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What is a TOM fee, or time off market fee?

The TOM fee, or "time off market fee," is an optional fee offered by a homebuyer to a seller to encourage the seller to accept an offer and take the property off market. A TOM fee is typically used in competitive housing markets or in situations in which the seller of a home wants more certainty that the transaction will close. 

In New Mexico, time off market fees are referred to as ‘TOM fees,’ but in other states, these payments from a buyer to seller are sometimes referred to as "option" fees. 

When to Use TOM Fees in Santa Fe Real Estate

TOM fees give the seller assurance that the buyer will make it all the way to the closing table. In competitive markets like Santa Fe, sellers have the power to choose offers carefully. Sellers do not want their property to go under contract and then terminate without any good reason; this hurts the seller’s ability to sell because other buyers perceive that something is wrong with the property.

The TOM fee is money that you are guaranteeing to the seller no matter what happens with the deal. Buyers can factor it into the total cost of a home. For instance, here are two scenarios:

  • NO TOM FEE: Sellers lists a home for $1M. Buyer makes an offer for $1,010,000. In this case, the $10,000 is a nice deal sweetener, but the buyer could still get that money back if they find something in inspections or if there's an issue with financing.

  • TOM FEE: Sellers lists a home for $1M. Buyer makes an offer for $1M plus a $10,000 TOM fee. In this case, the $10,000 is a guaranteed payment to the seller. They feel like the buyer has a huge stake in getting to the closing table. In the worst case scenario, they earn $10k and have to re-list the house.

Facts about TOM Fees in Santa Fe

  • The TOM fee is a payment directly to the seller from a buyer to give them time to do due diligence. 

  • Tom fees are non-refundable, in contract to earnest money. TOM fees basically state, “I will give you X amount of money, with no strings attached, to go under contract on this home.” 

  • There is no negotiating TOM fees after the fact. 

  • TOM fees are initiated with a purchase agreement when the home goes under contract. 

  • TOM fees are not credited back to the buyer. The TOM fee does not go toward down payment, purchase price, closing costs, or anything else. 

  • If the buyer terminates, the TOM fee does not get refunded. 

  • TOM fee is delivered to the seller directly. It is NOT delivered to the title company to hold in escrow. 

  • Buyer broker gives their buyer a receipt, then delivers it to the seller’s broker and gets receipt.

  • If the seller accepts the offer, it must be placed in pending status. But the seller may accept backup offers. 

  • TOM fees are used in competitive markets to sweeten the offer. 

  • TOM fees depend on the price of the home. For a $1.5M home, that fee would be at least $1,000. 

Sample TOM Fee Scenario

A seller puts a house on the market and it sits on the market for 7 days. A buyer makes an offer within that period contingent on the sale of their existing property in another state. This poses a risk to the seller, who would rather see a clean offer with no contingencies. To show the seller that the buyer is serious, the buyer’s broker offers a TOM fee.


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