The Texas Option Period, Explained for DFW Buyers

If you've bought a home in Texas, you've heard the phrase "we're still in the option period." For first-time buyers and people moving here from out of state, it can be one of the more confusing parts of the contract. Here's a plain-English look at how it works under the current Texas Real Estate Commission (TREC) One to Four Family Residential Contract (Resale).

One note before we start: we're real estate agents, not attorneys. This is a general overview, not legal advice. For questions about your specific contract, talk to a Texas real estate attorney.

What the option period is

In exchange for an option fee, the seller gives the buyer the unrestricted right to terminate the contract within a set number of days after the contract's effective date. Unrestricted means you don't need a specific reason. The number of days and the size of the fee are both negotiated as part of your offer.

How the money moves

Within 3 days after the effective date, the buyer delivers the earnest money and the option fee to the escrow agent named in the contract, which is usually the title company. The two can be paid separately or in a single payment. If a deadline falls on a Saturday, Sunday, or legal holiday, the current contract extends it to the end of the next business day.

What happens next

• You close on the home: the option fee is credited toward the sales price at closing.
• You terminate during the option period: the seller keeps the option fee, and your earnest money is refunded.

The two details that trip buyers up

The 5 p.m. deadline. Notice of termination has to be given by 5:00 p.m., local time where the property is located, on the last day of the option period. Not midnight. Not "end of day."

Paying the fee on time. If no option fee amount is written into the contract, or if the buyer doesn't deliver it on time, the buyer doesn't get the unrestricted right to terminate. The contract says time is of the essence for these deadlines, so strict compliance matters.

How buyers use the option period

Most buyers schedule inspections right away and use the rest of the window to review results, get repair estimates, and negotiate with the seller. A shorter option period can make an offer more competitive, but it also gives you less time to do your homework. That's a tradeoff worth talking through before you write an offer.

Buying in DFW this winter?

Whether you're looking at resale homes in Mansfield and Arlington or new construction out in Godley, Granbury, or Weatherford, the On The Move DFW Team will walk you through every deadline in your contract. New construction usually uses a different contract form, so the timeline can look different. Reach out, and we'll help you plan.