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In Texas, Buyers have an OPTION...

By Kim Dean

Real Estate Broker/Owner with www.GoSimplyTexas.com TX Lic 0530037

March 15, 2012 10:36 AM

In Texas, you have AN OPTION...

Buyers often have a lot of anxiety surrounding a home purchase. The loan, picking the "perfect" home, the "right" neighborhood with the BEST schools...and it can all lead to a case of cold feet.

Luckily, the Texas contract has a provision to help ease any of the buyer's fears...it's called the Termination Option, or as it's often referred to as the "Option Period".

How does it work?

For a negotiable fee - usually in the neighborhood of $50-$200 - and for a negotiable amount of time - usually between 5-14 days - the buyer has the right, or OPTION, to back out of the contract for any reason whatsoever. The earnest money is then refunded back to the buyer, and Mr. and Mrs. Buyer can walk away with very little lost.

The #1 reason I've seen for buyers exercising their option is due to a failure to negotiate repairs with the seller during this time frame. Or perhaps the home inspection revealed major problems with the home - mold, foundation issues, etc. But it doesn't matter if it's inspection related or not. The buyer could have a bad dream about the home, find a better home or change their mind about purchasing entirely.

Should the buyers NOT exercise their option to terminate, the option fee that was paid becomes a credit to them at closing.

It's just that easy!!

Have more questions about buying a home in Texas? Ask a REALTOR that you trust to guide you through the process! You've got plenty of OPTIONS...

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Karen Hawkins, MBA - Langley & Surrey, BC

Royal Pro Real Estate Network - Langley, BC

Very interesting, Kim, just to make sure I understand: the option is much broader than specific contract conditions/subjects - essentially at a 'whim' the buyers could back out? Curious, what (if any) provision or compensation is made for the sellers in this case?

Mar 15, 2012 10:47 AM

Kim Dean

www.GoSimplyTexas.com - McKinney, TX

Simply Texas Real Estate - Broker/Owner

Karen - yes, the buyer can back out at any time DURING THE NEGOTIATED OPTION PERIOD. The sellers keep the option fee that was paid should that happen.

AFTER the option period expires, the buyer is bound to the other terms of the contract and could lose the earnest money at that point.

Thanks for stopping by, and for your comment!

Mar 15, 2012 10:52 AM

Beth and Richard Witt

New York, NY

The best Retired Brokers !!!!

Sounds good to me. I can see that it would be something a lot of buyers would appreciate having. I'd be intrested in knowing how many of them exercise that right... Have a nice evening..

Mar 15, 2012 10:55 AM

Carolyn Shipp

Source 1 Real Estate - Mineral Wells, TX

Mineral Wells Texas Real Estate

The majority of our buyers take advantage of the option fee. The biggest reason usually has to do with inspections. Buyers like knowing that if something is discovered during an inspection that can adversely affect the purchase of the home, they can walk away and get their earnest money back with no arguments. It's a safety net for them when making such a large financial and life changing decision.

Mar 15, 2012 01:05 PM

John Cannata

214-728-0449 http://TexasLoanGuy.com - Frisco, TX

Texas Home Mortgage - Purchase or Refinance

This is a good OPTION to exercise if you have a buyer that really isnt sure for some reason. Gives them a little more time and comfort to think about it, without losing a lot of money. Ultimately, its not a loss as the money is applied towards the purchase in the end if they decide to continue forward.

Mar 16, 2012 11:04 AM

In Texas, Buyers have an OPTION...

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