under the contract. The option fee goes to the seller and pays for your short window to inspect and, if needed, terminate. In Southwest Fort Worth, both are usually due within a few business days, and getting the amounts and timing right can make your offer both competitive and safe.
When you want local, step-by-step guidance on the numbers, deadlines, and strategy for your next offer, work with a neighborhood expert who knows Tarrant County contracts inside and out. Reach out to Peggy Villagomez to talk through your goals and map out a clear plan.
FAQs
What is the option period in Texas?
- It is a short, negotiated window that gives you an unrestricted right to terminate the contract in exchange for a separate, typically non-refundable option fee.
How much are earnest money and option fees in SW Fort Worth?
- Earnest money often ranges from 1,000 to 10,000 dollars depending on price and competition, while option fees commonly range from 100 to 400 dollars, and can be 500 to 1,000 dollars in hotter segments.
Who holds earnest money and who gets the option fee?
- The title company usually holds earnest money as escrow. The option fee is usually paid directly to the seller or as instructed in the contract.
Is my earnest money refundable if I terminate?
- It can be, but only if you terminate under valid contract rights such as a timely option period, financing contingency, or other stated provisions.
What happens if buyer and seller disagree about earnest money?
- The title company follows the contract and will hold funds until both parties sign a mutual release or a court decides how to disburse them.
How do I make a competitive offer without too much risk?
- Consider a slightly higher earnest money deposit, a shorter but still practical option period, and quick delivery of funds, while avoiding waiving key protections you still need for inspections and financing.
