Should I fix up my house before selling?

Not every repair is worth the money. The key is knowing which fixes create buyer confidence and which ones you can skip without hurting your sale price. Stephen gives every seller a pre-inspection repair plan built around real return on investment, so you spend only where it pays off and avoid over-improving for the market.

How do you price a home correctly in this market?

Pricing is the single most important decision you make when selling. Too high and buyers skip you, days pile up, and you accept less with no leverage. Too low and you leave money behind. As a certified Home Pricing Expert, Stephen builds a full market analysis for every listing and positions your home where serious buyers compete rather than hesitate.

Can I sell my home while I'm stationed overseas or out of state?

Yes. Stephen has sold homes for military clients stationed in Japan, Germany, and across the country. As a certified Military Relocation Professional, he handles the full process remotely, including pricing, prep coordination, showings, negotiation, and closing, so you do not have to be physically present.

How long will it take to sell my home in Killeen?

A correctly priced and well-prepared home in Killeen and the Fort Hood market typically goes under contract within two to three weeks of listing. Homes that sit longer are usually overpriced at launch or lack a targeted marketing strategy. Stephen uses a structured launch with a Day-10 checkpoint to catch momentum issues early before they become a problem.

What is the difference between list price and what I actually walk away with?

A lot can happen between list price and closing table. Buyer concessions, repair credits, closing cost contributions, and weak contract terms can all reduce what you keep. Stephen focuses on your net proceeds, negotiating price, terms, credits, and contingencies together so the number that matters is the one on your final settlement statement.

Why should I hire Stephen Harris over another agent in Killeen?

Stephen has 400+ closings, $92 million in sales volume, 100+ five-star Google reviews, and 10 years of Central Texas experience. He gives you a straight answer, builds a real plan for your specific home, and stays reachable throughout the entire process.

What Is Earnest Money in Texas (And Who Keeps It If the Deal Falls Apart)?

What is earnest money in a Texas real estate contract — and who keeps it if the deal dies?

Earnest money in Texas is a deposit the buyer puts into escrow with a title company within three days of contract execution, typically 1% to 3% of the purchase price. If the buyer terminates during the option period or under a valid contract contingency, the earnest money goes back to the buyer. If the buyer defaults after the option period ends — walks away without a contract right to do so — the seller has a strong claim to it. Either side can demand release through the TREC contract’s Paragraph 18 process, and the other side has 15 days to object before the title company can release the funds.

By Stephen Harris | May 22, 2026

You’re under contract on a home in Killeen, the buyer’s lender just pulled the loan, and now both sides are pointing at the $5,000 in escrow saying “that’s mine.”

Earnest money disputes are one of the most stressful parts of a Texas real estate transaction — and one of the most misunderstood. The good news is the TREC contract spells out exactly how this works. The bad news is most buyers and sellers don’t read those paragraphs until they’re in the middle of a fight.

Let me walk you through how it actually works in Texas, what triggers a release, and what you can do when the other side won’t sign.

What Earnest Money Is (And What It Isn’t)

Earnest money is the buyer’s “I’m serious” deposit. It shows up shortly after contract execution and sits in escrow at a title company — not in the agent’s pocket, not in the seller’s account — until closing or termination.

In the Killeen and Bell County market, earnest money typically runs 1% to 3% of the purchase price. On a $276,000 home, that’s $2,760 to $8,280. In hotter price brackets or competitive multiple-offer situations, you’ll see buyers stretch to 3% or higher to look stronger on paper.

Earnest money is not the same thing as the option fee, even though they’re often paid together. Here’s the cleanest way to keep them straight:

Option fee — a separate, smaller payment (often $200 to $500 in Bell County) that buys the buyer an unrestricted right to terminate during the option period. The option fee is non-refundable. The seller keeps it no matter what, though it’s credited to the purchase price at closing if the deal closes.
Earnest money — the larger deposit that’s refundable if the buyer terminates properly, and at risk if the buyer defaults.

Since April 1, 2021, TREC’s contract requires both the option fee and the earnest money to be delivered to the title company within three days of the contract’s effective date. Late delivery can put the contract itself at risk, so this is one of the first deadlines I track for every client.

Who Keeps the Earnest Money — The Five Common Scenarios

The TREC One to Four Family Residential Contract governs every standard resale in Texas, and Paragraph 23 (option period) and Paragraph 18 (escrow/earnest money) do most of the heavy lifting. Here’s how the money typically flows in real life:

1. The deal closes. The earnest money is applied to the buyer’s closing costs or down payment at closing. Everybody wins.

2. The buyer terminates during the option period. The buyer gets the earnest money back. The seller keeps the option fee. This is the cleanest, most common termination — the buyer has an unrestricted right to walk for any reason or no reason during this window.

3. The buyer terminates under a valid contingency after the option period. Examples: the appraisal comes in low and the buyer invokes the appraisal contingency, the financing falls through under the third-party financing addendum, or the title commitment surfaces an unresolvable issue. The earnest money typically goes back to the buyer.

