Understanding The Option Period

Many times I meet with home buyers who do not understand Option Period and how it is used within a residential property contract.  In Texas, when an offer is submitted for a residential property, there will be two checks; one is for the option period and another for the earnest money.  Option money check gives the buyer the right to terminate the contract for any reason during the option the period.  Normally, the option period ranges from 7-15 days.  The option fee is nonrefundable, and if the buyer does not exercise the right to terminate the contract during the option period, the amount paid by buyer will be credited to the buyer at the closing table.  During the option period, the buyer should be having an home inspection, getting homeowners insurance quote and conduction further investigations to verify that is the right property for their needs and desires.  Normally, the option fee is a much smaller amount than the earnest money given with the contract.  The reason for smaller amount, the buyer wants to avoid a large loss since the money will not be return to the buyer.