In a real estate transaction, buyers are given a specific amount of time between the creation of the contract and the finalization of the transaction. This time is typically used by buyers to inspect the property and decide whether to move forward with the sale or not. The idea behind the so called Option Period is to give the buyer a chance to assess whether he/she wants to buy the property, without actually losing the property to another competing buyer. Some desperate buyers even offer a shorter option period simply to be prioritized by sellers.
During The Option Period
It is worth noting that the Option Period does not come in free. Typically, buyers must pay the Option fee in order for them to be given the opportunity to make use of the Option Period. Normally, what happens during this period is that the property is inspected so the buyer can assess whether the property in question is worth its asking price or not.
The Option fee is non refundable and this payment ensures the buyer that the seller will not sell the property to another aspiring buyer during the entire duration. During the Option period, the property is off the market and the buyer who paid the fee could enjoy the freedom of checking out the home without feeling obliged to ultimately purchase it.
Option Period Varies Between States
Keep in mind that not everyone can get an option period. Different states have different regulations and procedures when it comes to Option periods. Texas is one of the most well known states to grant Option periods to buyers. In the said state, the Option period usually goes from 7 to 14 days. Other states on the other hand may have different rules when it comes to Option periods and inspection regulations.
When it comes to the Option fee, state laws dictate how much a buyer needs to pay the seller for the Option period. In Texas, typical Option fee costs less than 1% of the property price. The fee is also usually part of the escrow closing, in the event that the paying client decides to go on with the purchase.
Overall, buyers who ultimately declined from the deal after the option period should simply be required to pay the Option fee to compensate the seller for the days his/her property was taken out of the market. However, the buyer will not be put under any contractual obligations.
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