Option Period

· 2 min read
An option period is a set number of days after your contract is signed where you can back out of the deal for any reason…

An option period is a set number of days after your contract is signed where you can back out of the deal for any reason — no questions asked — in exchange for a non-refundable fee.

This is a Texas thing, primarily. In Texas, buyers pay the seller a small “option fee” — typically $100–$500 on a $350K home — to secure an unrestricted right to terminate the contract during the option period. The period usually lasts 7–10 days.

During that window, you can cancel for any reason and keep your earnest money. The only thing you lose is the option fee.

What Happens During the Option Period?

Most buyers use the option period to:

  • Get a home inspection
  • Get repair estimates for any issues found
  • Negotiate repairs or price reductions with the seller
  • Walk away if the home has dealbreaker problems

It’s essentially your “free look” at the property. In states without option periods, buyers rely on inspection contingencies instead — which are similar but work differently in practice.

Option Fee vs. Earnest Money

The option fee is non-refundable — it’s the price of your right to cancel. Your earnest money deposit (typically $3,500–$7,000 on a $350K home) is separate and IS refundable if you cancel during the option period.

If the deal closes, the option fee is usually credited toward the purchase price. So it’s not money lost — just money committed early.

Watch out for: Missing your option period deadline. If the option period ends at 5:00 PM on day 10 and you deliver your termination notice at 5:01 PM, you’re past the deadline. Your right to cancel without cause is gone. Track this date obsessively. Your buyer’s agent should send you reminders, but don’t rely solely on them.

Can the option period be extended?

Yes, but both parties must agree in writing. The seller may ask for an additional option fee for the extension. In practice, sellers agree to extensions if the buyer is negotiating repairs in good faith. If you’re just stalling, expect pushback. Use the closing cost calculator to plan your full timeline and check our glossary for related terms like due diligence period.