Understanding Option Periods in Real Estate Contracts: A Guide for Buyers

buyer will have time period after contract ___ by both parties to ___ contract ___ ___= Option Period. buyer must pay seller ___ ___ for this right. funds must be delivered to seller, or listing agent, within ___ ___ after ___ date of contract. buyer has unrestricted right to terminate contract within time period agreed to. number of ___ ___

accepted – terminate – without recourse – option fee – three days – effective – days negotiable

The buyer will have a time period after contract execution by both parties to option contract terms, which is called an Option Period. This period is usually negotiated and agreed upon in the initial contract and can vary in length.

During the option period, the buyer has the unrestricted right to terminate the contract for any reason. This can be helpful in allowing the buyer to conduct due diligence on the property, such as inspections or obtaining financing.

In exchange for this right, the buyer must pay the seller a fee, which is typically referred to as an Option Fee. This fee is negotiable and can vary in amount, but it is typically between 1-3% of the purchase price.

The funds for the option fee must be delivered to the seller, or the seller’s agent, within a specified time period following the execution date of the contract. This time frame is also negotiable, but it is typically within 3-5 business days.

Lastly, the initial contract should specify the exact number of days that the option period will last. This is typically between 7-14 days, but it can be longer or shorter depending on the needs of the buyer and the negotiation between the parties.

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