Trudging through Texas Real Estate: What to expect from the Contract Option Period as a buyer or seller

Real Estate Agent with eXp Realty 470666

The option period in Texas contracts is a tool to assist with fair and timely negotiation processes between buyer and seller.  It allows a set amount of time for a buyer to perform due diligence and inspect the property while compensating the seller for this lost time in ‘Active Status' for sale on the market.  It's a bit of a lemon law approach in real estate and helps protect the buyers from a really bad inspection.

The option period is paid up front when submitting an offer, and it is not refundable if the buyer terminates the contract.  The option fee is paid in consideration for this initial time under contract and the home is changed to ‘Pending Status' in the MLS System because it is no longer actively listed for sale on the market. The buyer has their negotiated amount of time to inspect the property and understand these findings. Upon final closing of the property, the buyer is reimbursed for the option fee at closing.  This comes in the form of a credit from seller to buyer on the Settlement Statement at closing.  If the buyer terminates the contract for any reason, the option fee is the seller's to keep.

As a buyer, the option period in Texas Real Estate specifically offers the buyer the unrestricted right to terminate a real estate contract - for any reason.  The amount of time is typically 7-10 days in the Austin Tx real estate market, or it could be longer or shorter depending upon what buyer and seller have agreed upon during the original contract negotiations.   The buyer pays the seller a negotiated ‘option fee' up front for this option, and set amount of time.  This fee typically runs around $200-$500 on an average transaction.  The amount might also indicate how serious the buyer's intent to purchase the home is, as well.

Most often, the buyer uses this timeframe to have the property inspected, to check on homeowners insurance for the home, and to understand the results of the home inspection report.  We assist buyers in understanding what the report is detailing and suggesting, as well as what the scope and pricing of those projects would look like.  We have several reliable professionals we work with to obtain pricing and bids for projects from miniscule in size to quite large in scale. We help our buyers plan for future repairs and understand general maintenance involved with homeownership, and this empowers our buyers to know when a home is right for them. Of course, most basically, we assist the buyer with repair negotiations and requesting repairs from the seller during this time period. 

Every buyer wants to move into a solid and mechanically safe home.  This means that the roof, foundation, plumbing system, electrical system, HVAC, and hot water heater are in good working condition.  This may not mean they are sparkling like new, but they are performing as intended.  If something were awry with one of these systems, that is a repair the buyer might request of the seller during the option period negotiations.  All repairs agreed upon between buyer and seller are noted in writing, signed by all parties, and the repairs must be completed by closing date or a date otherwise agreed upon in writing.  This agreement in writing takes place on a form called the ‘Amendment to the Contract' in Texas real estate.

To a seller, the option period is not the most anticipated event during the home purchase process.  Sellers often feel invaded during the inspection process.  Who wouldn't when a person you do not know is combing through the systems of your home looking for imperfections?  Sound horrible?  Well, it doesn't have to be horrible for a seller.

If you've ever put off a ‘hone-do list' of pesky home repairs, getting to those can be essential if you are getting ready to put your home on the market for sale.  Be it the list of chores you'd do for your spouse, or if the in-laws were coming to visit, that distant and overly avoided list of to do's needs to be done.  If all of these descriptions sound unfamiliar, this is also the list The Nelson Project will give you when you are getting ready to list your home on the market for sale.  Do not negate the importance of this list.  Changing out air filters, stopping minor leaky faucets, replacing the dryer vent, tightening the loose toilet bolts, mulching the garden...attending to these details can save you so much headache, and possibly heartache, in the end!  Our proactive sellers have better experiences time after time during contract negotiations and during option period negotiations.

Outcomes of the option period are typically an agreed upon list of repairs or an allowance for repairs.  When a home is found to be in tip top shape, sometimes the option period is only there for the buyer to make certain of that fact.   On the most exquisitely maintained homes, one item or another will be noted by the inspector, so don't let that be a surprise either.  For more specifics on option period negotiations, see our blog article: Top 10 Repair Negotiation Tips for Buyers & Sellers.


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Christina Strommen Stevens
Realty Associates, Team Stevens - Galveston, TX

An option period also serves as a time period that allows you to walk away for any reason under the sun, in addition to the inspections. You can walk away just because you decide its not what you had in mind. Its an insurance policy for the buyer. It does seem unfair to the seller at times but what choice do they have. Its part of the structure in Texas real estate law/ contracts. In our area the typical fee is not $200 to $500.  It is closer to $100 and up of course depending on the price of the home.

Mar 12, 2009 09:07 AM #1
Richard Weeks
Dallas, TX
REALTOR®, Broker


Well said.  In addition this is a great time for the buyer to check with their insurance agent to make sure they can get reasonable priced home owners insurance.

Mar 12, 2009 11:01 PM #2
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Julie Nelson

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