Comments (2)

Michael Swanson
Keller Williams North Raleigh - Raleigh, NC
Broker

I'm not sure how it works in FL but here in NC it's basically an easy way to terminate a contract for any reason whatsoever within a specified time frame. This of course comes at a premium as there is typically an option fee paid which is, unlike earnest money, "non-refundable" under any circumstances. The option fee is completely negotiable but I use a basic rule for determining the amount to suggest to my client. I  use the amount of mortgage payment that would have to be paid for taking the home off the market for said option period. ie, 30 day option period would be equal to 1 month payment, 15 days equals half payment, etc. In most cases the seller will agree to apply said option fee towards the purchase price just like a earnest money but this is at the seller's discretion. This is very basic explaination but is the basic idea behind it.

Jan 20, 2009 03:45 AM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

I agree with Michael and I would like to add that an Option has to have consideration. Should the Lessee/Purchaser exercise the Option, the Landlord/Seller is required to got through with the deal at predetermined terms. If the Option is not exercised the Lessee/Purchaser with lose their Option money and the Landlord/Seller has the right to keep it. The Landlord/Seller may elected to credit some of the Option money to the purchaser.

Jan 20, 2009 04:12 AM