What is an Option Period?

What is an option period?

The option period is also sometimes called the inspection period.  It is important to know is that buyer has an unrestricted right to cancel the sales contract for any reason during this time period.   The buyer will pay an “option fee” to the seller for an agreed amount of time.   During this timeframe the seller cannot enter into another contract.   Frequently,  the buyer will hire a licensed real estate inspector to inspect the property during the option period.

Furthermore, the buyer might request the seller to amend the original contract to include any repair items that are discovered during this time period.    An experienced agent will guide you through the process of negotiating  any contract amendments.  The seller may or may not agree to the new terms of the contract. the option fee is credited back to the buyer at closing and the transaction moves forward when both parties are in agreement.  The buyer may cancel the contract and  his earnest money will be refunded if both parties do not come to an agreement.   However, the option fee will stay with the seller.

For this time period to be valid the buyer must pay an option fee.    The buyer has 3 days from the executed date of the contract to pay the seller for this fee.     Sellers prefer this timeframe to be a short as possible. Generally, buyers like this time period to be as long as possible.   Generally, the option period is between 5 to 10 days.