Are you seeing “option period” in Austin contracts and wondering what it really means for your money and timeline? You are not alone. This short window can protect you, but only if you understand the deadlines, fees, and what to do the moment your offer is accepted. In this guide, you will learn how the Texas option period works in Travis County, what it typically costs, what to tackle during the window, and smart tactics to keep your deal on track. Let’s dive in.
Texas option period basics
The option period is a negotiated, short time you buy in a Texas residential resale contract that lets you terminate for any reason. You pay a separate, nonrefundable option fee to the seller for this right. If you terminate properly within the option period, your earnest money is typically returned per the contract.
The option period exists because the standard Texas contract forms include an option clause. The contract sets the length, the fee, how you pay it, and how to deliver a termination notice. It is not required by law, and sellers do not have to agree to it. The purpose is practical: you use this window to complete inspections, review documents, confirm financing logistics, and assess risks before you are locked in.
Two key distinctions matter:
- Option fee vs. earnest money: The option fee compensates the seller for taking the home off the market. It is usually nonrefundable if you walk during the option. Earnest money sits in escrow, applies to your purchase at closing, and is returned per the contract if you terminate properly during the option period.
- During vs. after the option: During the option period, you can terminate for any reason. After it expires, termination is limited to specific contract defaults or contingencies spelled out in the agreement.
Timeline and mechanics
The option period starts on the Effective Date. That is the date the last required signature is delivered and the contract becomes binding. The clock runs in calendar days unless your contract says otherwise.
Watch your deadline. Your termination notice must be in writing and delivered under the contract’s notice rules before the option expires. Some forms specify the exact time on the final day. Confirm whether the cut-off is midnight or tied to business hours. Do not rely on oral conversations.
Important mechanics to track:
- Pay the option fee per contract instructions and get written proof of payment.
- If you decide to terminate, send written notice as the contract directs, and keep delivery confirmation.
- If you need more time, you can request an extension, but it requires a written amendment signed by both parties and often an additional option fee. Sellers are not obligated to extend.
Local Austin note: In hotter segments of the Austin market, sellers sometimes counter with shorter option periods or ask buyers to reduce or waive the option. Neighborhood customs can vary, so align your approach with current conditions.
Option fees in Austin
There is no set amount for the option fee. It is negotiable and tied to market conditions and the length of the option.
What you might see:
- In many Texas markets, modest fees in the $100 to $300 range have been common historically.
- In competitive areas of Austin, buyers sometimes offer higher fees to stand out or to secure a longer option window. That can be several hundred to a few thousand dollars in multiple-offer situations.
Who keeps what:
- If you terminate during the option period, the seller keeps the option fee.
- If you close, the option fee is typically credited to you at closing, as outlined in the contract.
How it interacts with earnest money:
- Earnest money shows good faith and is applied to the price at closing. If you terminate properly during the option period, earnest money is usually returned per the contract.
- After the option expires, your earnest money may be at risk if you default, so understand your remaining contingencies.
Practical tip: Negotiate the fee and the length together. A larger fee can help you secure enough time for inspections in a competitive neighborhood without overpaying elsewhere in the offer.
What to do in your first week
Your goal is to complete inspections, review documents, gather bids, and decide whether to proceed, negotiate, extend, or terminate before the deadline. Here is a typical plan for a 5 to 7 day option period. Adjust to match your contract.
Day 0: Effective Date
- Confirm the option fee payment and obtain a receipt.
- Confirm the exact option period end date and time. Put it on your calendar.
- Order a general home inspection right away. Book specialty inspections as needed: termite or WDI, roof, HVAC, sewer scope, pool, mold, and radon if desired.
- Request HOA documents if applicable, and begin reviewing the rules, fees, and any pending assessments.
- Ask for the title commitment and existing survey if available, or order what is needed.
- If flood risk is a concern, check floodplain information using City of Austin and Travis County resources.
Days 1 to 3
- Complete the general inspection first. Use results to decide if you need specialists such as structural, electrical, or roofing.
- Review seller disclosures and title exceptions so you understand any recorded restrictions and potential issues.
- If your contract includes financing protection, confirm lender requirements and appraisal timing to see whether you will need more time.
Days 3 to 5
- Gather contractor estimates for any repairs you plan to request.
- Prepare a repair amendment or a request for a closing credit based on realistic bids.
