Confused about the difference between earnest money and the option fee when buying a home in Arlington? You are not alone. Texas uses both, and they play very different roles in your offer and your risk. In this guide, you will learn what each payment does, typical amounts in Arlington, when they are due, and how to use them to strengthen your offer without taking on unnecessary risk. Let’s dive in.
Earnest money vs. option fee
Earnest money is a good‑faith deposit that shows you are serious and helps fund your purchase at closing. It is held by the escrow agent and is usually credited to you at settlement. Whether you can get it back depends on your contract rights and timelines. If you terminate under an allowed contingency, you typically receive a refund.
Option fee is paid to the seller for a limited right to terminate the contract for any reason during a negotiated option period. It is usually nonrefundable if you use it to terminate, because you are paying for that flexibility. If you close, the contract may allow the option fee to be credited to you at settlement.
Texas contract basics
Most Arlington resale purchases use the TREC One to Four Family Residential Contract and related addenda. This form includes the option period, option fee, earnest money, and the rules for delivery, termination, and remedies. Your exact deadlines, amounts, and where to deliver funds are written into your executed contract. Always follow the signed contract.
During the option period, you may terminate for any reason by delivering proper notice before the deadline. If you do, the seller usually keeps the option fee, and your earnest money is typically returned per the contract. After the option period, your ability to terminate is limited to other contract rights, and your earnest money can be at risk if you default.
Who holds the funds
- Earnest money is held by the escrow agent named in the contract, most commonly a title or escrow company in Arlington and across Tarrant County.
- Option fee is typically paid directly to the seller, often via the seller’s broker who then delivers it per their policy. Confirm the delivery method in writing and get a receipt.
Deadlines and timelines
- Earnest money is commonly due to the escrow agent within 1 to 3 business days after the contract is effective. The exact deadline is in your contract.
- Option fee is often due immediately, either upon execution or within the first business day, to make sure your option period is valid and clearly documented.
- Option period timing follows the dates in the contract. It usually starts on the effective date and ends at midnight on the agreed expiration day. If you plan to terminate, deliver written notice before that time.
If parties disagree about funds, the escrow agent will follow the contract and may require a written release. Without agreement, an escrow agent can also interplead the funds for a court to decide. Documentation and on‑time notices are key.
Typical Arlington amounts
Arlington generally follows broader Dallas–Fort Worth practice. Amounts are negotiable and shift with market conditions and price points.
- Option fee: commonly $100 to $500 for standard single‑family resales. Higher fees can support a longer option period or signal stronger commitment.
- Earnest money: often several thousand dollars on mid‑priced homes, commonly in the $2,500 to $10,000 range. Some buyers use about 1 percent of the price to stand out in a competitive area. Lower‑priced homes may see several hundred to $2,500.
In high‑demand Arlington neighborhoods, buyers sometimes raise earnest money or shorten the option period to compete. Choose amounts that match both your budget and your risk comfort.
What to budget upfront
- Option fee: plan for $100 to $500, nonrefundable if you terminate during the option period.
- Earnest money: plan for several hundred to several thousand dollars, depending on price and strategy. Your earnest money is typically credited to you at closing if you perform.
Offer strategy tips
Signals to sellers
- Larger earnest money shows commitment and can help your offer stand out, even without changing price.
- A higher option fee or a shorter option period can appeal to sellers who want speed and certainty.
- Clear delivery timing for both payments reduces friction and builds confidence in your offer.
Competitive tactics and trade‑offs
- Shortening or waiving the option period can increase competitiveness, but it reduces your inspection flexibility and increases risk.
- Raising earnest money is a lower‑risk way to strengthen your offer, because you still keep your contract‑based protections if you follow the timelines.
- If you want a longer inspection window, consider pairing it with a slightly higher option fee to keep the seller engaged.
Risk management
- Keep an option period if you need time for inspections, estimates, or HOA review. The option fee buys you that time.
- If you forgo an option period, understand that your earnest money could be at greater risk if you later try to terminate without another contract right.
- Always track the option expiration and delivery requirements for notices, and keep receipts for payments.
Smart timelines to track
- Day 0: Contract effective date.
- Day 0 to 1: Pay the option fee to the seller or seller’s broker, as the contract directs.
- Day 0 to 3: Deliver earnest money to the named escrow agent.
- Option period: Complete inspections, review disclosures, and decide whether to proceed, negotiate, or terminate.
- Option expiration: Midnight on the agreed date. After this, unrestricted termination rights are gone unless another contract clause applies.
Buyer checklist before you sign
- Confirm the escrow agent’s name, location, and the exact earnest money deadline in the contract.
- Choose an option period that fits inspector availability, typically several days, and set a realistic option fee for that time.
- Decide whether the option fee will be credited at closing, if your contract provides that choice.
- Plan your earnest money amount to match the property and competition level.
- Get written receipts or email confirmations for both payments, and calendar every deadline.
- Ask your title or escrow contact how they accept deposits and cutoff times for same‑day posting.
Example offer setups in Arlington
- Balanced protection: Earnest money of $5,000 on a mid‑priced home, option fee of $250, and a 7‑day option period. This shows strong intent while giving you inspection time.
- Competitive push: Earnest money at 1 percent of price, option fee of $350, and a 5‑day option period. Good when you want to stand out without waiving protection.
- Fast‑track approach: Larger earnest money, option fee of $500, and a 3‑day option period aligned with a pre‑scheduled inspection. Works when you already did research and feel confident in the property.
Each option is negotiable. Choose the structure that fits your risk tolerance and the seller’s priorities.
Common mistakes to avoid
- Missing the option deadline and losing unrestricted termination rights.
- Delivering funds to the wrong party or without proof of receipt.
- Assuming the option fee will be credited at closing without confirming it in the contract.
- Offering very low earnest money in a competitive area, which can weaken your offer’s credibility.
- Waiving the option period without a plan for inspections or backup contingencies.
Get local guidance
Understanding how earnest money and the option fee work can help you write a clean, compelling offer that protects your interests. Every Arlington contract is unique, and timelines matter. If you want help sizing your deposits, setting a smart option period, and coordinating with the title company, reach out for local, step‑by‑step support. Schedule a free consultation with Amanda Beames to get started.
FAQs
If I terminate during the option period in Arlington, do I get my earnest money back?
- Typically yes under the contract, the seller keeps the option fee, and the escrow agent returns earnest money once proper termination and release instructions are delivered.
Who should I pay for the option fee in a Texas resale purchase?
- The option fee is usually paid to the seller, often through the seller’s broker per their policy, and you should get a written receipt.
How much earnest money do buyers in Arlington usually put down?
- Many mid‑market offers include $2,500 to $10,000, and some buyers use about 1 percent of price to be competitive, but the amount is negotiable.
When is earnest money due to the title company in Tarrant County?
- Most contracts set delivery within 1 to 3 business days after the effective date, but always follow the exact timeline stated in your signed contract.
Can the seller keep my earnest money if I default after the option period?
- Possibly, if the contract allows the seller to keep it as liquidated damages and the seller elects that remedy, which is one reason tracking deadlines is so important.
