Did you know there’s an “undo” button for buyers in a real estate contract? Paragraph 23 in the Texas Real Estate Commission residential sales contracts, the “termination option,” lets buyers pay a fee for the right to terminate their contract during a defined period of time. The termination option isn’t a required element of a contract to purchase a home but most buyers make it part of their offer. The amount of the fee and the number of days of the option are negotiable. What’s it for? During the option period, a buyer may terminate the contract for any reason and get his earnest money back. Most buyers use the option period to have a home inspection and otherwise evaluate the condition of the property. If the buyer doesn’t terminate the contract during the option period, the transaction moves ahead and the option fee is either is credited as negotiated in the original contract. Sellers don’t have the ability to terminate the contract during the option period, but the termination option does provide benefits to the seller as sellers receive a fee in exchange for the buyer receiving his right to terminate. The option period gives buyers time to perform due diligence and enter into the contract happy with their purchase. Buyers should … As a buyer, make sure the option fee is an amount you are comfortable paying should you decide to terminate the contract. And don’t schedule inspections on the last day of the option period. You want to allow enough time to conduct inspections of the house and address any concerns you have about the property. Keep in mind you may need follow-up inspections. Also, if an inspection reveals conditions that lead to additional negotiations between a buyer and seller, a buyer will want those talks to happen during the option period, so he still has the right to terminate. Sellers should …While most sellers want to keep the option period as short as possible, negotiating hard for an extremely brief option period may work against you. If a buyer feels pressured and cannot get the information she needs in time, she may feel her best course of action is termination of the contract.
For more information about buying and selling in Texas, visit TexasRealEstate.com. For your real estate needs, please contact Waymond Lightfoot (RE/MAX Genesis) at 210-386-5201.