Buying in Nolanville and wondering why you are writing two checks at the start of a contract? You are not alone. In Texas, earnest money and the option fee serve different purposes, follow different rules, and can impact how much you get back if things change. When you understand both, you can write a stronger offer and protect your cash.
This guide breaks down what each payment does, when it is due, who holds it, and how it is handled at closing in Nolanville and Bell County. You will also see local examples and a simple checklist to keep your funds safe. Let’s dive in.
Key definitions in Texas contracts
Texas uses standard TREC residential contracts. You can review the official forms and instructions on the Texas Real Estate Commission site for exact language and options in the paragraphs that cover these items. You can find those forms on the TREC forms page at the Texas Real Estate Commission forms directory.
Earnest money
Earnest money is a buyer deposit that shows you intend to move forward. It is part of your consideration under the contract. The amount and deposit deadline appear in the contract, and the funds are typically credited back to you at closing.
If you default without a valid contract right to terminate, the seller may seek the earnest money subject to the contract’s remedies.
Option fee
The option fee is separate from earnest money. It pays for your unrestricted right to terminate during an agreed window called the option period. You can terminate for any reason during that time if you follow the contract’s notice rules.
The option fee is normally nonrefundable once paid. Some contracts allow it to be credited to you at closing if the sale closes. The TREC contract identifies the amount, the length of the option period, and how termination notice must be delivered.
Timing, who holds funds, and closing credits
Earnest money timeline and escrow
Your contract sets the due date for earnest money. In Texas, it is commonly due within a few days after the effective date. You deliver it to the named escrow agent, which is usually the title company. Title companies act as escrow agents and are regulated in Texas; for an overview of title and escrow oversight, visit the Texas Department of Insurance.
At closing, earnest money is almost always credited toward your down payment or closing costs.
Option fee timing and payee
The contract will show when the option fee is due. Many buyers pay it immediately so their option right is active. The option fee is typically payable to the seller, not the title company. In practice, you may give the check to the listing agent for delivery to the seller or the seller’s broker, depending on instructions.
If the sale closes, your contract may state that the option fee will be credited at closing. Check the contract paragraph to confirm.
Refunds, termination, and default
If you terminate during the option period
When you terminate properly and on time during the option period, the seller keeps the option fee. You usually receive your earnest money back, less any permitted offsets. Make sure to deliver termination notice exactly as the contract requires.
If you default after the option period
If you default without a valid termination right, the seller may use the remedies in the contract, which can include claiming the earnest money. The exact remedy depends on the contract language and what the parties selected.
If the seller defaults
If the seller fails to close after you have performed, you may have remedies such as return of earnest money or other contract remedies. The TREC contract outlines these options.
If there is an escrow dispute
If you and the seller disagree about who gets the earnest money, the escrow agent will typically hold funds until there is a written release signed by both parties or an order from a court or arbitration panel. The TREC contract includes an escrow dispute process. You can review the relevant structure in the TREC forms and instructions.
Nolanville norms: what buyers see
Local practice in Nolanville and Bell County often uses flat earnest money amounts rather than strict percentages, especially on mid-priced homes. Amounts depend on price point and how competitive the listing is.
Earnest money
- Lower-priced or low-competition listings: about $500 to $2,000
- Mid-priced homes around $150,000 to $300,000: about $1,000 to $3,000
- Higher-priced or very competitive listings: larger deposits, sometimes 2 percent of price or more
Option fee
- Common local range: about $100 to $300 for a multi-day option period
- In hot competition, some buyers increase the option fee to $500 to $2,000 or shorten the option period
These are typical ranges, not rules. Competitive dynamics shift with inventory and season. Always align with current Nolanville activity and seller expectations.
Example A: typical Nolanville home
- List price: $220,000
- Earnest money: $2,000
- Option fee: $200 for a 7-day option period
- Outcome if you terminate during the option: seller keeps the option fee; you get earnest money back if you followed the notice rules and timelines.
