The Texas Option Period, Explained

If you are buying in Texas, the option period is one of the most useful tools in the whole contract. It is also one of the most misunderstood.

What it is

When you make an offer using the Texas Real Estate Commission contract, you can pay the seller an option fee in exchange for the unrestricted right to terminate the contract during a set number of days. That window is the option period.

During the option period you can walk away for any reason, or no reason at all, and get your earnest money back. You do not get the option fee back, but it is usually credited to you at closing if you do buy the home.

How long is it?

It is negotiated. Many contracts in Austin use somewhere between five and ten days. Shorter periods can make your offer more attractive to a seller, but you need enough time to schedule inspections and get answers.

What to do during the option period

• Schedule your general home inspection right away
• Add specialty inspections if needed, like foundation, sewer line, roof, pool, or HVAC
• Review the seller's disclosure, survey, and any HOA documents
• Get insurance quotes so there are no surprises
• Drive the neighborhood at different times of day

Negotiating after inspections

If the inspection finds something important, you can ask the seller to make repairs, lower the price, or give you a credit toward closing costs. Any agreement is put in writing with an amendment before the option period ends.

The deadline is real

The option period ends at 5:00 p.m. local time on the last day. If you want to terminate, the notice has to be delivered on time. If you are negotiating repairs, the agreement has to be signed on time too, or the option period may expire before you have a deal. This is one of the places where a good agent keeps a close eye on the calendar.

How much is the option fee?

It varies with the price of the home and how competitive the situation is. Your agent will suggest an amount based on the home and the market.

Used well, the option period gives you peace of mind. You get to learn everything you can about the house before you are fully committed. If you have questions about how it works on a home you are considering, reach out.