"If you're buying a home in Texas, you've probably heard the term earnest money, the deposit that shows a seller you're serious about your offer. In most cases, earnest money in Texas ranges from 1% to 3% of the home's purchase price, but the exact amount can vary depending on market conditions and your agreement with the seller. According to the Texas Real Estate Commission (TREC) , buyers must deliver their earnest money to an escrow agent"
"In real estate, a contract is only binding if there's "consideration," meaning both sides are offering something of value. In this case, the buyer's promise to buy and the seller 's promise to sell fulfill that requirement. Because earnest money plays such a key role in this exchange, understanding how much to put down and when to deliver it can help you avoid delays or even losing out on your dream home."
"Once the offer is accepted, the earnest money is typically held in an escrow account managed by a title company or brokerage until closing. If the sale is completed, the deposit is applied toward the buyer's down payment or closing costs. If the deal falls through for a reason covered by the contract, such as a failed inspection or financing contingency, the buyer may get their deposit back."
Earnest money is a good-faith deposit buyers include with an offer to demonstrate commitment. Typical earnest money in Texas ranges from 1% to 3% of the home's purchase price, but amounts vary with market conditions and negotiation. Buyers must deliver earnest money to an escrow agent within the contract time frame, and late delivery can allow the seller to terminate or seek remedies under contract provisions. Earnest money is held in escrow until closing, applied to down payment or closing costs if the sale completes, and may be refunded when contract contingencies cause a valid termination.
Read at Redfin | Real Estate Tips for Home Buying, Selling & More
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