Buying in University Park can move fast, and the money you put down early matters. Two items come up in nearly every Texas offer: earnest money and the option fee. They work together, but they serve very different purposes. When you know how each one works, you can write a stronger offer, manage risk, and keep your timeline on track.
In this guide, you will learn what each payment does, when it is due, typical amounts in University Park, how refund rules work, and how to use both to your advantage. You will also see real-world examples and a simple checklist to stay organized. Let’s dive in.
Quick definitions: earnest money vs. option fee
You will see both on nearly every Texas resale contract, but they are not interchangeable.
Earnest money basics
- The earnest money deposit shows good faith to the seller and gives the seller some security if you default outside your contract rights.
- You typically deliver it to the title company or an escrow agent named in the contract, usually within 1 to 3 business days after the effective date. The exact deadline is written in the contract.
- If you close, your earnest money is credited toward your purchase price or closing costs. If you terminate under a contract contingency, it is typically refunded per the contract. If you breach outside your rights, the seller may have remedies that include keeping the deposit.
Option fee basics
- The option fee pays the seller for your unrestricted right to terminate the contract during a short option period. This is the time you use for inspections and decisions.
- You usually pay the option fee directly to the seller or the listing broker who holds it for the seller. The contract sets the dollar amount, the number of days in the option period, and when the fee is due.
- The option fee is normally nonrefundable. If you terminate within the option period, you usually lose the option fee but keep your earnest money.
How Texas contracts handle both
Texas resale contracts provide spaces to fill in the amount and delivery deadline for each payment. The form framework is standard, and the blanks you fill control the actual timing and amounts.
Delivery and who holds funds
- Earnest money goes to the title company or escrow holder named in your contract. It is recorded in escrow and held until closing or termination.
- Option fee is typically paid to the seller, and many listing brokers will accept it on the seller’s behalf. Always request a written receipt.
- Deadlines are specific. Your contract may use business days or calendar days, so confirm how days are counted before you schedule payments or courier deliveries.
Refunds and disputes
- Option fee: usually nonrefundable once paid. If you use your option right to terminate in time, the seller keeps the option fee and the title company generally releases your earnest money per the contract.
- Earnest money: refundable when you terminate under a valid contract right, which can include a timely option termination or other agreed contingencies. If you default outside the contract, the seller may have a claim to keep the earnest money, subject to the contract’s dispute provisions.
- Disputes over earnest money follow the contract’s escrow and dispute paragraphs. The escrow holder often needs written releases from both parties or may interplead the funds into court if there is a stalemate.
Option period timeline in practice
- The option period starts on the effective date and runs for the number of days you negotiate. Seven days is common; in hot University Park listings, buyers sometimes offer 3 days to be more competitive.
- During the option period, you can terminate for any reason by giving written notice before the deadline. If you do, you typically forfeit the option fee but recover your earnest money.
- After the option period expires, you no longer have an unconditional right to walk away. Your earnest money is still governed by the rest of the contract.
Typical amounts in University Park
University Park sits in the Park Cities, which is a high-demand, higher-price market. Because of that, earnest money and option fees often run higher in absolute dollars than in lower-priced parts of Dallas. Amounts below are common local ranges, not requirements. Your exact strategy depends on the property and competition.
Earnest money ranges
- A common starting point is about 1 percent of the purchase price. In competitive Park Cities situations, buyers often offer 1 to 3 percent.
- By price band (rough planning ranges):
- Under $800,000: about $5,000 to $10,000 or near 1 percent.
- $800,000 to $1.5 million: about $10,000 to $25,000, often 1 to 2 percent.
- $1.5 million to $3 million: about $25,000 to $50,000, often 1 to 2 percent.
- $3 million and up: $50,000 and higher, often 1 percent or more.
Option fee ranges and period length
- Low competition: $100 to $500 option fee with an option period of about 7 to 10 days.
- Park Cities competitive context: $500 to $3,000 option fee is common, sometimes paired with a shorter option period, like 3 to 7 days.
- Very aggressive offers: $5,000 or more for the option fee, or a waived option period. Waiving the option period increases your risk since you give up the right to terminate for any reason.
What strengthens an offer in Park Cities
- Larger earnest money signals commitment. It shows the seller you have funds on the line and plan to perform.
- A higher option fee or shortened option period reduces the seller’s downside. The seller gets compensated for time off market and less uncertainty.
- Absolute dollars matter. In a high-price market, the real dollar amount often carries more weight than a clean percentage.
