Ever been told you need to write two separate checks when you make an offer in Texas and wondered why? If you are buying in Wilson County or the San Antonio corridor, you will hear about both earnest money and the option fee almost immediately. It can feel like a lot in the first 48 hours of a contract. This guide breaks down what each payment does, typical local amounts, when you can get money back, and how to avoid costly mistakes. Let’s dive in.
Earnest money vs. option fee: the basics
Earnest money is a good-faith deposit that shows you are serious about buying. It is delivered to the escrow agent named in your contract, usually the title company. If you close, it is credited to your purchase. If you do not, the contract controls who receives it.
Option fee is a separate payment you make directly to the seller or the seller’s agent. In return, you get a short, negotiated “option period” when you can terminate for any reason. This right is unique to Texas contracts and is commonly used to complete inspections.
Both amounts are negotiated. They appear as separate items in the standard Texas purchase contract and have different legal effects.
Timelines that matter in Texas
Effective date starts all deadlines
The effective date is the day both parties sign the contract. All other dates run from here, including when you must deliver earnest money and how long your option period lasts.
Option period window
Your option period is a set number of days that you and the seller agree to. In our area, 5 to 7 days is common, though it can range from 3 to 10 days depending on competition and property type. During this window, you can cancel for any reason by giving proper written notice.
Earnest money delivery
Most sellers expect earnest money to reach the escrow agent within 1 to 3 business days after the effective date. Your contract will state the exact deadline. Always get a receipt from the title company.
Inspection scheduling
Schedule inspections immediately after your offer is accepted so results arrive within your option period. This keeps your decision and any repair negotiations on track.
Typical amounts in Wilson County
Earnest money norms
For many homes under about $300,000 in the San Antonio–Wilson County corridor, earnest money often falls between $1,000 and $5,000. For higher-priced homes, you may see 1 to 2 percent of the price or a negotiated flat amount. In competitive situations, buyers sometimes raise earnest deposits to signal commitment.
Option fee norms
Option fees commonly range from $100 to $500 for residential resales in this area. For more competitive segments or larger homes, sellers may expect $500 to $2,000. Many buyers choose a modest option fee, such as $100 to $300, for a 5 to 7 day period, and then adjust higher if they want to shorten the timeline to make their offer stand out.
Local market context
In tighter markets, sellers push for shorter option periods and higher fees. Wilson County can be more flexible in some rural pockets, while desirable spots near major corridors often mirror San Antonio norms. Exact expectations shift with supply, demand, and price point.
Refunds, credits, and forfeits
If you terminate during the option period
When you end the contract within the option period using proper written notice, the seller typically keeps the option fee. Your earnest money is usually refunded according to the termination terms in the contract.
If you terminate after the option period
If you cancel outside the option window without a contractual right, you risk losing your earnest money and could face additional remedies. Know your financing and appraisal deadlines so you do not miss protections you are counting on.
At closing
If you close, your earnest money is credited on the settlement statement. The option fee is commonly credited at closing as well, but the contract should specify this. Clarify in writing and keep receipts.
Real-world examples
Example A: Typical offer
- Day 0: Contract effective date.
- Earnest money: $3,000 to the title company within 2 business days.
- Option period: 7 days with a $200 option fee paid to the seller.
- Inspections: Days 2 to 4; you terminate on Day 6. The seller keeps the $200 option fee. Your earnest money is refunded per the contract.
Example B: Competitive offer
- You offer $7,500 in earnest money plus a 3 day option period with a $500 option fee. This strengthens your offer but gives you less time for inspections and decisions.
Buyer checklist for Wilson County
- Confirm your strategy: how much earnest money and option fee fit your goals and the local market.
- Specify payees: name the escrow holder and who receives the option fee in the contract.
- Deliver on time: meet the contract deadlines for both payments and get written receipts.
- Use the option period: schedule inspections immediately and decide early.
- Track every deadline: option, financing, appraisal, and closing.
- Ask local questions: verify neighborhood norms by ZIP code and price tier before you write your offer.
Common mistakes to avoid
- Mixing up the two payments. Treat earnest money and the option fee as separate items with separate deadlines and payees.
- Missing the option deadline. Terminate within the option period with proper written notice or your earnest money could be at risk.
- Assuming refundability. The option fee is typically non-refundable, even if you later close. Confirm crediting at closing in the contract.
Strategy tips for first-time buyers and relocators
Move fast after acceptance. Book inspections the same day your offer is signed.
Right-size your option window. Shorter periods can help in multiple offers, but only if you can complete inspections and make decisions in time.
Plan for distance. If you are relocating, allow extra time for inspections, funds delivery, and document turnaround.
Work with a trusted local advisor
Getting these details right can save you money and stress. If you want help setting smart amounts and timelines for Wilson County and the San Antonio corridor, reach out to Kelly Wiggins. We will align your offer with current local norms and protect your position from day one. Schedule a Consultation today.
FAQs
What is earnest money in a Texas home purchase?
- It is a good-faith deposit held by the escrow agent and credited to you at closing, or released based on the contract if the deal does not close.
What is the Texas option fee and why pay it?
- It is a separate payment to the seller that buys you an option period when you can terminate for any reason, commonly used to complete inspections.
How long is a typical option period in Wilson County?
- Many buyers negotiate 5 to 7 days, though it can be as short as 3 days in competitive situations or longer in some rural transactions.
Is earnest money refundable if I cancel during the option period?
- Usually yes, if you give proper written notice within the option period according to the contract, while the seller typically keeps the option fee.
How much earnest money should I expect on a $300,000 home?
- In this area, you often see $1,000 to $5,000 for homes under about $300,000, though terms are negotiated and vary with market conditions.
Who holds the option fee in Texas transactions?
- The seller or the seller’s agent commonly receives it. Confirm in the contract who is holding it and get a receipt.
What happens if I miss the option period deadline?
- If you terminate after the option period without another contractual right, your earnest money may be at risk and the seller could pursue additional remedies.
