We are new to the Dallas area and looking to purchase our first home. We have recently learned there is an Option Period and an Option Fee in Texas. What is an "Option Period"?
This is an excellent question and not an uncommon one. The terminology and process of purchasing a home differs in each state.
In Texas, the Option Period pertains to the buyer’s unrestricted right to terminate the contract.
A buyer is required to pay the seller for the Option Period, this is your Option Fee and the fee amount is negotiable. The Option Fee is paid directly to the seller upon execution of the contract.
The Option Period is a specified amount of time, in the Dallas/Fort Worth markets, 3-7 days is a common time frame. The number of days agreed upon by both parties, buyer and seller, is specified in the contract.
During the Option Period, the buyer has the right to conduct any inspections, reviews, or other due diligence they feel is needed on the property. Prior to the expiration of the Option Period, the buyer and seller will negotiate repair requests or other items deemed necessary after inspections. If an extension of the Option Period is needed, the buyer will negotiate this request with the seller and a written extension filed.
The buyer has the unrestricted right to terminate a contract during the Option Period. If the buyer elects to terminate, they will forfeit the Option Fee paid to the seller and be released from the contract. Should the buyer proceed with the purchase after the Option Period expires, they will receive a credit at closing for the Option Fee.
As you move forward with the home buying process it is advisable to select and partner with a local Realtor®. Finding an agent who will guide and advocate for their client throughout the entire purchase is essential to reaching the closing table.
Bailey Funke, Realtor®, Certified DRS Agent™ Providence Group Realty