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We answer frequently asked questions or FAQ about buying Houston real estate and real estate in the surrounding communities of Greater Houston including Cypress, Katy, and College Station.
An earnest money contract is the most common form of real estate purchase contract in Texas. When using an earnest money contract, a buyer agrees to deposit a small percentage of the sales price with a title company to be held until closing as a sign of their good faith intentions to purchase a home or other real estate. The amount of the earnest money deposit is negotiable between the buyer and seller.
A termination option is a clause in the standard Texas real estate earnest money contract that gives a buyer the unconditional right to terminate the contract during the option period. The buyer must pay a fee to the seller for the right to have the termination option. The length of the option period and the option fee are negotiable between the buyer and the seller. Earnest money contracts are also called option contracts for this reason. In Texas, a typical option period is around 10 days and the typical option fee is about $10.00 to $30.00 per day. However, option fees and option periods are completely negotiable between the buyer and seller.
A title company is a type of trust company that is licensed by the State of Texas to act as an escrow office in a real estate transaction. The title company holds the buyer’s earnest money in a trust or escrow account, researches the title history of the property and issues a title insurance policy insuring the that buyer is receiving a good and valid title to the real estate being purchased, and processes the deed and other documents needed to transfer title. The title company disburses the buyer’s and mortgage lenders funds to the seller at the closing and pays off all existing mortgages and liens on the property.
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