If you’re in the market for real estate in Texas, you may have come across the term “active option contract” when browsing listings or speaking with a real estate agent. But what does it mean exactly?
In Texas, an active option contract is a type of real estate contract in which the buyer pays a fee to the seller in exchange for the exclusive right to purchase the property within a certain timeframe, usually 30 days. During this time, the buyer has the option to back out of the contract without penalty or obligation to purchase the property.
This type of contract is popular in Texas because it allows buyers to lock in a purchase price and take time to inspect the property and secure financing before committing to the purchase. It also gives sellers some level of security that the property will not be sold to another buyer during the option period.
The option fee, which is typically 1-3% of the purchase price, is paid upfront by the buyer and is non-refundable. However, if the buyer ultimately decides not to purchase the property during the option period, they can walk away without any further financial obligation.
If the buyer decides to move forward with the purchase, the option fee is typically applied towards the purchase price. However, if the buyer and seller cannot come to an agreement on the final purchase price or terms during the option period, the buyer can choose to terminate the contract and forfeit the option fee.
It’s important to note that an active option contract is not the same as a contingency. A contingency gives the buyer the right to back out of the contract if certain conditions are not met, such as a failed inspection or inability to secure financing. With an active option contract, the buyer can back out for any reason or no reason at all.
When considering an active option contract, it’s important to work with a real estate agent who is familiar with Texas real estate laws and can help guide you through the process. It’s also important to carefully review the terms of the contract and understand your rights and obligations as a buyer.
In summary, an active option contract is a type of real estate contract in Texas that allows the buyer to pay a fee for the exclusive right to purchase a property within a certain timeframe. It provides some level of security for both the buyer and seller and allows the buyer to back out of the contract for any reason during the option period. As with any real estate transaction, it’s important to carefully review the terms of the contract and work with a qualified professional.