One element of the standard residential purchase contract that is unique to Texas is the option period & option fee. All states have a period during which buyers can inspect a property, and most states call those “inspection periods”. In Texas, we negotiate an Option Period & a non-refundable Option Fee that operates as this inspection period.
What is an Option Fee?
The Option Fee is a nominal fee the buyer pays in order to have the “option” to terminate the contract during this period. A standard option fee is usually 0.05% to 0.1% of the purchase price, but it varies a bit due to quick “rounding” by most agents.
Do I cash the check now?
Yes! The fee is non-refundable. It is credited to the buyers at closing, so make sure to cash it.
Can the seller terminate the contract during the option period?
No. The buyer has the unilateral right to terminate.
Does the seller have to make any repairs found on the inspection?
No. The seller isn’t obligated to make any repairs. Buyers will usually request that the seller make some repairs or give the buyer a cash credit at closing in lieu of repairs, but the seller isn’t obligated to do anything. The buyer’s leverage is that they can terminate if they think the seller is being unreasonable or if they decide it’s no longer a good deal.