HOME: Offer accepted; What happens next?

Your offer to purchase a property was accepted by the seller and you are wondering what your commitments are. If your agent has used TREC One to Four Single Family residential contract, you have to full fill two financial obligations in order to avoid a breach of contract.

ONE Pay option money (OM)
TWO Pay Earnest money (EM)

Option money must be delivered and receipted by the seller within 3 days from the executed date. These three days includes holidays and weekends. Usually, option money is a smaller amount that gives the buyer the un-restricted right to unilaterally terminate the contract during the option period. Most buyers use the option period say 5 to 10 days, to inspect the property so they can understand the working condition of different systems in the property.

Earnest Money is typically a larger amount that demonstrates buyers’ good faith to the seller towards the purchase of the property. This money will be handled by the Title Company on the contract and they are a disinterested third party in a real estate transaction i.e. they are a neutral party to the transaction. While there is not a hard and fast rule, 1% of the contracted sale price is recommended. This money is due within 3 days as long as the third day does not fall on a holiday or weekend. If it does then the contract allows extending to the first working day following the holiday.

Both option and earnest money can be issued as personal checks or cashier checks and/or wire transfer. MAKE sure once these checks are delivered that a receipt is provided.

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