A couple of weeks ago, I was on Nextdoor and came across a woman who was very upset. She had been searching for a new home, and things weren’t working out well for her. A Houston house she went under contract to purchase ended up having foundation damage that the seller refused to fix. The woman was then upset that she did not get her option money back since she felt they may have known about the issue. I took a moment to briefly explain the option period to the woman in the thread, and went on my way. A bit later I came back to the thread and was quite surprised at the positive feedback I got for the response. Due to that, I decided to write a bit more about the option period is. So, how does an option period work in Houston TX?
The Option Period By Definition
Option Period Definition (via HAR.com)–
“The Option Period in Texas is a specified number of days set forth in a real estate contract which allows the buyer to terminate the contract for any reason. This option, when written into a real estate contract, creates the right to terminate the contract within a certain number of days for a specified price without risking the earnest money deposit.” In short: The option period is a window of time in which the buyer can back out of the contract for ANY reason.
Now this is easy to be taken at face value, but there is some depth to this, that I think I hit on in my post that many people don’t consider. Before I get into this let’s take a look at what all the option period entails.
How Does The Option Period Work?
- An option period is not required, but it is recommended.
- The option period provides protection for a buyer from losing their much larger earnest money deposit; usually 1 or 2% of the purchase price. In essence, the option fee works almost like an insurance policy.
- The option fee is negotiable and generally ranges from $100 – $250.
- The option window is also negotiable, and typically is either 10 or 14 days, but can be more or less depending on the situation.
- The option period can be extended if both the buyer and seller agree to it. If they do not come to an agreement, and the end of the option period is approaching, the buyer will have to terminate before 5 pm on the last day in order to avoid losing earnest money in the event of needing to cancel later.
- The option period starts on the first full day after the start of the executed contract. Basically, the option period starts the day after the contract is signed.
Emotions In The Option Period
In most cases I feel that people can empathize with the buyer. There is this feeling of buyer beware, that everyone selling their house is trying to trick you into buying a lemon; due to this, we usually forget where the seller is coming from (unless we are the seller).
As the buyer, when the contract is executed and you enter into the option period, YOU have all the power. While it may not feel that way, it is a fact. At this point, no matter what the seller says, you have a signed document that states they have agreed to sell you their house for a given price. Under pretty much all circumstances there is no way out. That is nerve racking when selling.
Fear When Selling Your House
Now let’s look at the option period from the perspective of the seller. You are signing away the freedom to choose a buyer for about two weeks. This means that if someone comes knocking on your door with a better offer the day after you signed the contact, you are out of luck. It also means that for around $100 someone can tie up your house for a couple of weeks and then decide not to buy it for no reason. I have been there, and trust me, that is an incredibly frustrating feeling. If you have ever sold your house, you probably know these feelings all too well. The uncertainty of the process, and that deflated feeling you get when find out that after two weeks under contract, you are going back on the market.
The whole process of trying to buy or sell a house can be filled with exhaustion, frustration and disappointment. It is easy to forget that there are people on the other side of things, that are experiencing their own set of distressed feelings. Lets try to be better and not forget the humanity in the process and try to think about what the other side may be going through.
As always, if you are considering selling your house and don’t want to go through this process, check out our company Brilliant Day Homes.
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