When you buy a pre-owned home in Texas, you'll generally find yourself writing two checks along with your purchase contract: One for "Option Money" (made payable to the Seller) and one for "Earnest Money" (made payable to the closing Title Company). Let's talk about the first of those here:

"Option Money" (or the "Option Fee") is what you, as a buyer, pay the Seller for the unrestricted right to terminate your contract for a set period of time (sometimes know as the "Option Period"). The Option Fee can range widely depending on the price of the home and terms of the contract, but generally $75-$100 for every $100,000 worth of home will buy you a normal Option Period. Generally, these last the first 7-10 days of a contract from the day it was executed, or agreed upon, by all parties. During this time, property inspections are usually performed and quotes are sometimes gathered by Buyers and/or Sellers for any repairs that the Buyer deems necessary. Generally speaking, the Buyer is paying the Seller to take the property off the market while they check it out more thoroughly and negotiate any repairs of previously unknown problems. Real Estate Agents may still show the home, and even write a back-up contract(s) with another Buyer, but the Seller cannot usually back out of the primary contract for sale; only a buyer, who paid his Option Fee, can do this. Reasons for a Buyer terminating a contract during the Option Period may range from a property needing too many repairs (or a Seller not agreeing to repair enough to satisfy the Buyer) to the Buyers finding a better deal or just changing his mind. I could write a whole page (in fact I probably will) on negotiating repairs. Just know that once both parties have agreed on any/all repairs, you can move on out of the Option Period and one step closer to the sale of the home. The Option Period can also be extended, with both Buyer and Seller consent, by paying an additional "Option Fee". Sometimes a few more days may be needed (especially if major repairs are found to be needed) for both parties to get quotes. The Option Fee belongs to the Seller once a contract is executed and will generally be credited back to the Buyer at closing (if all parties have agreed to this in the contract). So, in summary, most Buyers are not to upset if they have to lose their Option Fee. In these cases, the home generally had more problems than they expected, or the Seller was not willing to fix enough to please them. Option Money also allows sellers to rest assured that they are not wasting their time. Once they have a contract, the Buyer is on the hook for the Option Fee plus any Buyer inspection costs.

*Important note: The Option Fee must be receipted (by the Seller or their Agent) within two days of the contract being executed (agreed upon by all parties & dated) or the Buyer may waive his/her right to their Option Period. This means that as a Buyer, your Agent better really stay on top of things or it could adversely affect you/your contract.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com