If you’re like most Texas homebuyers, you’ve probably heard the terms earnest money deposit and option fees and periods since you made the decision to buy a home. You may be wondering what the differences are… and if you’ll need to pay one or both.
Earnest Money Deposits
When you find your dream home, you need to act quickly. You’ll have to let the seller know you’re serious about completing the purchase.
That’s what an earnest money deposit is for. The earnest money deposit is a negotiable amount of money that comes with a set of conditions (also negotiable) that protect the buyer and seller.
Why Does Earnest Money Make a Difference?
When you sign a purchase contract, you’re asking the seller to take the home off the market and hold it for you. That makes it unavailable to other buyers.
Your earnest money deposit is still, in most cases, your money; it goes into an escrow account until the deal is closed. Usually, the money is put toward your down payment.
What is an Option Fee and Period?
After making an offer and negotiating the terms and conditions of the earnest money deposit, you may want to take advantage of the option fee and period. This fee is separate from the earnest money deposit, and it can be a smart investment for homebuyers.
The option period lets you change your mind, with no questions asked, by paying a small fee. It also gives you a little extra time (usually 10 days or less) to complete all the necessary inspections.
Buyer’s remorse? Sometimes the option fee and period can get you out of a mistake. You don’t have to specify a reason for backing out of a real estate transaction, but remember, there are very strictly enforced timelines you’ll need to follow if you take this route.
Are You Buying a Home or Condo in Port Aransas?
Call us at 361-563-7788 or get in touch with us online to tell us what you want from your next home. We’ll begin searching right away.
In the meantime, you might find these links helpful: