Purchasing San Antonio TX Real Estate FAQ 1 - What is an Option Period

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Purchasing San Antonio TX Real Estate FAQ #1 - What is an Option Period


When you are purchasing a home in San Antonio TX, buyers and sellers alike Questionhave very similar questions.  One of the biggest questions I get as your local San Antonio TX Realtor® is what is an option period?  

Both buyers and sellers can have misunderstandings on just what the option period means in the contract.  The plain definition of what is an option period is this...

it is a period of time that the buyer pays the seller to have the unrestricted right to terminate the contract for any reason.  

When you enter into a Real Estate Contract to buy a San Antonio TX home, and both parties have accepted all that is in the contract, it is binding, meaning that legally, each party must adhere to the contents of that contract.  The option period gives the buyer an "out" so-to-speak for a certain amount of time.  The buyer pays consideration (a dollar amount) negotiated in the contract to the seller.  If the buyer chooses to exercise their option (terminate the contract), they are entitled to their earnest money back and the seller will keep the money.  Should the buyer not exercise their option, the money could be credited back to the buyer at closing or credited to the seller.  

The option period is typically the time that the buyer will get a home inspection done. Generally before the option period ends, repairs are renegotiated in the contract if the home inspection found anything that is of concern for the buyer.  If during the home inspection the buyer finds out the home has major damage or some unforeseen circumstance arises, the option period can be some type of protection for the buyer. 

Here in San Antonio TX, the option period is typically negotiated and paid for from 7 to 10 days.  I have seen it as little as 3 days and as long as 20 days.  However, if we remember the definition of an option period, (the unrestricted right to terminate the contract for any reason), the longer the option period, the less desirable for the seller and to some degree, the buyer and below, I give you a couple of reasons why.

Once a San Antonio TX home for sale goes under option, it is listed as AO in the MLS.  Now, the home is still able to be shown to other prospective buyers; however, many won't bother looking at the home because it is thought that once a home goes under contract, the next logical step is Pending.  So once a home starts displaying AO, it effectively (although not literally) takes it off of the market.  

If, the buyer decides to exercise the option, then the seller will go back on the market, displayed as BOM on the MLS.  Because the home was just under option, there is now a stigma on the home, regardless if it was just buyer's remorse and there was nothing wrong with the home.  Bottom line, the option period is not the most desirable thing for the seller so you may have a hard time asking for a very long option period.

Additionally, if you as a buyer are under too long of an option period, your lender won't order the appraisal and do the rest of the necessary steps to get your loan finalized.  Considering that if you have found the perfect San Antonio TX home for sale for you, the option period will give you the buyer the time to get an inspection and negotiate some other repairs.  Once the buyer's mind has been eased and everything worked out between buyer and seller, there truly isn't a reason to remain in the option period. 

It's time to make that true commitment and get the home into pending status so the next step is a happy buyer and a happy seller!

Posted by

Brenda Mullen – San Antonio Texas Real Estate Professional

Brenda Mullen Your San Antonio TX Real Estate Agent
 
Selling a San Antonio Texas area home involves many steps and having an experienced  San Antonio  Texas Real Estate Agent by your side will make the transaction run a lot smoother. I would love to be your San Antonio Texas Area Real Estate Professional! I assist both buyers and sellers in the San Antonio Texas area with either the purchase and or sale of residential real estate.
 
As an Accredited Buyer’s Agent, I have received special training to guide and educate you through the entire home buying process. From start to finish, I listen to your needs and desires in what you would like and take the information you give me to find you home.
 
As your San Antonio Texas listing agent I am well versed on the local San Antonio Texas area Real Estate Market. You can expect personalized service that includes a detailed consultation on how to best position your home to be competitive in today’s market with an in depth comparative market analysis, and advice on staging. I use the latest and most up-to-date marketing methods to get your home in front of as many buyers as possible. Being your San Antonio Texas area Realtor® not only involves just finding the home or selling the home, but being your guide, negotiator, advisor and advocate and making sure that your needs and goals are met. Being your San Antonio Texas area Realtor® is one of my truest passions, and “Helping You Find Home” is my number one priority.
 
 
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Brenda Mullen
Broker-Associate/Realtor®, ALHS®, MRP®, ABR®, ePro®

Team Leader The Mullen Group with RE/MAX Access - Helping You Find Home
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Topic:
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Texas Bexar County San Antonio
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Tags:
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Rainmaker
506,926
Cal Yoder
Keller Williams Elite - Lititz, PA
Homes For Sale in Lancaster PA - 717.413.0744

Great job Brenda. I need to write my posts. Maybe tomorrow? Have a great weekend.

Cal

May 18, 2012 01:58 PM #1
Rainmaker
622,810
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Another example of how real estate is local.

In our area, we do not have “option” periods. Inspections and appraisal are done during the “contingency” periods. There is a contingency period for appraisal, loan approval and inspections. The run concurrently but can be of different length. There is not cost for these contingency periods.

