Thinking about making an offer on a home in Denton County? Your earnest money is one of the first signals to a seller that you are serious and ready to perform. It also comes with timelines, rules, and real consequences if you miss a step. You deserve a clear, local guide so you can feel confident and protect your deposit.
In this buyer’s guide, you will learn what earnest money is in Texas, how it works with the option period, typical amounts in North DFW, when it is refundable, and how to deliver it safely. You will also get a simple checklist and answers to common questions. Let’s dive in.
Earnest money basics
Earnest money is a good-faith deposit that you pay when you go under contract to buy a home. In Texas, it is credited toward your purchase at closing. If the deal does not close and you terminate properly under the contract, it is often refundable.
Most resale transactions use Texas Real Estate Commission forms that spell out how earnest money is handled, where it is held, and what happens if either party defaults. The contract will name the escrow agent, usually a title company in Denton County, that receives and holds your funds.
Option fee vs. earnest money
In Texas, the option fee and earnest money are separate. The option fee buys you the unrestricted right to terminate during the option period. You typically pay the option fee to the seller, and it is usually non-refundable if you use that right to terminate on time.
Earnest money is different. It goes to the title company or other agreed escrow holder. If you terminate properly under the option period or other contract provisions, you generally receive your earnest money back. The exact outcome depends on the contract terms and timelines.
How much in Denton County
There is no fixed rule for how much earnest money to offer. In many Texas markets, a common starting point is about 1 to 2 percent of the purchase price. In Denton County communities such as Denton, Flower Mound, Argyle, Corinth, Lewisville, and Highland Village, buyers sometimes increase earnest money to stand out in competitive situations.
Option periods of 5 to 10 days are common in North DFW, with option fees often in the $100 to $500 range. In hotter markets, buyers may shorten the option period to 3 to 5 days or consider higher fees. Always confirm current norms with your agent because local practice changes with market conditions.
Delivering your deposit
Your contract will state how and when to deliver earnest money to the named escrow holder. In Denton County, that is usually a title company. Follow the delivery instructions and deadline in the contract.
Common payment methods include personal check, cashier’s check, or wire transfer to the title company’s escrow account. Cashier’s checks and wires clear faster. If you wire funds, call the title company using a verified phone number to confirm instructions. Do not rely on email alone. Always get a written receipt that shows the amount, date received, and the escrow agent’s information.
Refunds and risk
When you exercise your option to terminate within the option period, and the option fee was paid as required, your earnest money is generally refundable. Other contract paragraphs, including financing timelines, also create windows where you may be able to terminate and receive a refund if you follow the notice rules on time.
If you miss deadlines or do not follow the termination steps in the contract, your earnest money can be at risk. Many Texas resale contracts include a liquidated damages remedy where the seller may keep the earnest money if the buyer defaults. Read your contract carefully and track every date.
Protect your deposit
- Verify the escrow holder. Confirm the title company named in your contract and save their phone number.
- Get a receipt. Ask for written confirmation the title company received and deposited your funds.
- Track timelines. Note your option period end date and the steps required to terminate.
- Follow financing dates. Submit your loan application and deliver any required notices on time.
- Guard against wire fraud. Call the title company at a known number to confirm any wiring instructions before sending funds.
- Keep documentation. Save the signed contract, deposit receipt, wire confirmation, and copies of checks.
Special situations
- New construction. Builder contracts often require larger, staged deposits and may include non-refundable language. Builder agreements are not the same as standard resale contracts.
- Foreclosures and auctions. Sales may require certified funds upfront, with strict non-refundable terms. Read the sale rules carefully.
- Cash offers and large deposits. Cash buyers often increase earnest money to signal reliability, which can help in negotiations.
Buyer checklist
Before signing:
- Confirm the title company and contact details named in your contract.
- Discuss an earnest money amount and option fee that fit the current Denton County market.
- Review any non-refundable language, especially with builders.
At contract signing:
- Deliver earnest money within the timeframe in the contract.
- Obtain a written receipt from the title company.
- Pay the option fee and write down your option period dates.
During the contract:
- Complete inspections within the option period.
- If you need to terminate, follow the contract’s notice steps before the deadline.
- Submit your loan application and meet all financing notice dates.
If a dispute arises:
- Do not assume funds will be released without both parties signing or a court order.
- Talk to your agent and the title company. Consider consulting a real estate attorney if needed.
Avoiding disputes
Most earnest money disputes come from missed dates or unclear notices. Use a simple timeline checklist from day one. Ask your agent to confirm delivery of every notice in writing. If buyer and seller disagree on who should receive earnest money, the title company will usually hold the funds until both parties sign a release or a court orders distribution.
At closing
At closing, your earnest money appears as a credit on your closing statement and is applied to your purchase price or closing costs. If the contract terminates and you are entitled to a refund, timing depends on how quickly the parties sign the release and the title company’s process.
Get local help
Your earnest money is a small part of the price, but it is a big part of your leverage and risk. With clear timelines, careful delivery, and the right strategy for the current Denton County market, you can strengthen your offer and protect your deposit.
If you want local guidance on earnest money strategy for Denton County homes, reach out to KW 1st Team. Start Your Home Search or Get a Free Home Valuation, and let a neighborhood-focused team help you move forward with confidence.
FAQs
What is earnest money in Texas home purchases?
- It is a good-faith deposit credited to you at closing, typically held by a title company named in your contract.
How much earnest money is typical in Denton County?
- Many buyers use about 1 to 2 percent of price in competitive markets, though a few hundred to a few thousand dollars can be common in calmer conditions.
Who holds my earnest money in North DFW?
- A title company or other escrow agent named in the Texas Real Estate Commission contract usually holds the funds and issues a receipt.
Can I get my earnest money back if financing falls through?
- If you terminate properly under the financing terms and deadlines in your contract, earnest money is generally refundable.
How quickly must I deliver earnest money in Texas?
- Your contract sets the deadline. Deliver it to the named escrow holder on time and get a written receipt to avoid issues.
