What is an Option Period in a Texas Real Estate Contract?

Jan 27, 2009

Texas real estate contracts contain a paragraph called the “Termination Option.”  This paragraph provides the buyer the opportunity to place a property under contract while still giving the buyer the opportunity to terminate the contract.  The buyer pays a relatively small amount (this amount is negotiable) to the seller for the right to have a period of time (also negotiable) during which the seller may exit the contract and still receive a refund of the earnest money.

Let’s look at an example of how this might work.  Assume a buyer has found a house that interests her.  She can include a provision where she would pay an amount (perhaps $100) to the seller.  The seller would then agree to a period of time (perhaps 7 days) during which the seller can exit the contract for any reason.  Usually, this period would be utilized to have an inspection of the house.  Then the seller and buyer might negotiate the repair of certain items that the inspection revealed as needing attention.  If the buyer is not satisfied with the resolution of these repairs, the buyer could “opt out” of the contract and receive her earnest money back in full.  The seller would keep the “option money” ($100 in this case) as payment for the option period.

What many buyers may not realize is that this option period allows them to opt out for any reason.  Therefore, if a buyer thinks they want to secure a property under contract but still has doubts about the purchase, she can use this paragraph in the contract to accomplish her purpose.

If you have been considering the acquisition of Fredericksburg Texas real estate, you should consider an Accredited Buyer’s Representative (ABR) for the expertise he or she can provide.  As an ABR, I can guide you through the intricacies of the real estate purchase process and advise you on how you can best utilize the “Termination Option” and other contract paragraphs to negotiate effectively and in your best interest.

Contact me today at (830) 456-6243 or (JavaScript must be enabled to view this email address)

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