- If you plan to terminate, draft your written notice and deliver it before expiration. If you need more time, request a short extension with an additional option fee to make the ask reasonable.
Critical reminders
- Deliver all notices and amendments in writing and according to the contract’s notice section.
- Schedule inspections immediately, especially for older homes or unique features that require specialists.
- If you extend, put the new end date and time in writing and obtain signatures from both parties.
Negotiation tips and pitfalls
Smart tradeoffs
- Length vs. fee or price: A longer option often requires a higher option fee or a slightly higher price to offset the seller’s extra time off market.
- Repairs vs. credits: Sellers may prefer a credit at closing instead of doing repairs. Compare the credit to real contractor bids.
- Shorter option in hot markets: If competition is fierce, a shorter option can strengthen your offer, but you must be ready to move fast with inspectors.
Buyer tactics that help
- Make the option fee proportional to the time requested. If you ask for a longer period, increase the fee to reduce seller pushback.
- If you need an extension, propose a short, targeted extension with an additional option fee to keep momentum and fairness.
- Keep financing timelines aligned with your option window so you are not forced into a corner while waiting on lender items.
Common pitfalls to avoid
- Missing the deadline: Send termination or amendments a day early when possible and confirm receipt.
- Paying the option fee incorrectly: Follow the contract instructions and get written confirmation of delivery or deposit.
- Assuming the option covers everything later: Once it expires, your ability to terminate narrows to contract remedies and specific contingencies.
- Relying on verbal promises: Put every change, extension, or concession in writing and get signatures from both sides.
Austin-specific checks
Austin and Travis County have resources that can influence your decision during the option period. Build these into your timeline.
- Flood and drainage: Use City of Austin and Travis County floodplain tools to review potential flood risk and drainage concerns. Consider a survey review if elevation or past water issues are a concern.
- Permits and code: For homes with recent work, check City of Austin permitting records to verify whether permits were pulled and closed. This is especially helpful for additions, garage conversions, and major systems work.
- HOA documents: Some condo associations and planned communities take time to deliver full document packages. Start early so you can review rules, fees, and any pending assessments before your option ends.
Should you shorten or waive it
In multiple-offer situations, some buyers offer very short option periods, or even waive the option entirely, to compete. Understand the tradeoff. A short or waived option reduces your flexibility after inspections and increases your risk if unexpected issues arise.
If you consider a short option:
- Pre-schedule inspectors for the day after your Effective Date.
- Limit your requests to only the most essential items supported by bids.
- Keep your extension strategy ready with a reasonable additional fee in case you need a few more days.
If you consider waiving the option:
- Recognize that you lose the right to terminate for any reason. You will be limited to specific contract protections.
- Only proceed if you have completed pre-inspections or have unusually high confidence in the property and your risk tolerance.
Make a confident decision
Your option period is your chance to verify the property, sharpen your budget, and set up the rest of your transaction for success. Focus on fast scheduling, written notices, and realistic negotiations supported by bids. In Austin, local customs can shift by neighborhood, so calibrate your fee and timing to the current competition and the complexity of the home.
If you want clear guidance on timelines, fees, and how to position your offer, reach out. As a hands-on, bilingual Austin agent, I help you set the right strategy and move quickly during your option window. Connect with Maria Aguirre to plan your approach. ¿Tienes preguntas? Hablamos español.
FAQs
What is the Texas option period in a resale contract?
- It is a negotiated window you buy with a separate option fee that lets you terminate for any reason within that time and typically receive your earnest money back per the contract.
How much is a typical option fee in Austin, Texas?
- Fees are negotiable; modest fees around $100 to $300 are common in many markets, but competitive Austin areas may see several hundred to a few thousand dollars depending on the offer strength and option length.
When does the option period start and end in Texas contracts?
- It begins on the Effective Date, which is when the last signature makes the contract binding, and runs in calendar days. Check your contract for the exact end time and deliver any notice in writing before it expires.
Can I get my earnest money back if I terminate during the option period?
- If you terminate properly and on time under the option clause, your earnest money is typically returned per the contract, while the seller keeps the option fee.
How do I extend an option period in Austin, Travis County?
- You need a written amendment signed by both parties, often with an additional option fee. Sellers are not required to agree, so propose a short, fair extension with a proportional fee.
