In Texas real estate transactions, a good faith deposit, typically made by the buyer to the seller upon accepting an offer, demonstrates commitment to the purchase. This deposit, held in escrow until closing, is credited toward the buyer’s down payment and closing costs. For instance, a deposit of 1% on a $300,000 home would be $3,000. The precise amount isn’t legally mandated but typically ranges from 1% to 2% of the purchase price.
This practice provides sellers with assurance against buyer default and offers a degree of financial protection if the transaction falls through due to buyer-related issues outlined in the contract. Historically, this tradition has served as a symbol of good faith, signifying a serious intent to purchase. The amount can signal the buyer’s level of commitment to the seller and can strengthen an offer in competitive markets.