- Balance risk and leverage. If you want to stay protected, consider a reasonable option fee with a short, firm timeline for inspections rather than waiving the option altogether.
Timelines: what to expect once you go under contract
Use this simple sequence as a starting point. Your contract controls exact dates.
- Day 0 (effective date): All parties sign. The option period begins.
- Days 0 to 1, up to 3 business days: You deliver earnest money to the title company and pay the option fee to the seller or listing broker, as stated in the contract.
- Option period (3 to 10 days is common): Schedule inspections promptly, review results, seek estimates, and decide whether to proceed. If you terminate in time, you usually forfeit the option fee and recover your earnest money.
- After option period: You proceed with financing, appraisal, and title work. Earnest money remains in escrow and gets credited at closing if you continue. If a contingency applies and you terminate under the contract, the earnest money may be refunded per the specific language.
Practical notes:
- Confirm whether your deadlines use business days or calendar days.
- Ask how delivery is counted, especially if you plan to wire earnest money or courier a check near a weekend or holiday.
- Keep every receipt and written notice. Documentation helps if there is any dispute later.
Real-world examples you can model
These scenarios reflect recent patterns in University Park. Your offer should match the property, competition, and your risk comfort.
Scenario A: Mid-price University Park home
- Purchase price: $1,200,000
- Earnest money: $18,000 (about 1.5 percent)
- Option fee: $1,000 for a 7-day option period
- How it plays out: You inspect promptly, negotiate repairs or credits, and proceed to close. Earnest money is credited at closing.
Scenario B: Multiple-offer luxury listing
- Purchase price: $1,800,000
- Earnest money: $54,000 (about 3 percent)
- Option fee: $5,000 for a 3-day option period, or you waive the option period to win
- How it plays out: The seller favors your offer due to strong earnest money and minimal option time. You accept higher risk for a better chance at winning.
Scenario C: Maximum inspection protection
- Purchase price: $950,000
- Earnest money: $10,000 (about 1 percent)
- Option fee: $2,500 for 7 to 10 days
- How it plays out: You use the full inspection window. If a major issue appears, you can terminate in time. The seller keeps the option fee; your earnest money is typically refunded.
Tips for first-time and relocating buyers
- Confirm every deadline before you send funds. Ask your agent to write clear delivery times and how days are counted.
- Get receipts for both the earnest money and the option fee.
- Use your option period wisely. Schedule inspections early, and gather contractor estimates before the deadline.
- Balance your risk. In a high-price area, many buyers raise the option fee to be competitive while keeping earnest money at a level they are comfortable risking.
- If you want more protection, choose a slightly longer option period instead of waiving it.
- Coordinate with the title company on where and how to deliver earnest money, and how releases work if you terminate.
- Keep organized records. Save reports, termination notices, and any written releases.
Common pitfalls to avoid
- Missing the earnest money deadline. Late delivery can be a contract issue that gives the seller remedies, including possible termination.
- Assuming the option fee is credited automatically. It usually is not credited unless everyone agrees in writing.
- Confusing calendar days and business days. This can cause missed timelines.
- Waiving the option period without a plan. If you waive, line up inspections and due diligence ahead of time as much as possible, then move fast.
Work with a local guide in Park Cities
In University Park, the amounts you choose and the timing you meet can shape your leverage, your risk, and your outcome. A local, hands-on team can help you tailor earnest money and option strategy to the specific house, the competition you face, and your comfort level.
If you are planning a move in University Park or nearby neighborhoods, we are here to help you structure a smart, confident offer. For a one-on-one walkthrough of current norms and a plan that fits your goals, connect with Chris Blackman.
FAQs
In Texas, does the option fee count toward the purchase price?
- Only if the parties agree to credit it at closing. It is usually a nonrefundable payment to the seller rather than a credit.
If I terminate during the option period, do I get my earnest money back?
- Yes, if you terminate in time under your option right. The seller keeps the option fee and the title company typically releases your earnest money per the contract.
If inspections find major defects, can I get the option fee back in Texas?
- No. The option fee compensates the seller for the inspection window and is generally nonrefundable. Your relief is to terminate in time and recover earnest money if allowed by the contract.
What if I miss the earnest money delivery deadline in a Texas contract?
- Missing the deadline can be a breach that gives the seller remedies, possibly including termination. Do not assume late delivery is acceptable.
If buyer and seller dispute the earnest money in Texas, who decides?
- The contract’s escrow and dispute provisions control. The escrow holder often requires written releases from both parties or may interplead the funds into court if there is no agreement.
