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They were certain the inspection wouldn’t reveal more than they already knew and they used the lack of option period as a negotiating strategy to drop the price of the property. Option periods allow homebuyers the chance to have property inspections and appraisals conducted, wrap up financing loose ends, and finalize their homebuying decision. A.No, an Option Period is not required if you are 100% sure that you want to purchase the property . However, you can buy an Option Period and if inspections are done quickly and you would like to move forward, then you may decide to opt-out of the Option Period early. A buyer could ultimately close on the property sooner if this route is chosen. However, if the buyer wants to eliminate risk, and have the property properly inspected, it is best to stick to the negotiated Option Period.
Real estate developers may gain by keeping a large number of real estate option contracts and only exercising a small number of them dependent on changes in the market throughout the holding term. In the Austin real estate market, a decent general rule of thumb is that the option money should be one percent of the sales price, or one percent of the option money. When purchasing a property, an option fee is a modest proportion of the entire purchase price that rarely exceeds $500. When you’re buying a new home in Texas, there’s no official option period. Generally, a buyer is considered locked into purchasing a new-construction home when construction begins and the earnest money becomes non-refundable. If you’ve paid a fee for a seven-day period, you can walk away on day six if there’s a structural problem, wood rot, plumbing problem, or any other issue with the house.
Helpful Information for Buyers,Sellers and Agents.
If you need assistance finding agents in other parts of the country, please contact us. We have completed signed house contract and it has been since April 1st. Generally the option period is 10 days but can be shorter or longer. The option period begins as soon as the offer is accepted and the contract is executed.
If you're an agent interested in turning contingent clients into cash buyers, schedule an appointment with a Homeward Advisor here. As a buyer, you need to make sure you make the most competitive offer you can, while still ensuring you’re making a great investment. Traditionally, homebuyers have had to choose between moving quickly and having peace of mind. Make a cash offer now, and Orchard will sell your old home after you move. All Orchard Home Advisors are experienced agents who know your local market inside and out. Say goodbye to the days of needing to sell your home before buying a new one.
Blog – Option Period: What It Is and How It Affects Buying and Selling Texas Homes
Our Home Advisors are experienced local agents who know how to sell for top dollar and help win your dream home. On top of a guaranteed sale, 95% of Orchard customers sell for more on the open market. In Massachusetts, the contingency date is 17 days after acceptance . Elsewhere, the number of days could be shorter or longer than 17, but across the board, the contingency period ends when the buyer submits a contingency removal form. A 2017 study found nearly 70% of respondents wanted to eventually disconnect from the grid.
A skilled real estate agent can also help you negotiate a contract that will apply your option fee to the sales price if you decide to move forward with the home purchase. Buying a property is a big commitment, and most homebuyers agree that paying an option fee is worth it to secure peace of mind on their real estate purchase. After all, the last thing you want is to buy a house and later discover it has wood rot or plumbing problems. That’s an awfully large amount of money for an option fee – could it have been earnest money that you’re talking about? (There are times when option fees are large, but we don’t see them all that often.) The earnest money could have been at play if a buyer failed to close or terminated the contract. The presence of the Realtor isn’t necessarily a requirement to initial and sign, but it sounds like there is some concern over what happened.
Why Is an Option Period Valuable?
The home-buying process can be overwhelming—even more so if you rush through it. The option period is a small but critical part of the home-buying process. With so many factors to consider and so much money at stake, the option period is a great way to protect yourself. It gives you the right to terminate the contract without losing your Earnest Money Deposit. During this period, which can be 7–14 days depending on the contract terms, you can schedule home inspections to ensure that the house is in good condition. The inspection will also yield estimates for any repairs, which you can use to renegotiate the home’s sales price.
According to HAR.com, the Texas Real Estate Option Period is normally between one and ten days in length. Our experienced transaction coordinators ensure compliance while saving you time, allowing you to acquire new contracts faster than ever before. Closure Concierge is available if you want additional assistance with your transaction process. Another option is to place it in certified mail , which is a more secure method of delivery. When deciding when the choice period finishes, holidays and weekends are not taken into consideration. If the due date falls on a Sunday, the deadline for delivery is that day.
You and the seller agree on the length of the option period as one of the terms in your contract. For example, some complex properties with lots of systems (septic, a well, a pool, etc.) require longer option periods. While this period can last anywhere from a few days to a few weeks, Redfin reports that a typical option period is between one and two weeks long. To set up an option period, the buyer needs to pay a small option fee to the seller, usually around $100.
The earnest money, like the option money, will be credited to the buyer at the time of closing and can be used to help with your down payment or closing expenses. The buyer is responsible for delivering the option money to the title corporation in Texas. The buyer can present the option fee check separately from the earnest money depositor, or the two checks can be delivered together as a single package . As soon as the funds are combined and allocated to one account, the option fee is deducted first, and the leftover monies are applied to the extra earnest money account.
During the Option Period, the buyer can terminate the contract for any reason without the risk of losing their earnest money. In Texas, a standard option period is about seven days, however, this is an area that can be negotiated as well. In a seller’s market, a shorter option period is much more attractive and three or five days is common to see. On the flip side, a ten day option period may be requested if the option period falls over a holiday or is affected by other factors like weather. Upon termination of the option period, the real estate contract goes into full effect and the homebuying process proceeds to closing.
You should think of them as a “good faith” payment to a seller, indicating that you intend to purchase a home if it passes an inspection first. The non-refundable deposit isn’t a deal breaker for most consumers because the quantities involved are minor in comparison to the overall purchase price. Alternatively, if you wish to seek a refund of an option fee, you can request that the seller apply the money to the closing costs. A seller who is motivated to sell may be willing to do so, but he or she is not obligated to do so. Almost often, a seller will transfer an option fee into his or her own bank account. An earnest money payment, on the other hand, is deposited into an escrow account, which is handled by a bank or a real estate agent on the closing day.
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