Real Estate Secrets: Understanding the ‘Option Period’ and What This Term Means for You as a Buyer
When the sale of real estate takes place, a certain amount of time might be allotted after a contract is created but before the transaction is finalized. During this time the buyer may decide not to follow through with the deal set forth in the contract. This ‘option period’, also known as the due diligence period, allows buyers to have a property inspected and its value ascertained without the risk of losing the property to another buyer.
What Happens When The Option Period Takes Place
During the option period, property inspections are typically carried out on the property in question so that the buyer can be sure that the proposed offer is appropriate. Also, the buyer can negotiate home repairs with the seller.
Differences Between Various States
It is not always possible for a buyer to have an option period during which he or she can finalize plans to make a purchase on a property. Regulations and procedures between different states vary significantly.
It is worth noting that the state of Georgia has a real estate market that is particularly well known for granting option periods. In Georgia, the option period usually lasts between seven and 14 days and serves as a period of time during which inspections are carried out; however, other states have different ways of dealing with option periods and scheduling inspections.
The particular laws applicable where a sale takes place will often dictate how much a buyer needs to pay to the seller in option fee charges. In the state of Texas, for example, the option fee is usually no greater than 1 percent of the sale price of the home. The option fee is normally applied to the transaction at escrow closing in the event that the buyer decides to proceed with the sale. In Georgia, there typically is no option fee.
Buyers who decide not to purchase a property after the option period has already begun will usually be responsible for paying the option fee (if any) to compensate the buyer for lost time. However, the buyer will be under no further contractual obligations.
If you have questions on the processes and regulations involved in a real estate transaction, please contact me to learn more.
For more information about the Atlanta area real estate market, please email me at firstname.lastname@example.org or call me at 404.918.2500.