Do you have to put earnest money down? Is there a required amount for Texas?

Asked by Jessv, Austin, TX Fri Apr 17, 2009

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15
Guy Gimenez, Agent, Austin, TX
Sun Sep 27, 2009
Simple answer is "NO."

Earnest money is not mandatory to have a valid contract. While earnest money is one form of consideration, it is not the only form. A mere promise to perform under the contract is also consideration. Earnest money tendered, if any, is determined by negotiation between buyer and seller.
Web Reference:  http://www.phgbrokers.com
3 votes
George Kiefer, Agent, Austin, TX
Sat Apr 18, 2009
I have done many contracts over the years where Earnest Money is $0. None is required in Texas. Earnest money is completely negotiable. However regarding Foreclosures: Dept of HUD requires $1000 if property is over $50,000 and $500 is property value is under $50,000 (I have never seen HUD vary from this rule) and most banks (bank foreclosures) have rules and minimums regarding Earnest money as well (however most banks will negotiate to a point - but not down to $0).
1 vote
Ashley Stucki, Agent, Austin, TX
Mon Feb 23, 2015
Earnest money is a negotiated amount that needs to be agreed upon by both the buyer and the seller. Customarily it's 1% of the contract sales price. Earnest money is held in an escrow account and is credited back to the buyer at closing. Your earnest money would also be returned to you if you back out during your option period (which is also a negotiated time frame but generally 7-10 days after you have an executed contract).
0 votes
Gary Geer, Agent, Antioch, IL
Mon Jan 26, 2015
You as a buyer can determine what amount of earnest money you want to provide. The seller can accept that amount or counter back to you asking for more.
0 votes
Jim Morelli, Agent, Austin, TX
Mon Jan 26, 2015
The Texas Real State contract is an earnest money contract with an termination option. so it is required. The buyer can offer any amount they want. In a strong sellers market like we are currently in the more a buyer offers the better their offer may look in the eyes of the seller. Typically you will want to offer at 1% of the sales price in earnest money. If a buyer terminates withing their rights of the contract the earnest money is refundable.
0 votes
jewelwms2, Home Buyer, Cedar Hill, TX
Sat Jan 24, 2015
Once you put earnest money down and the 100 dollars option fee. sign the contract.You have financing approved...The realator says he will take the contract to the title company.Then 5 days later realator calls you and say he has some one else on the contract of the house. He informs you are in second place for the house. He never took the paperwork to the title office. Can he legally do that?
0 votes
Charles Runn…, Agent, Austin, TX
Sat Jan 21, 2012
You do if you want the Sellers to think you're serious. Custom amount is 1%.
0 votes
Blaine Dunlap, Agent, Kerrville, TX
Wed Jan 18, 2012
Only if your seller doesn't have a Realtor. Because if they have one they are going to tell their client not a accept a contract with earnest money. You offer is SO much stronger with earnest and option money anyway.
Your concern must be losing your money, if you are serious about a property, pay the customary $100 for a termination option and go ahead and make your earnest money check. If you then have concerns, eject WELL before this period is up.
0 votes
John Magruder, , Williamson County, TX
Wed Sep 16, 2009
Earnerst money is rightly called consideration which is required for a contract to be valid. A typical amount is $1000 or 1%. Consideration could also be some other item of value like a service performed or item
exchanged. The important thing to remember is that the seller is taking the house off the market and therefore deserves adequate consideration indicating you are a willing and able buyer. The other important part is to provide money for an option period and typically that is $100.
0 votes
Donna Harris, Agent, Austin, TX
Fri May 15, 2009
Earnest money is not needed, but "consideration" is needed, and in order to have consideration, that typically means some form of earnest money. Most contracts I do are not a percentage, but a flat $1000 or sometimes it's $2000 with $1000 given at signing and $1000 given after the inspection period. It helps show seriousness.
Web Reference:  http://www.donnahomes.com
0 votes
Tim Moncrief, , Austin, TX
Sat Apr 18, 2009
The market has been around 1% of the purchase price; but there is no mininum or maximum. There are some creative strategies used in the amount of the earnest money in negotiating an agreement, depending on the both the situation of the buyer and/or the seller.
Web Reference:  http://TopKWGroup.com
0 votes
Kathleen Ver…, Agent, Austin, TX
Fri Apr 17, 2009
Although Texas real estate contracts require earnest money, you do not have to deposit earnest money for a contract to be valid in Texas. On a "normal" residential purchase contract though, I doubt there are many, if any, sellers willing to accept a contract with no earnest money. There is no required or set amount, but typical is approx. 1% of the purchase price. Check out this website for more information - http://www.hancockmcgill.com/h&m%20article%20earnest%20m…

Kathleen Bauerle Vernon
Third Generation Austin Realtor
512-567-9909
Exit SW Jackson Properties
kvernon@austin.rr.com
0 votes
Buyers House…, , Texas
Fri Apr 17, 2009
How to Make an Offer in Texas

Even though the economy has placed a cloud on the real estate industry, the Texas real estate market ranks highest throughout the country. While the home prices have taken a slight dip, potential buyers are taking advantage of lower home prices and record low interest rates. Potential investors and home buyers who are in a position to make an offer, see this unique buyers market and are looking to seize the moment.

Although you can Google “How To Make An Offer”, it is a wise choice to base your information on how to make an offer in Texas, as there are some specifics about Texas real estate that differ from the rest of the country, and of course this could affect you getting the best deal.

Verbal offers are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract, which starts with your written offer. This offer covers all of the terms and conditions of the purchase, including offer price.

Buyers House Realty has the standard forms (including One to Four Family Residential Contract (Resale)) that you will need in order to complete your offer. As our client we will answer all of your questions concerning this process. There are also important items that the seller must disclose and these items will be addressed prior to submitting your offer.

Once we have discussed the terms of your offer, we will send the offer to you for your final approval. You will then need to initial and sign the offer prior to Buyers House Realty submission to the seller’s agent.

If your offer is accepted, the seller will both initial and sign without making any changes. This will become a legally binding contract. At this time both the option money and earnest money will be due within 48 hrs. This also starts the clock for important strict timelines mentioned in the contract.

If the offer is countered by the seller, you will be free to walk away or counter their counter-offer. Keep in mind that countering the sellers offer puts you at risk of losing the home, as another buyer could make an offer that is accepted before your counter offer is accepted.
Learn more : http://www.buyershouserealty.com/Gavin_St._Louis_REALTOR.shtml
0 votes
Dallas Texas, Agent, Dallas, TN
Fri Apr 17, 2009
Where is your buyers agent explain all these terms ?

Earnest money usually based agreed purchase price of home. YES you have purchas earnest money down if you are dealing direct with real estate agent, a FSBO might not have to go thru those steps. However most home buyers would not sale a home unless you provided some kind of deposit.

Earnest money is paid to title company

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0 votes
Mattye P. Sm…, , Dallas, TX
Fri Apr 17, 2009
Hi Jessy,

Yes, in most cases Earnest Money is required..however if you are my Client, I will negogiate for the least amount possible.

If you need assistance or have any other questions you may reach me @ mattye.smith@vrimail.com.

Best regards,

Mattye P. Smith
Realtor

American Realtors
0 votes
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