What Is the Option Period?
In a Texas residential contract, the option period is a negotiated number of days after the contract is signed when the buyer has the unrestricted right to terminate the contract for any reason. It is one of the most buyer friendly features of the standard TREC contract.
What Is the Option Fee?
To secure that right, the buyer pays the seller an option fee, which is negotiated and paid within a short time after the contract's effective date. If you move forward and close, the option fee is generally credited toward the purchase price. If you terminate during the option period, the seller keeps the option fee, but your earnest money is returned.
How Long Should It Be?
There is no single right answer. A longer option period gives you more time for inspections, but in a competitive situation sellers may prefer a shorter one. Your agent can help you choose based on the home and the market.
How to Use It Well
- Schedule your home inspection as soon as the contract is signed.
- Get quotes for any repairs the inspector finds, and consider specialists for foundation, roofing, or plumbing issues.
- Request repairs or a price reduction in writing before the option period ends.
- Review flood risk, insurance quotes, and HOA documents during this time.
Watch the Deadline
The option period ends on a specific date and time stated in the contract. If you want to terminate, you must deliver the notice before it ends. Ask your agent to put the deadline on your calendar.
