If you are buying or selling in Far North Dallas or Collin County, the option period can make or break your deal. It gives buyers breathing room to inspect the home, and it gives sellers clarity on a buyer’s commitment. Yet many people mix up option fees, earnest money, and what happens if deadlines slip. This guide breaks it all down so you can move with confidence from offer to closing. Let’s dive in.
What the option period is
An option period is a negotiated window in your Texas purchase contract when the buyer can terminate for any reason and get their earnest money back. This right is standard in Texas and is created in the TREC one-to-four family residential contract. During this time, buyers typically complete inspections and review disclosures and HOA documents. If the buyer terminates in writing before the deadline, the contract ends and the earnest money is returned.
If the option period expires without termination, the buyer usually loses the unilateral right to walk away without consequences. From that point forward, other contract contingencies and remedies apply. This is why strict attention to timing and delivery of notices matters.
Option fee vs. earnest money
The option fee is a small payment from the buyer to the seller for the right to terminate during the option period. It is usually non-refundable if the buyer cancels under the option. The amount is negotiable and reflects market conditions and the price tier.
Earnest money is different. It is a separate deposit held by the title company and is applied to the purchase at closing or returned to the buyer if they terminate within the option period per the contract rules. Treat these as two different buckets with different rules and destinations.
Typical timelines and fees
In Far North Dallas and Collin County, option periods commonly run 3 to 10 days. A 7-day option is a local norm in many cases. In hot multiple-offer situations, you might see 3 to 5 days or buyers waiving the option to strengthen their offer. In a more balanced market, longer options are easier to secure.
Option fees often range from about 100 to 500 dollars, with higher fees at higher price points or when sellers push for stronger commitment. Where the fee is held depends on the contract instructions. It might be delivered to the seller directly or paid through the title company for disbursement. If a buyer terminates during the option, the seller typically keeps the option fee.
How to use your 7-day option
Use your option period like a project plan. Move fast on inspections, document everything in writing, and keep a close eye on deadlines.
Day-by-day plan
- Day 0: Contract effective. Pay earnest money and option fee per contract. Order inspections immediately.
- Days 1–2: Complete the general home inspection. Book specialists for foundation, roof, HVAC, plumbing, or sewer scope as needed.
- Days 2–4: Receive initial reports. Review seller disclosures, survey, and HOA documents and resale packets if applicable.
- Days 4–5: Get estimates from contractors for any material issues. Prioritize safety, structure, roof, water intrusion, and major systems.
- Day 5–6: Decide strategy. Draft a repair request, a credit at closing, a price adjustment, or prepare to terminate.
- Day 6–7: Deliver any termination in writing before the deadline if needed. If proceeding, submit the repair request and be ready to negotiate.
Scheduling inspections fast
Inspection calendars fill quickly in DFW. Line up inspectors as soon as your offer is accepted. If you are making an offer in a competitive situation, consider contacting inspectors in advance so you are ready to go on Day 0. This protects your timeline if you secure a shorter option.
Inspections to prioritize locally
North Texas soils and weather create specific home risks. Focus your time and budget where it counts.
- Foundation and soil movement: Expansive clay soils can cause shifting. If the general inspection flags movement or cracks, engage a reputable local foundation specialist for evaluation and estimates.
- Drainage and grading: Look for standing water, negative grading, and inadequate gutters or downspouts. Water management is critical to protect the foundation and interiors.
- Termite and wood-destroying insects: Order a WDI inspection and ask for any treatment history. Subterranean termite activity is a known local concern.
- Roof and HVAC: Hail events and heat cycles stress roofs and systems. Confirm age, service records, and expected remaining life.
- Plumbing and sewer: For older homes or where history suggests issues, a sewer scope can prevent surprises. Rural or fringe parcels with private systems may need septic inspection.
- HOA documents: Many Far North Dallas neighborhoods have HOAs. Review CC&Rs, resale certificates, rules, assessments, and any pending litigation promptly.
Negotiating repairs and credits
If inspections reveal issues, you will typically request repairs or concessions in writing. Common outcomes include seller-completed repairs, a closing cost credit, or a price adjustment. Sellers can accept, reject, or counter.
If you cannot reach agreement and your option is still open, you may terminate with timely written notice and recover your earnest money. The option fee is typically retained by the seller. Once the option expires, the buyer’s unilateral right to terminate for inspection reasons is usually gone.
Buyer strategies in competitive offers
Make your offer strong without sacrificing smart due diligence.
- Target a 5 to 7 day option period when possible. Shorten only if you have inspectors lined up and can manage the risk.
- Budget for the option fee and inspections. Consider the fee non-refundable if you cancel under the option.
- If considering a waiver, look at other protections, such as pre-inspections where permitted, larger earnest money, or focusing your inspection on the most critical systems.
- Pre-book inspectors and ask about next-day availability before you submit your offer.
Seller strategies that protect you
Use the option period to keep the deal on track while limiting uncertainty.
- In multiple offers, ask for shorter option periods or a higher option fee to reflect the home being off the market.
- Respond to repair requests quickly. Delays encourage termination and can derail momentum.
- If you expect repair requests, gather service records, roof receipts, foundation warranties, and utility averages to reduce friction.
Deadlines and contract must-knows
Texas contracts rely on strict calendar deadlines. Missing the option termination deadline can eliminate a buyer’s unilateral termination right. Always put termination in writing and deliver it according to the contract, with proof of receipt.
Know that the option is separate from other contingencies. Financing, appraisal, and title have their own timelines and procedures. Sellers must provide a Seller’s Disclosure Notice, but buyers still verify details through inspections during the option period.
Common mistakes to avoid
- Waiting to schedule inspections until mid-week. You lose negotiating time.
- Confusing option fees with earnest money. They serve different purposes.
- Relying on verbal notices. Termination must be written and delivered per the contract.
- Reviewing HOA documents too late. Resale packets and special assessments can change your decision.
- Letting the option period lapse while still negotiating. Have a firm go/no-go plan by Day 6 on a 7-day option.
Work with a fiduciary advisor
A clear plan for your option period reduces stress and keeps your leverage intact. Whether you are buying a luxury home in Willow Bend or selling in Plano or Prosper, you want disciplined timing, inspection strategy, and repair negotiations that protect your goals.
When you are ready for a private, data-forward approach to your next move, Request Your Private Client Market Analysis with Unknown Company. We will help you set the right option strategy for today’s market and guide you from offer through closing with confidence.
FAQs
Can a Texas buyer terminate during the option period?
- Yes. You can terminate for any reason during the option period by delivering timely written notice as the contract requires, and your earnest money is normally returned.
Do sellers keep the option fee if a buyer cancels?
- Typically yes. The option fee is non-refundable to the buyer if they terminate under the option, and the seller keeps it.
Is the option fee applied to the price at closing?
- Not by default. It is separate consideration. Some parties agree in writing to credit it at closing, but that is not automatic.
What if major defects show up after the option ends?
- Your unilateral right to terminate for inspection reasons usually ends with the option. You can still try to negotiate, but you risk losing earnest money if you walk without a contractual right.
Can a Texas seller refuse repair requests?
- Yes. Sellers can accept, refuse, or counter any repair request. If you plan to terminate, you must do so within the option period.
How long is a typical option in Far North Dallas?
- A 7-day option is common, with 3 to 5 days in hot markets and longer periods sometimes possible in a more balanced market.
