Are you getting ready to write an offer in Riverstone and wondering how earnest money and the option fee actually work? You are not alone. These two payments serve very different roles in a Texas contract, and knowing the difference helps you compete without taking on unnecessary risk. In this guide, you will learn what each payment does, who holds it, what is refundable, typical Riverstone amounts, and smart ways to structure your offer. Let’s dive in.
Earnest money vs option fee
The simplest way to think about these is purpose and protection.
- Earnest money shows the seller you are serious. It goes into escrow and is usually credited at closing. It is refundable only as the contract allows.
- Option fee buys you the right to terminate for any reason during the option period. It is usually paid to the seller and is typically nonrefundable.
Both are important. You use earnest money to demonstrate commitment, and the option fee to create a short window to inspect and decide.
How Texas contracts handle them
Texas uses standardized contract forms that separate earnest money and the option fee. The forms create a specific option period with a start and end date. If you terminate during that period, you usually lose only the option fee, and you get your earnest money back. If you try to cancel after the option period without a valid contract reason, you risk your earnest money.
The exact outcomes depend on the written contract. The timelines, who receives funds, and seller remedies are all spelled out in the form and any boxes or options you select.
Who holds the funds and when you pay
- Earnest money is usually deposited with the title company named in your contract. Payment often occurs within 1 to 3 days after the effective date. Always follow the contract timeline and keep a receipt.
- Option fee is typically paid to the seller or the seller’s agent. Some buyers arrange to route it through the title company for clarity, but that must be written into the contract. Delivery is usually required within 1 to 3 days as well.
Late delivery can be a breach of contract. Plan ahead so funds arrive on time.
What is refundable and when
- Option fee: This pays for your unrestricted right to terminate during the option period. It is typically nonrefundable. If you terminate during the option period, the seller keeps the option fee.
- Earnest money: This is refundable only under the terms of the contract. If you terminate during the option period, earnest money is typically returned to you. If you default outside allowed termination rights, the seller may be entitled to the earnest money as damages, depending on contract language.
If there is a dispute about who gets the earnest money, the title company will usually hold the funds until both sides sign a release or a dispute process resolves it.
Typical Riverstone amounts and timelines
Riverstone sits in Fort Bend County and includes both resale homes and new construction. Amounts and timelines are negotiated, but here is what you will commonly see as a starting point:
- Earnest money on resale: Often around 1 percent of the price, or a flat amount such as 3,000 to 5,000 dollars on a 400,000 dollar home. Higher-priced homes may see 1 to 2 percent or a larger flat sum.
- Option fee on resale: Often 100 to 300 dollars for a 5 to 10 day option period. In hotter markets, buyers may raise the fee or shorten the option period to stand out.
- New construction: Builders set their own deposit rules. You may see 1,000 dollars for a quick move-in or 5,000 to 25,000 dollars for higher-value or semi-custom homes. Some builders limit or do not offer option periods and instead allow limited inspection rights. Always read the builder’s contract and confirm deposit schedules.
Local competitiveness matters. In multiple-offer situations, buyers sometimes increase earnest money, shorten or waive the option period, or raise the option fee to be more attractive. When inventory is more balanced, buyers use standard 5 to 10 day option periods with modest fees.
How to be strong and still protected
You can show commitment without giving up all your safeguards. Match your offer to the market and your comfort level.
Conservative structure for a steady market
- Earnest money: About 1 percent of price (or a flat amount like 3,000 dollars on 300,000 dollars)
- Option period: 7 days
- Option fee: 200 to 300 dollars
- Why it works: Shows good faith while giving time for inspections and decisions.
Competitive structure for a hot listing
- Earnest money: 1.5 to 2 percent, or a higher flat amount depending on price
- Option period: 0 to 3 days, or waived if you are comfortable
- Option fee: 500 to 1,000 dollars if a short option is included
- Why it works: Signals strong commitment in a bidding contest. If you shorten or waive the option period, protect yourself by lining up inspections fast or doing a pre-offer inspection if allowed.
New construction in Riverstone
- Confirm the builder’s deposit amount and timing in writing
- Expect limited or no option period. Ask for independent inspection rights as allowed
- If competing for a desirable spec home, a higher deposit may help
Smart timing and delivery steps
Getting the timing right is critical. Follow these habits on every offer:
- Identify the title company and include it in your contract.