The above is an abbreviated description.

May 18, 2012 02:53 PM #2
Rainmaker
1,756,777
Tom Arstingstall, General Contractor, Dry Rot, Water Damage Sacramento, El Dorado County - (916) 765-5366
Dry Rot and Water Damage www.tromlerconstruction.com Mobile - 916-765-5366 - Placerville, CA
General Contractor, Dry Rot and Water Damage

Thanks for clarifying the option period Brenda, I can see why this is frequently asked about.

May 18, 2012 05:34 PM #3
Ambassador
852,497
Brenda Mullen
RE/MAX Access - Schertz, TX
Your San Antonio TX Real Estate Agent!!

Hi Cal-I've got 9 more to go lol :)!

Hi John-Real Estate is definitely local :)!  I am often surprised when I see the different way other States do things and I think, wow, what would I do if I had to move there?  I would have to relearn Real Estate lol :)!

Hi Tom-It can be confusing.  Many dont understand what the option period is exactly and some want to be under option for a long, long time lol :)!

May 18, 2012 11:33 PM #4
Rainer
396,412
Cathy Criado
Criado Realty - San Antonio, TX
Making Real Estate Profitable

Brenda - Great explanation!  Thought I'd stop by to say hi to a good friend!

Sincerely,

Cathy Bureau
♥X☺X☺X☺♥

PS- I went to a WP website. It's not quite done but check it out when you get a chance.

May 19, 2012 12:00 AM #5
Rainer
396,412
Cathy Criado
Criado Realty - San Antonio, TX
Making Real Estate Profitable

PPS - I like to call it the lemon law. In case you discover the house is a lemon by material fact you can back out. Or, if you just have a crazy, freaking nightmare about it - go with the gut back out! That actually happened to me once. WE were going to build a Perry home and were seeking a one story. Fell in love with the builder and area, but they didn't have a large one story. Went 2 story. I was preggy with #2. I had this horrible  nightmare that my 3 year old woke up in the middle of the night and wandered, falling down the stairs and dying. The next day I backed out. With the builder there is not an option period, there was a 3 day rescind however.

May 19, 2012 12:03 AM #6
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Brenda Mullen
RE/MAX Access - Schertz, TX
Your San Antonio TX Real Estate Agent!!

Hi Cathy-Thanks for dropping in!  That sounds like a good reason to back out of the deal lol :)!  I would have done the same.  Love to check out your WP site.  Is the address on your site?

May 19, 2012 12:08 AM #7
Rainmaker
732,603
Eileen Hsu
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON

Very clear explaination for buyers to understand of how it is done in San Antonio Texas. Hope you sell a home today.

May 19, 2012 03:57 AM #8
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Brenda I have not heard it referred to as the option period before, but we have the same thing included in our contracts, and the inspections seem to be the driving force.

May 19, 2012 06:44 AM #9
Rainmaker
1,557,797
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Another real estate practice that is local, and for anyone not familiar with an option period you're the San Antonio agent to turn to.  We don't have them here, although we do have other clauses and contingencies in the contract which would make it kinda like an "option period."  Good post and having an agent that is knowledgeable is so important!!

May 19, 2012 09:08 AM #10
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Loreena and Michael Yeo
3:16 team REALTY ~ Locally-owned Prosper TX Real Estate Co. - Prosper, TX
Real Estate Agents

Love your explanation of our Texas Option Period. So many dont understand it.

May 19, 2012 09:43 PM #11
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Brenda Mullen
RE/MAX Access - Schertz, TX
Your San Antonio TX Real Estate Agent!!

Hi Eileen-Thank you so much :)!  I hope you sell another NY Condo too :)!

Hi George-It generally is here too, but folks need to understand that the buyer can terminate for any reason.  If the buyer and seller don't iron out inspection stuff in time and the buyer doesn't extend the option, they could be stuck :)!

Hi Carla-It sure is and having an agent that will ensure those dates are strictly adhered to is so important!

Hi Loreena-Thanks, I am positive you get asked that all the time :)!

 

May 19, 2012 10:51 PM #12
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Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Hey, Brenda! I included this post in Last Week's Favorites.  Have a great week.

May 20, 2012 02:20 AM #13
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Brenda Mullen
RE/MAX Access - Schertz, TX
Your San Antonio TX Real Estate Agent!!

Hi Pat-Thanks :)!  

May 20, 2012 04:59 AM #14
Rainer
639,083
Carl Winters
Canyon Lake, TX

Saw where you were featured over at Pat's as one of last week's "favorites".  Congratulations!

C^C

May 20, 2012 06:14 AM #15
Rainmaker
809,821
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

Brenda:

John Juarez described very well what occurs in a transaction in California.  I am glad we don't have an option period.  More money for the buyer to pay.  What is a typical price for an option per day?

May 23, 2012 02:03 PM #16
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