DEAR WOODLANDS REAL ESTATE AGENT ~ WHAT IS THE OPTION PERIOD?
In Texas we call our due diligence period during a contract as the Option Period. Many people are unfamiliar with this concept and ask great questions to better understand this. In a nut shell, the Option Period is offered by the potential buyer to take a home off of the market for a set number of agreed upon days for an agreed upon amount of money.
During the Option Period, the Buyer has the right to schedule inspections, appraisals, etc. During this time, the Seller allows the Buyer to perform their due diligence on the home. This period of time has also been referred to as the Feasibility Period.
Here are some common questions regarding the Option Period:
1. How long is the typical Option Period?
Answer: Usually we see Option Period ranging from 7- 14 days". If the Option Period is longer, the Seller will typically ask for a larger dollar amount.
2. How much do you put down for the Option Period?
Answer: This is completely negotiable, but we commonly see between $100 - $1000. This money is either credited back to the Buyer at closing or not. See contract above.
3. So when does the Option Period officially begin and end?
Answer: The OP begins the next full calendar day AFTER the date on the EXECUTED contract. An executed contract is one where all parties have signed, initialed & money has been exchanged. The OP time ENDS at 11:59 p.m. on the final day of the period.
4. Can we terminate the contract for any reason during the Option Period?
Answer: Yes. You will need to complete a Contract Termination form along with a Release of Earnest Money BEFORE the OP ends.
5. Who do we make the Option payment to?
Answer: Your real estate agent will find this out for you but normally the OP is made out directly to the Sellers.
6. What happens after the Option Period ends?
Answer: If no termination of contract occurs, you are now on your way to closing on a home. The home will move into a PENDING status during this time. If the contract is terminated, the OP fee is not refundable. This was your cost to ask the Sellers to take their home off of the market during this time.
In any real estate transaction, time is of the essence. Your real estate agent should keep you in the loop on the official dates and keep things progressively moving forward. Knowing the actual start and end date of your Option Period is extremely important.
Please let me assist you with your next real estate transaction. I am here to help you and answer your real estate questions! The Woodlands is a busy market, contracts and dates are to be followed very carefully!
I do not practice law but I can certainly assist you with your real estate questions! Give me a call today!
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