Buying a home in Dallas and keep hearing about the “option period”? If you are new to Texas contracts, it can feel like a mystery. You want to protect your earnest money, move fast on inspections, and still stay competitive. In this guide, you will learn exactly how the Texas option period works, what it costs, and how to use it wisely in Dallas.
Let’s dive in.
What the option period is
The option period is a short, negotiated window in your Texas purchase contract that gives you an unconditional right to terminate for any reason. You buy this right by paying an option fee to the seller. Most Dallas resale transactions use the standard TREC One to Four Family Residential Contract (Resale) form.
During the option period you can inspect, evaluate, and decide if the home is right for you. If you choose to terminate before the deadline and deliver written notice correctly, you typically get your earnest money back. The option fee is usually not refundable if you terminate.
Option fee vs. earnest money
These two payments do different things:
- Option fee: Paid to the seller for your right to terminate during the option period. It is typically non-refundable if you back out within that window. If the sale closes, it is often credited at closing, depending on your contract.
- Earnest money: A separate deposit held in escrow that shows good faith. If you terminate properly during the option period, your earnest money is generally refundable to you under the contract.
When the option period starts and ends
- Start: The option period starts on the contract’s effective date, which is the date the last party signs or as specified in the contract.
- Length: You and the seller decide the number of days in the contract. The most common range is 3 to 10 days.
- Deadline: You must deliver written notice of termination to the seller or the seller’s agent before the option period expires. The contract controls how to count days and how to deliver notices. Confirm the exact time-of-day deadline and delivery method written in your contract.
Typical lengths and fees in Dallas
- Length: In balanced markets, 5 to 10 days is common. In very competitive areas, buyers sometimes shorten to 3 days or even waive the option period to win an offer. Shorter time means more risk.
- Fee: Option fees often range from about $100 to $500 in Texas. Many Dallas buyers offer $100 to $300 for typical resale homes. In multiple-offer situations, raising the option fee can make your offer more attractive.
- Who gets the fee: The seller usually receives the option fee, separate from earnest money that goes to escrow.
How to use your option days
Use these days to fully understand the home and set your strategy:
- Schedule inspections quickly: Book your general home inspection within 24 to 48 hours. That gives you time for any follow-up specialists.
- Order specialty inspections as needed: Foundation engineer, sewer scope, WDI (termite), pool, roof, or HVAC inspections if the general inspector flags issues.
- Decide your path: Before the deadline, you can terminate, request repairs or credits, or move forward with no changes.
- Lender and insurance considerations: If a lender later requires safety-related repairs, it can be harder to negotiate after the option period ends. Your strongest leverage is during the option period.
Dallas inspection priorities
Dallas homes face a few common risks. Focus on these during your option period:
- Expansive clay soils and foundations: Many Dallas areas sit on clay soils that can cause movement and cracking. If you see cracks or uneven floors, consider a foundation engineer’s opinion.
- Termites and WDI: Subterranean termites are common in Texas. A WDI inspection is a smart step.
- Roof wear from heat and storms: Hail and heat can age roofs faster. If the roof looks worn, add a roof evaluation.
- HVAC and ductwork: Dallas summers work systems hard. Review age, condition, and service records.
- Sewer and drainage: In older neighborhoods, a sewer scope can catch costly problems.
What inspections may cost in the Dallas area can vary, but these ballpark ranges are helpful:
- General home inspection: about $300 to $600, depending on size and age.
- WDI inspection: often $50 to $150.
- Foundation or structural engineer: several hundred dollars to more than $1,000, depending on scope.
- Sewer scope: roughly $100 to $300.
Strategy in competitive markets
If you are shopping in a hot Dallas neighborhood or price band, sellers may prefer offers with shorter option periods or higher option fees. Here is how to weigh your choices:
- First-time or relocating buyers: A 5 to 7 day option period often gives you enough time for a general inspection and any follow-ups.
