What is an Option Period? And Why Do You Need An Option Period?

What is an Option Period?  And Why Do You Need An Option Period?

Unless you have bought a home in recent years, you are probably wondering what “Option Period” means. Sometimes referred to as the “Due Diligence Period” the option period is an amount of time when the buyer can initiate further negotiations to the initial contract agreement. Let’s take a look at this aspect of home buying in Houston Texas.

When an option period is negotiated the buyer pays a “Option Fee” typically in the range of $100-$500 depending on the size and strategy involved in the negotiation. Obviously a shorter option or no period at all would be desired by the seller side of a transaction. We always recommend a option period for the buyer to complete any home inspections or other due diligence desired. There is no set period of time or fee amount in Houston Texas. Typically your Realtor will recommend a 10 day period for a $100 fee.  This this will give the buyer a unrestricted right to terminate the contract if the buyer gives notice of terminations within the time period negotiated without any penalty. The only loss to the buyer if they terminate during the option period will be the option fee they have paid and any costs involved in their inspections of the property.

Let’s look at an example.

The buyer enters into a contract to buy a home in Houston, Texas. They pay $100 for a 10 day option period. Next the buyer hires a licensed Home Inspector to complete a full home inspection. Typically these inspections range a few hundred dollars and are well worth it. The inspector provides a complete analysis of the property with any deficiencies and recommendations to the buyer. If something is discovered that is unacceptable to the buyer, the buyer can now work with their Realtor to either negotiate repairs to be made, re-negotiate the sales price or terminate the contract and receive their earnest money deposit back. Typically the earnest money is around 1% of the sales price. So on a $200,000 home that could be up to $2000 on the line. Now you can see how important an option period can save you if something comes up unexpected.

Protect yourself and make sure you ask for an option period. Hire an inspector and give yourself the time to thoroughly examine the property. It could save you from buying a home with thousands of dollars on unknown repairs and give you the opportunity to walk away if you decide it is not the right property for you.

Your one-stop source for real estate services covering the Houston Metro Area. With a focus on exceptional service, you’ll find everything you’ll need from complete MLS listings, valuable home value calculation tools, neighborhood information , and school informationDo you need to sell your home, click here to request a comparative market analysis!

In today’s competitive real estate market, timing is everything.  Many good homes are sold before they are ever advertised. Beat other home buyers to the hottest new homes for sale in Houston with my New Listings Notification Service.

If you own real estate that you’re thinking of selling, I would be happy to provide you with a FREE Home Evaluation.

Whether you are buying or selling a home hire someone like me, who will earn your business. I invite you to contact me as I’d be happy to assist you with this important transaction.  In addition, if you have any general questions about buying or selling real estate in Houston, please contact me as I am more than willing to help.

I service all areas of the Houston Metro Area. I work with you for commercial or residential real estate.  Do you need to sell your home?  If you are looking for land, homes, townhomes, condo’s, loft’s or an apartment complex, or an experienced real estate agentthis is the place.

While you are here, feel free to have a look a couple of my current listings below.

So until then, should you, your family, or your colleagues need a realtor please don’t hesitate to contact me via  Facebook or by phone at 281.798.4599.

@TheTexasBroker (a.k.a Allen Keith Hebert)

#ForSale
#NewHome
#HouseHunting
#MillionDollarListing
#HomeSale
#HomesForSale
#Property
#Properties
#Investment
#Home
#Housing
#Listing
#Mortgage
#HomeInspection
#CreditReport
#CreditScore
#Foreclosure
#NAR
#EmptyNest
#Renovated
#JustListed

Area hashtags

#Kingwood
#Spring
#TheWoodlands
#Humble

Branding hashtags

#AllenKeithHebert
#TheTexasBroker
#RegisterRealEstateAvisors
#RREA
#HoustonRealEstateRadio
#TexasBusinessRadio
#AlHebert
#TexasProudRealty
#ExitRealtyNorthEastHouston

Leave a Reply

%d bloggers like this: