In Texas real estate, the “Option Period” is a formal period of Due Diligence that your Buyer will get as the Buyer of your home. Its definition is “the unrestricted right to terminate a contract on a home for any reason within a prescribed period of time”. Here is a visual so you can see how it works:
Offer Made – Offer Accepted – Option Period Begins – Option Period Ends – Loan Approval Finalized – Home Purchased
You will receive a check from the Buyers for this Option Period. Please make sure not to hang on to it, but rather, deposit it into your bank account right away. The Option Period typically runs anywhere from 5 days to 14 days, with 10 being a standard amount of time. Within this period many crucial things happen.
Most important of all, the Buyer will hire an inspector to inspect the home. They usually can’t make it out immediately, so waiting on them will naturally eat into the Option Period. Once they inspect, they will send the Buyer a written inspection report. Some inspectors will send it same day, while others may take several days to return a report – especially if it’s around a holiday or a weekend. Once the Buyer has the report, which is usually pretty technical and lengthy, they will need to make sense of it and determine which items, if any, give them cause for concern. They may need to call in additional experts to find out more information about the issue – again taking more time out of the Option Period. Once they have determined which items they want you to address, they will make a formal request in writing. Sometimes they ask for the Seller to make the repairs before they buy, other times they ask the Seller to contribute money toward their closing costs in lieu of repairs. This negotiation between Buyer and Seller can take time – especially if disagreement exists. Once agreement is reached, a document called an Amendment is signed by both Buyer and Seller.
Concurrently with ordering the inspection, the Buyer will be shopping for insurance. Insurance quotes generally take only a day or two to get back from the insurance agent. They will typically get more than one quote, because insurance prices can vary widely.
Finally, they will decide once and for all that this is absolutely the house they want to buy. If the Buyer gets cold feet or has a change in plans or finds a better house, this is the right time for them to back out of the contract. You will keep the Option Fee they paid to you, and they will be refunded the Earnest Money they paid to the Title Company.