- Multiple-offer situations: You can shorten the period or raise the fee to strengthen your offer. That increases risk if major issues surface.
- Waiving the option period: You can still inspect after you waive, but you give up the unrestricted right to terminate. If you find big problems, you must negotiate without the automatic option protection.
A simple option-period checklist
- Day 0 to 1: Hire a licensed general home inspector and book the earliest slot.
- Day 1 to 3: Based on findings or disclosures, schedule specialists like a foundation engineer, sewer scope, pool, roof, chimney, or HVAC.
- Day 3 to 5: Review reports with your agent. Decide whether to terminate, request repairs or credits, or proceed as-is.
- Before the deadline: If you plan to terminate, deliver written notice per the contract’s delivery method and timing. If you plan to negotiate, submit a written repair request or amendment and keep all communication documented.
Common pitfalls to avoid
- Missing the deadline: If you do not deliver written termination before the option period expires, you lose the unilateral right to cancel under the option clause.
- Not following the contract’s delivery method: Email, text, or portal messages may not count unless your contract allows it. Follow the notice instructions exactly.
- Relying on verbal agreements: Put all repair terms in a written amendment signed by both parties.
- Assuming the option fee is refundable: It typically is not if you terminate during the option period.
- Skipping specialty inspections: In older or high-risk areas, a foundation or sewer scope can save you from costly surprises.
Real Dallas scenarios
Example A: Cautious first-time buyer
- Option period: 7 days. Option fee: $200.
- Timeline: Day 1 general inspection notes an older roof and small foundation cracks. Day 3 foundation engineer evaluates and recommends localized piers. Day 6 buyer requests a seller credit. Day 7 parties agree and move forward.
Example B: Competitive-offer waiver
- Option period: 0 days. Option fee: $0.
- Timeline: Buyer inspects after going under contract. Significant foundation issues appear. Without an option right to terminate, the buyer must negotiate for repairs or credits. If the seller declines, the buyer risks losing earnest money by trying to terminate without another contract basis.
Key takeaways
- The option period is your built-in time to inspect and decide with minimal risk.
- Shorter periods and higher fees can help win offers, but raise your exposure if problems surface.
- In Dallas, prioritize foundation, roof, termite, HVAC, and sewer due diligence.
- Act early, follow the contract exactly, and keep everything in writing.
Ready to craft an option strategy that matches your Dallas target neighborhood and price range? Connect with a local, proven team. With more than two decades in market and 500-plus successful closings, we can guide your inspection plan, timeline, and negotiations with confidence. Reach out to Tony Nuncio for a quick consult.
FAQs
How long should a Dallas buyer request for the option period?
- For most first-time buyers, 5 to 7 days balances the need to schedule inspections with market competitiveness. In hotter segments, some buyers use 3 days or less to strengthen offers.
What is a typical option fee for Dallas resale homes?
- Many buyers offer $100 to $300, though fees can range to about $500 in Texas. In multiple-offer situations, a higher fee can signal seriousness to a seller.
Is the option fee refundable if I cancel during the option period?
- Typically no. The option fee is usually non-refundable to the seller if you terminate during the option period, while earnest money is generally refundable if you terminate properly and on time.
When does the Texas option period start and end on my contract?
- It starts on the effective date in the contract and runs for the number of days you negotiate. You must deliver written notice of termination before the deadline using the contract’s allowed delivery method.
Can I waive the option period and still get inspections in Dallas?
- Yes, but you give up the unrestricted right to terminate. Inspections become informational unless the seller agrees in writing to repairs or credits.
What inspections should Dallas buyers prioritize during the option period?
- A general home inspection first, then specialists as needed: foundation engineer, WDI (termite), roof, HVAC, and sewer scope, especially for older homes or if disclosures indicate concerns.
What happens if I miss the option deadline to terminate?
- You lose the unilateral right to terminate under the option clause and remain bound by the contract, with fewer remedies and a higher risk of losing earnest money if you later try to cancel without a contract basis.
