Understanding The Option Period In Texas

Heard Houston buyers talk about the option period and wonder what it actually does for you? If you are purchasing in West University or the Inner Loop, this short window can make or break your deal. You want enough time to inspect and negotiate without weakening your offer. In this guide, you will learn exactly how the Texas option period works, typical timelines and fees in Houston, and smart strategies to use it well in competitive neighborhoods. Let’s dive in.

What the Texas option period is

The option period is a negotiated window in Texas contracts that gives you an unrestricted right to terminate for any reason. It exists when you pay an agreed option fee and follow the contract steps for delivering notice before the deadline. The period starts on the contract’s effective date, which is when every party has signed and the contract is executed.

This right is part of the standard TREC One to Four Family Residential Contract and related addenda. During the option period, you can complete inspections, review title and survey, check HOA or deed restrictions, and negotiate repairs or credits, all without defaulting on the contract. From the seller’s perspective, the option fee compensates them for taking the home off the market for that time.

Option fee vs. earnest money

Understand how these two deposits work together:

• Option fee

  • A separate, usually smaller amount you pay for the right to terminate during the option period.
  • Non-refundable if you terminate, and often credited to you at closing if the deal closes. Confirm your contract and escrow instructions for the exact treatment.

• Earnest money

  • A larger deposit held by the title company and applied to your purchase price at closing.
  • If you terminate properly within the option period, your earnest money is typically returned per the escrow instructions. If you miss the deadline, your unconditional termination right ends and your earnest money can be at risk under other contract terms.

How long and how much in Houston

Option periods and fees are market driven and fully negotiable.

• Length

  • Common in Texas: 3 to 10 days.
  • Often used: 5 to 7 days.
  • In West University and Inner Loop: sellers may prefer 2 to 3 days or even a waived option period in multiple-offer situations.

• Fee amount

  • Typical range: $100 to $500 for standard resale homes.
  • Competitive offers: $1,000+, or some buyers waive the option period to strengthen an offer.

If you want more time in a hot micro-market, you may offer a higher option fee to balance the request. Always confirm whether the option fee will be credited back to you at closing.

Use your days wisely: a 7-day plan

If you secure a 7-day option period, move fast from day one.

• Day 0 (effective date): The option period starts. Pay the option fee per the contract and confirm earnest money timing.
• Day 1: Schedule a general home inspection plus pest and HVAC. If the home shows signs of movement, line up a structural or foundation specialist.
• Days 2–3: Receive inspection reports. Order any follow-up evaluations and repair quotes.
• Days 3–5: Review findings with your agent. Decide whether to request repairs, ask for a credit, or terminate.
• Days 5–7: If you will exit, deliver the written termination before the deadline. If you will proceed, send repair requests per the contract timeline.

Document everything and request written confirmations. Time-stamped delivery matters.

Houston inspection priorities

Focus on the issues most common in West University and the Inner Loop.

• Foundation and structural review for slab-on-grade homes.
• HVAC age, capacity, and performance in Houston heat.
• Roof condition and any signs of water intrusion.
• Pest inspection, including termites.
• Flood risk and drainage, plus any elevation certificates or flood history.
• Survey, title, and deed restrictions, since many Inner Loop areas have active covenants.

Terminate correctly and on time

Your right to terminate is only effective if you deliver written notice before the option period expires. Agents often reference 5:00 p.m. Central on the last day in standard practice, but you should confirm the exact expiration time written in your contract. Use your agent to send notice in writing, follow the contract delivery methods, and secure time-stamped proof and written acknowledgment.

If you terminate in time, the seller keeps the option fee and your earnest money is typically returned per escrow instructions. If the deadline passes, the unrestricted right ends and your choices narrow to what the rest of the contract allows.

Strategies for West U and the Inner Loop

In competitive pockets, you need a clear plan tailored to your situation.

First-time local buyer

Aim for a 7-day option period if the seller will allow it, then mobilize inspectors on day one. A modest option fee, such as a few hundred dollars, is common unless market pressure is intense.

Out-of-state or relocating buyer

If you cannot be in Houston during the option window, consider negotiating a longer period. If that is not possible, schedule inspections immediately and rely on video walk-throughs and detailed reports to make timely decisions.

Cash or strong-financing buyer

To stand out, you might shorten the option period to 2 or 3 days, or offer a higher option fee. If you choose a standard period, be prepared to move quickly with inspections and repair negotiations.

Investor or flipper

Short option periods can match your quick underwriting style. Some investors pair a larger option fee with a shorter window for a stronger offer profile.

Risks and trade-offs to weigh

Every adjustment has a cost. Keep these in view:

• Waiving the option period increases risk because you lose the broad inspection exit.
• Very short periods may not allow for specialized evaluations, like structural engineering.
• A large option fee can strengthen your offer, but it becomes a sunk cost if you terminate.

Repairs, credits, and timing

Use the option period to gather quotes and decide whether you want repairs completed before closing or a credit at closing. Some items, such as structural or foundation work, may require permits and longer timelines. In areas with deed restrictions or historic rules, factor in review times for planned changes. Clarify in writing how repair requests will be delivered and how the seller will respond per the contract.

Move forward with confidence

The option period is your safety net and your strategy window. In Houston’s West University and Inner Loop, speed, clarity, and coordination are essential. With concierge guidance, you can align inspections, confirm contract deadlines, and make smart, timely decisions.

If you want a founder-led, detail-first approach to your purchase, our team can help you plan and execute every step. Schedule a consultation with Lynn Tohme to navigate Houston’s option period with confidence.

FAQs

What is the option period in Texas real estate?

• It is a negotiated window that gives you an unrestricted right to terminate the contract for any reason if you pay the option fee and deliver proper written notice before the deadline.

How long does the option period usually last in Houston?

• Common ranges are 3 to 10 days, with 5 to 7 days often used. In West U and the Inner Loop, sellers may prefer shorter periods of 2 to 3 days in competitive situations.

How much is the option fee for Houston homes?

• Many resale deals use $100 to $500. In multiple-offer scenarios, buyers may offer $1,000 or more, or in some cases waive the option period to strengthen their offer.

What happens to earnest money if I terminate during the option period?

• If you terminate properly and on time, your earnest money is typically returned per escrow instructions. The seller keeps the option fee.

Is the option fee credited back to me at closing?

• Many contracts provide that the option fee is credited to you if the deal closes, but this depends on the wording in your contract and escrow instructions.

Can I still inspect the home after the option period expires?

• You can often continue inspections, but you lose the unconditional right to terminate based on findings. Any changes would rely on other contract terms or new negotiations.

How do I deliver a valid termination notice in Texas?

• Provide written notice to the seller or the seller’s agent as the contract requires, before the deadline. Use your agent to send, track time-stamped delivery, and obtain written acknowledgment.

What inspections are most important in West U and Inner Loop?

• Prioritize foundation and structural review, HVAC, roof, pest, drainage and flood history, and a careful survey, title, and deed-restriction review for local covenants.