Key points
- Earnest money and the option fee both go to the escrow agent within 3 days of the contract's effective date.
- The option fee buys the unrestricted right to end the contract during the option period, and the seller keeps it if you do.
- If you terminate by 5:00 p.m. on the last day of the option period, your earnest money comes back to you.
- Amounts and the number of days are negotiable. There is no amount set by law.
- Schedule inspections the day the contract is signed, because the clock is short.
How much earnest money do I need in Dallas?
There is no amount set by law. Earnest money is negotiated in each contract. The seller's expectations, the price and the competition for the home all shape it, and the listing agent can usually tell your agent what the seller expects.
Under the TREC One to Four Family Residential Contract, you deliver the earnest money to the escrow agent, usually the title company, within 3 days after the effective date. It is held there and credited to you at closing. A larger amount signals that you are serious, but it is also more money at risk if you default outside the protections in the contract.
- You usually get it back if you end the contract during the option period, or under the financing addendum within its time limits.
- You can lose it if you default, for example by failing to close without a contract reason.
- Late delivery is a problem: the seller may be able to end the contract, so wire it on time.
What's an option fee when buying a house in Texas?
The option fee is a separate, usually smaller payment that buys you the unrestricted right to end the contract for any reason during the option period. It is negotiated, like the number of days.
You deliver it to the escrow agent within 3 days after the effective date, along with the earnest money. If you close, the option fee is credited to you. If you terminate during the option period, the seller keeps the option fee and you get your earnest money back. If the option fee is not delivered on time, you do not have the unrestricted right to terminate, so this is one deadline never to miss.
How does the option period work in Texas?
The option period is a set number of days after the effective date during which you can end the contract for any reason by giving the seller written notice. The deadline is 5:00 p.m., local time where the property is, on the last day.
Buyers use these days for inspections, insurance quotes, HOA documents and repair estimates. If the inspection finds problems, you can ask the seller to repair, credit or lower the price, and a signed amendment records whatever you agree. If you cannot agree, you can terminate before the deadline. After the option period ends, you can no longer walk away for any reason. Only the remaining protections in the contract, like the financing addendum, apply.
- Book the inspector the day the contract is signed.
- Add a foundation, sewer or roof specialist right away if the inspector suggests it.
- Send any repair or credit request with enough time for the seller to answer before the deadline.
- If you decide to walk away, send written termination notice before 5:00 p.m. on the last day.
How long should the option period be?
Long enough to complete your inspections and get answers, and no longer than you need. In a competitive situation, a shorter option period and a larger option fee can make an offer more appealing to a seller.
Before you shorten it, check that your inspector and any specialist can actually come in time. For an older house, or one where foundation movement is a question, leave room for a structural engineer. I set the option terms with the inspection schedule in hand, not as a guess.
Count the days carefully. The option period runs in calendar days from the effective date, weekends included, and the notice deadline is 5:00 p.m. on the last day. Read the dates on your own copy of the contract, not someone's summary of it.
Who pays the buyer's realtor, and do I pay to see houses?
Your written agreement with the agent's broker sets the compensation, and you can ask the seller to pay part or all of it in your offer. You do not pay to tour homes.
Since January 1, 2026, Senate Bill 1968 requires a Texas agent to have a written agreement with a buyer before showing a home, or before making an offer if no home is shown. The agreement must state the compensation and say that broker compensation is not set by law and is fully negotiable. It can be a full representation agreement or a showing-only agreement. Ask any agent to walk you through it before you sign. More is on working with a Realtor.
What happens to my earnest money if the deal falls apart?
It depends on why the contract ended. If you terminated within a right the contract gives you, the earnest money comes back to you. If you defaulted, the seller may be entitled to it.
- Returned to you: termination during the option period, termination under the financing addendum within its time limit, a valid title or survey objection the seller does not cure, or a seller default.
- At risk: walking away after the option period without a contract reason, or failing to close.
The title company does not decide who is right. It releases the money when both sides sign a release, or under the demand procedure set out in the contract. The TREC contract also encourages mediation if the parties disagree. In practice, most releases are routine and signed within days. Keeping your notices in writing and on time is what keeps yours routine.
Contract dates to put on your calendar
Every date in a Texas contract runs from the effective date, the day the final signature is delivered. Put these on your calendar the same day.
- Day 3: earnest money and option fee due at the title company.
- End of the option period: termination notice by 5:00 p.m. if you are not going forward.
- End of the buyer approval period in the financing addendum, if you chose one.
- Survey and title commitment deadlines, and your time to object.
- Final walkthrough and closing date.
This is general information about the TREC forms. If a dispute about earnest money starts, talk to a Texas real estate attorney.
Questions people ask
Do I get the option fee back if I close?
Yes, in effect. The option fee is credited to you at closing, so it reduces what you bring. You only lose it if you terminate during the option period.
Can I end the contract after the option period?
Only for reasons the contract still allows, such as the financing addendum within its time limit or title and survey objections. Walking away without one of those reasons can cost you the earnest money.
Who holds the earnest money in Dallas?
The escrow agent named in the contract, usually the title company that will close the sale. It stays there until closing or until the parties agree in writing how to release it. For how the rest of a purchase works, see buying a home.
Andy Scott is a Dallas Realtor and founding member of the GPS Group at Dave Perry-Miller Real Estate. He grew up in Dallas in a real estate family, has been licensed since 2005, and has helped buyers and sellers for more than 20 years. About Andy · Buying costs and financing
