Two checks, two deadlines, and a lot of questions. If you are buying a home in San Antonio, you will hear about earnest money and the option fee right away. They sound similar, but they do very different jobs and affect how competitive your offer looks. In this guide, you will learn what each fee is, how much to budget, when they are due, and how to use them to your advantage in Bexar County. Let’s dive in.
Earnest money vs option fee: quick definitions
Earnest money
- Purpose: Shows good faith and secures your offer while the contract is active.
- Where it goes: Typically to the title company or escrow agent named in the contract.
- What happens at closing: Credited to your cash to close.
- Refund basics: Usually refundable if you cancel properly under a contract contingency, such as within the option period or if a contingency is not met. If you default after contingencies expire, the seller may claim it under the contract.
Option fee
- Purpose: Pays for a negotiated right to cancel the contract for any reason during the option period.
- Where it goes: Usually paid directly to the seller or the seller’s agent as the contract specifies.
- Refund basics: Typically non-refundable to the seller once paid. It can be credited at closing only if both parties agree to that in writing.
- Why it matters: The option fee buys time for inspections and due diligence. It does not replace your earnest money or your down payment.
How these fees work in Texas contracts
- Forms: The common Texas resale contract separates earnest money and the option fee into different sections. Each has its own delivery timeline and rules.
- Delivery and timing: Earnest money is usually due within 1 to 3 business days after the effective date to the title company named in the contract. The option fee is often due at execution or within a set number of days and is delivered to the seller per the contract.
- Escrow handling: The title company holds earnest money and releases it only according to the contract or a written agreement. The option fee is typically not escrowed and is kept by the seller whether or not you close, unless both parties agreed otherwise in writing.
- Termination and remedies: If you terminate within the option period by giving written notice, your earnest money is typically returned to you, and the seller keeps the option fee. If you default after the option period or miss a contingency deadline, the seller may have a claim to your earnest money as allowed by the contract.
What to expect in San Antonio
While every offer is negotiated, here are common ranges you will see in Bexar County:
- Earnest money: Often 1 to 2 percent of the purchase price. It can be lower on lower-priced homes or higher in competitive situations.
- Option fee: Commonly smaller than earnest money, often around $100 to $500. In hotter submarkets, buyers may offer more or shorten the option period to compete.
San Antonio budgeting examples
Use these illustrations to estimate your initial cash outlay at contract execution:
Example A: $300,000 home
- Earnest money: 1 percent = $3,000
- Option fee: $200 for a 7-day option period
- Initial outlay: $3,200
Example B: $200,000 home in a balanced market
- Earnest money: 1 percent = $2,000
- Option fee: $150 for a 5-day option period
- Initial outlay: $2,150
Example C: Competitive offer on a $400,000 home
- Earnest money: 2 percent = $8,000
- Option fee: $500 for a 3-day option period
- Initial outlay: $8,500
Amounts vary by price point, inventory, the neighborhood’s competitiveness, and seller expectations. Cash buyers sometimes waive contingencies, while financed buyers must plan for appraisal and lender timelines.
Delivery timelines and who does what
- Right after execution: Confirm the effective date and all delivery deadlines with your agent.
- Earnest money: Send to the title company or escrow agent listed in the contract within the agreed window, often 1 to 3 business days. Follow the title company’s instructions exactly.
- Option fee: Pay the seller per the contract, often at execution or within a set number of days. Keep proof of delivery.
- Inspections: Schedule immediately so you can complete them within the option period. In tight markets, shorter option periods are common, so move fast.
- Communication: Keep your agent, lender, and title company in sync on timing and documentation so nothing slips.
How to use these fees to strengthen your offer
In competitive San Antonio submarkets, sellers focus on net proceeds, contingencies, timeline certainty, and your commitment. You can signal strength by:
- Increasing earnest money: 1 to 2 percent often reads as serious while still protecting you if you cancel within a valid contingency.
- Paying a larger option fee or shortening the option period: This reduces the seller’s time risk and can help you stand out. The tradeoff is higher non-refundable cost and less time to inspect.
- Coordinating fast inspections: If you shorten the option period, have inspectors ready to go before you submit the offer.
- Aligning with lender timelines: Make sure your financing and appraisal milestones can be met on schedule.
If you are relocating or buying from out of town, plan for quick decision cycles and pre-arranged vendor availability. The option period only helps if you can complete your due diligence in time.
Likely scenarios and outcomes
- You terminate within the option period: You give written notice before the deadline. Your earnest money is typically returned. The seller keeps the option fee.
- You default after the option period: The seller may be entitled to the earnest money as allowed by the contract.
- A contingency fails: If the contract includes the relevant contingency and you follow the terms, earnest money is generally refundable.
- The seller defaults: You can pursue the remedies provided in the contract. Escrowed funds are released according to the contract, escrow instructions, or dispute resolution.
Smart budgeting checklist
Use this list to prepare before you write an offer in Bexar County:
- Decide your earnest money target as a percentage of price.
- Set an option fee that matches your inspection plan and risk tolerance.
- Pre-book inspectors so you can complete checks within a short option period.
- Confirm lender and appraisal timelines with your agent and lender.
- Ask the title company named in the contract for delivery instructions the moment your offer is accepted.
- Keep copies of all receipts and delivery confirmations.
Work with a San Antonio guide who moves fast
You deserve a streamlined plan that fits your timeline, especially if you are on PCS orders or juggling a cross-state move. A local, hands-on approach can help you set the right earnest money and option fee, move quickly on inspections, and protect your interests while staying competitive. When you are ready to take the next step, connect with Evie Hansen for concierge-level guidance from offer to closing.
FAQs
Who holds earnest money in a San Antonio home purchase?
- Typically the title company named in your contract holds earnest money in escrow and releases it only according to the contract or a written agreement.
Is the option fee in Texas refundable if I cancel?
- No. The option fee pays for your right to cancel during the option period and is usually non-refundable to the seller once paid.
Can my option fee be credited at closing in Bexar County?
- Only if your contract states that the option fee will be credited at closing; otherwise, it is not credited.
How much earnest money should I expect to pay in San Antonio?
- Many offers use 1 to 2 percent of the purchase price, with higher amounts possible in more competitive situations.
What happens to my earnest money if I terminate during the option period?
- If you give proper written notice within the option period, your earnest money is typically returned to you, while the seller keeps the option fee.
How fast do I need to deliver earnest money and the option fee?
- Contracts often require earnest money within 1 to 3 business days to the title company and the option fee at execution or within a set number of days as stated in the contract.
What if the seller defaults on our San Antonio contract?
- If the seller breaches, you can pursue the contract’s remedies, and the escrowed earnest money is disbursed according to the contract or dispute resolution outcomes.