Example B: competitive situation
- Strategy: $5,000 earnest money, 3-day option period, $300 option fee
- Signal: stronger commitment to the seller
- Tradeoff: less time for inspections and a higher risk if issues surface after the option period ends
Protect your money: simple checklist
Before you sign
- Confirm the earnest money amount, escrow agent name and contact, deposit deadline, option fee amount, option period, and termination notice method in the contract. Use the TREC forms directory as your reference for where these items appear.
- Ask which title company will hold earnest money and confirm it is named in the contract.
When you deliver funds
- Use traceable methods. If wiring, follow the title company’s instructions and keep confirmations. If paying by check, note the property address and get a receipt.
- Obtain a written, dated receipt from the escrow agent or payee showing the amount, payee, and date received.
During the option period
- Book inspections immediately to use your time well.
- If you decide to terminate, deliver written notice exactly as the contract requires and do it before the deadline. Keep proof of delivery.
If there is a dispute
- Request an earnest money release form from the escrow agent. If the other party does not sign, the escrow agent will usually hold funds until there are mutual instructions or a legal order, per the contract process.
Practical items to verify
- Know where the option fee is payable and whether it will be credited at closing.
- Confirm the escrow agent will hold earnest money in a trust account and understands the contract instructions. For title and escrow oversight background in Texas, see the Texas Department of Insurance.
Strategy tips for first-time buyers
Use earnest money as leverage
- Larger earnest money can make your offer stand out but increases risk if you cannot close. Consider a flat amount that fits local norms or around 1 percent of price when competition rises.
Get the option period right
- A 5 to 10 day option period gives more time for inspections and repairs discussions but can be less attractive to sellers. In competitive scenarios, a shorter 3 to 5 day option can help, with inspections scheduled immediately.
Balance fee and flexibility
- Increasing the option fee signals commitment, but remember it is usually nonrefundable. Find a number that shows seriousness without overexposing your budget.
Move quickly after acceptance
- Deliver earnest money and the option fee on time. Line up inspectors before you go under contract so you are ready.
Common pitfalls to avoid
- Delivering funds late. Missing a deadline can affect your rights.
- Sending the option fee to the wrong payee. Confirm who should receive it and get a receipt.
- Assuming the option fee is refundable. It usually is not.
- Ignoring termination rules. Even a timely decision needs proper written notice to be effective.
- Skipping documentation. Keep receipts, bank confirmations, and copies of notices.
How we help you in Nolanville
You deserve clear guidance and fast, organized steps that protect your money. With hyper-local experience across Bell County, we help you set the right earnest money and option fee for current Nolanville conditions, choose a smart option period, and schedule inspections right away. We coordinate with the title company, track deadlines, and make sure your notices and receipts are handled correctly.
If you are relocating, especially on a military timeline, you will get direct, responsive support and virtual options that keep you on schedule. When you are ready to talk strategy for your Nolanville purchase, reach out to Christie Minalga for personal guidance.
FAQs
What is the difference between earnest money and the option fee in Texas?
- Earnest money is a good-faith deposit held by the escrow agent and usually credited to you at closing. The option fee is paid to the seller for your unrestricted right to terminate during the option period and is normally nonrefundable.
Who holds earnest money and who receives the option fee in Nolanville?
- Earnest money is usually held by the title company as the escrow agent named in the contract. The option fee is typically payable to the seller, delivered through the listing agent or seller’s broker per instructions.
When are earnest money and the option fee due under a TREC contract?
- The contract sets the due dates. Earnest money is commonly due within a few days after the effective date, while the option fee is due as specified, often immediately or within a short window so your option right is active.
Is earnest money refundable if I terminate during the option period?
- Yes, if you terminate properly and on time during the option period, you typically receive your earnest money back, while the seller keeps the option fee per the contract.
What happens to my earnest money if I default after the option period?
- The seller may seek remedies under the contract, which can include claiming the earnest money. The exact outcome depends on the contract terms and facts.
Can the option fee be credited to me at closing in Texas?
- Sometimes. The TREC contract may allow the option fee to be credited at closing if the sale completes. Check the contract paragraph to confirm.
How are escrow disputes over earnest money resolved in Bell County?
- If the parties disagree, the escrow agent usually holds the funds until there are mutual written instructions or an order from a court or arbitration panel, consistent with the TREC contract’s escrow process.