- Confirm where each payment goes and the number of days you have to pay.
- Send funds early, not at the last minute. Use a traceable method and keep receipts.
- Ask your agent to verify the seller’s preferred handling of the option fee, and put it in the contract if it goes through escrow.
What sellers can do if you default
If you do not perform as the contract requires and you are outside your termination rights, the seller may elect remedies in the contract. One common remedy is to keep the earnest money as liquidated damages. The option fee does not replace those remedies. It is separate consideration for the option period.
Your goal is to avoid default by following every deadline, documenting delivery, and using termination rights only as the contract allows.
Real-world Riverstone scenarios
Scenario 1: You terminate during the option period
You offer on a 500,000 dollar resale with 5,000 dollars earnest money, a 7 day option period, and a 250 dollar option fee. Your inspector finds issues you do not want to take on. You terminate on day six. The seller keeps the 250 dollars. Your 5,000 dollars earnest money is typically returned to you.
Scenario 2: You miss the option period but try to back out later
Same deal, but you forget the deadline and try to terminate on day nine without a contract reason. The option period has ended. The seller may be entitled to your earnest money, subject to the contract’s remedy terms. The option fee is already the seller’s to keep.
Scenario 3: Competitive listing with a short option
The home has multiple offers. You submit 2 percent earnest money, a 2 day option period, and a 750 dollar option fee. You book the inspector for the next day, review the report the same evening, and either negotiate repairs or decide to proceed. You balanced competitiveness with a narrow but usable inspection window.
Scenario 4: New construction with builder rules
A Riverstone builder requires a fixed 10,000 dollar deposit and does not allow an option period. You negotiate for a pre-drywall inspection and a final inspection near closing. Your deposit schedule and inspection rights are specified in the builder’s contract.
Buyer checklist for Riverstone offers
Use this quick list before you submit an offer:
- Confirm which contract form you will use, and read the paragraphs on earnest money and the option fee.
- Decide on your earnest money amount, option period length, and option fee based on price and market competitiveness.
- Name the title company in the contract. Specify who receives each payment and the number of days to deliver.
- Get a strong lender pre-approval and include it with your offer.
- Deliver funds on time and keep receipts for both payments.
- If you plan to shorten or waive the option period, schedule inspections in advance or consider a pre-offer inspection.
- Ask your agent to confirm local norms for similar Riverstone homes so your numbers align with seller expectations.
How to choose the right structure
Start with your risk tolerance, then consider competition and property type. If the home is newly listed and there are several showings, a stronger earnest money amount and a short option period can help you win. If the home has been on the market longer, a standard 5 to 7 day option period and a modest option fee may be enough.
For new builds, the builder’s contract sets many terms. Focus on deposit timing, inspection access, and any incentives you can secure. Get everything in writing and keep your timeline organized.
Move forward with confidence
Understanding earnest money and the option fee helps you write a clean, confident offer in Riverstone. You can show commitment while keeping reasonable protections in place. If you want a second set of eyes on your structure, or you need a strategy for a competitive listing, we are here to help. Connect with Janssen Realty Group for disciplined guidance and local expertise in Fort Bend.
FAQs
What is the difference between earnest money and the option fee in Texas?
- Earnest money shows good faith and goes to escrow, while the option fee buys your right to terminate during the option period and is usually nonrefundable.
If I terminate during the option period in Riverstone, do I get my earnest money back?
- Typically yes. If you terminate within the option period as the contract allows, your earnest money is usually returned and the seller keeps the option fee.
Who do I pay the option fee to on a Riverstone resale?
- The common practice is to pay the seller or the seller’s agent, unless the contract states the title company will hold it. Always specify this in writing.
What happens if my earnest money is late in Fort Bend?
- Late delivery can be a contract breach and may give the seller remedies. Deliver funds on time and keep a receipt.
Are new construction rules different in Riverstone?
- Yes. Builders set their own deposits and may limit or deny option periods. Confirm the deposit schedule and inspection rights in the builder’s contract.
Can a seller keep both my earnest money and the option fee in Texas?
- Not for a valid termination during the option period. If you default outside your contract rights, the seller may seek the earnest money as damages, and the option fee is already the seller’s to keep.