Real Estate 401 – The Option Period

In Texas, the Termination Option, or the option period as it is typically referred to, provides buyers with an unrestricted right to terminate a contract to purchase property, for a specified fee within a specified number of days after the contract is signed by all parties.  In layman’s terms, the buyer has the right to say, “No thanks, I decided I don’t want to buy your house after all.”  Since this is an unrestricted right, there need not be a reason for terminating or cancelling the contract.  The buyer does pay for this unrestricted right to terminate.  Some of the more typical amounts I see are in the $50 - $75 range, but I have seen both larger and smaller amounts.  The fee can be credited to the buyer or seller at closing, generally buyers are usually credited with the fee if the sale is completed but it is a negotiable item.  The length of the option period, in days, is also negotiable but typical option periods are in the 5-10 day length.

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