We researched the details and talked with an expert Texas real estate agent to help you make the most of an option period.<\/p>\n
What is an option period?<\/h2>\n
An option period is a portion of time, agreed upon between buyer and seller<\/a>, which permits the buyer to think on a purchase decision. This enables the buyer to terminate the sale at any point during the allotted time<\/a>. \u201cAny reason is valid to change your mind during an option period \u2026 the only thing we\u2019re risking is our option fee,\u201d shares real estate agent Jennifer Bacak<\/a>, who sells homes 47% faster than the average agent in Bryan,Texas<\/a>.<\/p>\n You may be unfamiliar with the term option period, which is understandable as the phrase is specific to the Lone Star State<\/a>. However, other regions have similar processes that support the buyer\u2019s decision. For example, states such as North Carolina<\/a> and Georgia<\/a> have a due diligence period that works in a similar way.<\/p>\n The option period and fee are finalized in the purchase contract<\/a> terms of the sale. A higher fee and shorter time frame might make the buyer\u2019s offer more attractive to the seller, and sellers may ask for better terms<\/a> which could extend the negotiation period.<\/p>\n The option period begins the day after the contract is signed, and both buyer and seller are contractually obligated to carry out those terms. The home will revert to \u201coption pending\u201d on the market and sellers can only accept backup offers during this time.<\/p>\n An option period usually comes at the cost of a non-refundable option fee on the buyer\u2019s side. A typical fee ranges between $100 and $500+<\/a>, determined by the market and negotiated terms, and is due three days<\/a> after the contract\u2019s start date.<\/p>\n This fee makes the option period more worth a seller’s time. But don\u2019t be confused \u2013 the fee is also a win for buyers whether or not they back out!<\/p>\n \u201cThe earnest money and the option fee are credited to you at closing,\u201d explains Bacak for buyers who move forward. But for those who terminate, they only lose the option fee. The buyer would still receive back the earnest money deposit (EMD) placed down at signing, usually between 1% and 3%<\/a> of the sale price.<\/p>\n If the buyer decides to back out of the sale after the option period because of a low appraisal (and the lender will not lend what is needed to purchase the property) or a financing issue, and the appraisal and financing contingencies have not been released, the buyer will still lose the option fee, but will be refunded their earnest money deposit. Financing contingencies and appraisal contingencies are separate from the option period \u2014 but the only way for a buyer to get the option fee returned to them, is if they close the sale, according to Bacak.<\/p>\n A typical option period is anywhere between 1 and 10 days<\/a> but is dependent on several factors. These factors include:<\/p>\n The greatest determiner of the option period and fee is market status \u2014 a buyer might need to aim for a shorter option period in a seller’s market. \u201c$500 for five days has become my go-to when I\u2019m competing with other contracts and low inventory,\u201d Bacak explains. Finding a buyer\u2019s agent<\/a> like Bacak will help you navigate these waters to make an attractive offer that also gives you the time you need to make your decision.<\/p>\nWhen does an option period begin?<\/h2>\n
How much is a typical option period fee? Is this refundable?<\/h2>\n
How long is a typical option period? Can it be extended for any reason?<\/h2>\n
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