Earnest money is a good-faith deposit the buyer makes shortly after going under contract, typically around one percent of the sales price in Texas. It is not an extra fee. It is held safely by the escrow agent and credited toward your down payment and closing costs at the closing table.

How much, and when it is due

One percent is the common custom in Texas, but the amount is whatever the contract says, and it moves with the market. The contract requires the buyer to deliver the earnest money, along with the option fee, to the escrow agent within three days after the effective date. The escrow agent is the title company handling your closing.

Where the money actually sits

In a dedicated escrow account with a neutral third party. Neither the buyer, the seller, nor the agents can touch it outside the terms of the contract. If the deal closes, it appears on your settlement statement as a credit. If the deal ends early, the contract controls who receives it, and releases are documented in writing.

You also do not need to drive a check across town. We accept earnest money and option fees electronically through Bank Shot, straight from your phone. The link is on our resources page.

When the buyer gets it back

• Terminating during the option period. The walk-away-for-any-reason window. The seller keeps the option fee, the buyer gets the earnest money back.
• A financing or appraisal exit under the contract’s terms, with proper written notice inside the deadline.
• Seller default. If the seller fails to perform, the buyer can recover the deposit.
• At closing. The most common outcome: it simply becomes part of your funds to close.

When a buyer can lose it

Missing deadlines is the usual culprit: terminating after the option period without a contractual exit, blowing past the closing date without an amendment, or failing to deliver required notices in writing on time. The contract’s deadlines are real, and the option period post in this series explains the biggest one.

One safety rule

If you wire your earnest money or your closing funds, verify the wiring instructions by phone first, at a number you looked up yourself. Wiring instructions do not change by email. Read our wire fraud warning before you send anything.

Questions about a deposit on your contract? Call (972) 528-6071 or email info@cnattitle.com.