4. The buyer defaults after the option period ends. The buyer gets cold feet, can’t come up with the down payment, or simply walks away without a contract right to do so. The seller has a legitimate claim to the earnest money — but the buyer has to sign the release, and they often don’t.

5. The seller defaults. Less common, but it happens — seller refuses to close, backs out to take a higher offer, or fails to deliver clear title. The buyer is entitled to the earnest money back, plus potential remedies for specific performance or damages under the contract.

That covers the textbook outcomes. The reality is messier, because the side that’s losing the money often refuses to sign the release.

What Actually Happens When Both Sides Claim the Money

The title company will not release earnest money unless both sides sign a release form (the TXR-1904 Release of Earnest Money in most Texas transactions). Until that happens, the money sits in escrow indefinitely.

If one side refuses to sign, the TREC contract’s Paragraph 18 lays out the dispute process:

Either party sends a written demand to the title company asking for the earnest money to be released to them.
The title company forwards the demand to the other party, who has 15 days to file a written objection.
If no objection is filed within 15 days, the title company can release the funds to the demanding party, minus any expenses owed.
If an objection is filed, the title company holds the funds until the parties resolve the dispute — by mutual agreement, mediation, or court order.

The TREC contract requires mediation before litigation. Mediation typically costs $500 to $2,000, split between the parties, and takes 30 to 60 days to schedule. For most earnest money disputes under $10,000, that’s already more expensive than the amount in dispute — which is exactly why most disputes settle.

The path I see most often: the side with the weaker legal position eventually signs the release rather than pay for a fight they’re likely to lose. But it can drag on for weeks if either side digs in.

The Practical Lessons for Sellers in Killeen and Bell County

If you’re listing in the Killeen, Harker Heights, Copperas Cove, or Fort Hood area, three things matter most for protecting your earnest money position:

Document everything during the option period. Repair requests, inspection responses, contingency removals — get every change in writing through a TREC amendment. If the buyer later tries to claim a contingency wasn’t met, your paper trail is what protects the deposit.
Watch the option period clock. Once the option period expires, the buyer no longer has an unrestricted right to walk. That’s the moment your leverage on the earnest money jumps significantly.
Don’t agree to release earnest money just to be nice. If a deal falls apart on a buyer default after the option period, you may be entitled to the deposit. Talk to your agent and, if the amount is significant, an attorney before you sign a release.

For sellers actively pricing a home, the earnest money is one of several signals of buyer seriousness. A buyer offering 3% earnest money and a short option period is usually more committed than one offering $500 down and a 14-day option. I weigh those numbers alongside the offer price for every client. For a deeper read on how the Killeen and Fort Hood market is moving right now, what’s normal for earnest money on a $276K Bell County home looks different from what’s normal on a $550K Salado property.

Frequently Asked Questions

How much is earnest money in Texas?

Earnest money in Texas typically runs 1% to 3% of the purchase price, though the amount is negotiable and varies with market conditions. In Bell County, that often means $2,500 to $8,500 on a typical $250K to $300K home. Higher earnest money signals a more serious, committed buyer.

Is earnest money refundable if the buyer backs out?

It depends on when and why. If the buyer terminates during the option period or under a valid contract contingency (appraisal, financing, title), earnest money typically goes back to the buyer. If the buyer defaults after the option period without a contract right to terminate, the seller usually has a legitimate claim to keep it.

What is the option fee versus the earnest money?

The option fee is a separate, smaller, non-refundable payment that buys the buyer an unrestricted right to terminate during the option period. The seller always keeps the option fee, though it’s credited to the purchase price at closing. Earnest money is a larger, refundable deposit that’s at risk only if the buyer defaults after the option period ends.

Who holds the earnest money in a Texas real estate transaction?

A title company holds the earnest money in escrow — not the seller, not the buyer’s agent, not the listing agent. Both the earnest money and the option fee must be delivered to the title company within three days of the contract’s effective date.

What happens if both sides claim the earnest money?

The title company cannot release the funds until both sides sign a release or a court orders disbursement. Under TREC contract Paragraph 18, either side can send a written demand; the other has 15 days to object. If no objection is filed, the title company can release to the demanding party. If the dispute continues, mediation is required before litigation.

If you’re listing your home in Killeen, Harker Heights, Copperas Cove, or anywhere in the Fort Hood area and you want to walk into your transaction understanding every TREC paragraph that protects you — earnest money included — that’s exactly the prep I do with every seller.

Book a free strategy call so we can map out your best move. I’ll pull your comps, run your net proceeds at three price points, and walk you through the contract paragraphs that matter most for protecting your equity. No pressure, no pitch — just the data, so you can decide with full information. Book your call here.

About Stephen Harris

Stephen Harris is a Central Texas real estate broker who helps homeowners sell with a clear pricing strategy, smart prep plan, and strong negotiation guidance. He specializes in helping first-time sellers and move-up sellers in Killeen, Harker Heights, Copperas Cove, Temple, and the Fort Hood area protect their equity and make confident decisions from listing to closing.

This article is general information about Texas real estate contracts and is not legal advice. Earnest money disputes can involve complex contract interpretation; for guidance on a specific situation, consult a Texas real estate attorney.