Time Off Market Explained for Santa Fe Buyers and Sellers
If you have bought or sold a home in New Mexico before, you have likely encountered earnest money as part of the standard process. In Santa Fe’s evolving market, especially when buyers are competing or sellers are cautious about taking their home off the market, another term is appearing more frequently: the TOM Fee, also known as the Time Off Market Fee.
Understanding how a TOM Fee works can help both buyers and sellers negotiate from a position of confidence.
What Exactly Is a TOM Fee
A TOM Fee, Time Off Market Fee, is a payment from the buyer directly to the seller as compensation for removing the property from active marketing once a purchase agreement is reached.
In simple terms:
- The seller stops showing the property.
- New offers are no longer considered, except as official backup offers.
- The buyer continues with inspections and due diligence.
The TOM Fee is not required in every contract. It is negotiable and added when it strengthens the buyer’s position or protects the seller’s interests.
TOM Fee vs Earnest Money
They Are Not the Same
Earnest money is held by the title company and is refundable under certain circumstances. It often returns to the buyer if contingencies such as inspection, appraisal, or financing are not met.
A TOM Fee works very differently:
- It is paid directly to the seller.
- It is non refundable in almost all cases.
- It does not apply to the purchase price unless both parties agree in writing.
- It is separate from earnest money.
Because the seller immediately receives the TOM Fee, it creates value for taking the home off the market while the buyer evaluates the property.
Why Buyers Offer a TOM Fee
Buyers typically use a TOM Fee to:
- Strengthen an offer when competition is expected.
- Show commitment if contingencies will take time.
- Offset the seller’s perceived risk.
- Delay earnest money deposit until after inspections if both parties agree.
Out of state buyers and those purchasing second homes often use TOM Fees when they want extra assurance that a property will remain theirs while they work through travel and inspection logistics.
Why Sellers Appreciate TOM Fees
From a seller’s perspective, a TOM Fee provides:
- Guaranteed compensation for time off the market.
- Reduced risk if a buyer cancels during inspection.
- Less likelihood of disputes surrounding earnest money.
- More confidence accepting an offer early in the listing period.
A TOM Fee is often most useful when a seller is evaluating multiple offers that differ in price, terms, or timing.
What Happens if the Transaction Terminates
This is the most important part for buyers to understand.
If the buyer terminates during the inspection period:
- The TOM Fee stays with the seller.
- Earnest money may not yet be deposited, so it is not part of the dispute.
If the transaction moves forward after inspection:
- Earnest money is deposited as described in the contract timeline.
- The TOM Fee still belongs to the seller.
If both parties agree to credit the TOM Fee toward closing costs or purchase price, that agreement must be documented and may require lender review if financing is involved.
How TOM Fees Are Delivered
Since the fee does not go to the title company, the buyer typically delivers it:
- Directly to the listing brokerage office, or
- As instructed in the contract.
Funds must clear. A rejected check or failed payment can put the buyer in breach.
How Much Should a TOM Fee Be
There is no single standard amount.
Factors that influence TOM Fee size include:
- The home’s desirability.
- Competition among buyers.
- The complexity of inspection items.
- A seller’s tolerance for uncertainty.
The number needs to be high enough to matter to the seller and low enough that the buyer accepts the risk of losing it. This is a strategic calculation, not a formula.
Practical Takeaways
For Buyers:
- A TOM Fee is an advantage in negotiation, not a requirement.
- Understand the non refundable nature before agreeing.
- Use it thoughtfully to win the right home.
For Sellers:
- TOM Fees provide security during the sensitive inspection period.
- Transparency regarding timing and delivery prevents problems.
- A TOM Fee can make an offer more appealing than a slightly higher price.
Final Thoughts
TOM Fees are yet another tool to consider in Santa Fe real estate negotiations. When used wisely, a TOM Fee can help buyers win out in a bidding competition, and provide sellers with incentive to patiently wait out the buyer’s inspection period.
✨ About Adrienne DeGuere, Sotheby’s International Realty, Santa Fe
I am a licensed Realtor specializing in Santa Fe’s luxury, relocation, and lifestyle driven markets, with 130 successful transactions and deep experience helping clients evaluate offer terms such as TOM Fees, earnest money, and contingency negotiations.
If you would like expert guidance on whether a TOM Fee makes sense for your buying or selling strategy, contact me. I am here to help you negotiate from strength and clarity.
