Buying a home in Dallas and hearing about the “option period”? This short window can protect your earnest money and your peace of mind if you use it well. You want clarity on what it is, how much it costs, and how to handle inspections without losing leverage. In this guide, you’ll learn how the option period works in Texas contracts, what’s typical in Dallas, and a step-by-step plan to use it with confidence. Let’s dive in.
What the option period is
The option period is a negotiated number of days in a Texas purchase contract that gives you the unrestricted right to terminate for any reason. You pay an option fee for that right, and the clock starts on the contract’s Effective Date. Your right to terminate is created by the contract language, not by statute, so the exact deadlines and delivery rules matter.
During the option period, you can schedule inspections, review disclosures, and line up contractor opinions. If you choose to terminate in time and follow the contract’s notice rules, you exit the deal. The seller typically keeps the option fee, and your earnest money is generally refunded according to the contract.
Deadlines, fees, and money
Option fee vs. earnest money
- Option fee: Paid to secure your termination right. It is typically nonrefundable if you terminate, and usually credited to you at closing if you proceed.
- Earnest money: A separate deposit that shows good faith. It is usually credited at closing. If you terminate properly during the option period, your earnest money is generally returned under the contract’s terms.
When the clock starts
The option period runs from the Effective Date in the signed contract. The definition of the Effective Date and the cutoff times are in the contract. Mark those dates the day your offer becomes fully executed.
How to terminate
You must send a written Notice of Termination to the seller or the seller’s agent within the option period. Use the delivery methods allowed in your contract, and keep proof of delivery. If you miss the deadline, you may lose the unrestricted right to terminate.
Dallas norms and typical ranges
Local conditions affect how the option period is negotiated.
- Length: Commonly 1 to 3 days in hot, competitive situations. Five to ten days is more common when buyers want thorough inspections or when the market is slower. Some buyers may waive the option entirely, which increases risk.
- Option fee: Often $100 to $500 in ordinary situations. In competitive offers, some buyers propose $1,000 or more.
- Earnest money: Frequently 1 to 2 percent of the purchase price. Sellers may request higher amounts in tight inventory conditions.
These ranges are typical, not fixed. Your final terms depend on property type, location, and current Dallas market dynamics.
Plan your inspections
The option period is your inspection window. Use it to confirm condition, uncover material defects, and estimate repair or replacement costs.
Schedule fast
Book your general home inspection as soon as the contract is effective. This gives you time to add specialty inspections, collect bids, and make decisions before the deadline. Allow 48 to 72 hours for specialty reports to come back.
Which inspections to consider
- General home inspection covering structure, electrical, plumbing, HVAC, roof, and interiors.
- Pest or termite inspection if age or disclosures suggest concerns.
- Roof evaluation to estimate remaining life and potential leaks.
- HVAC diagnostic and service records review for older systems.
- Sewer scope, especially for older Dallas neighborhoods where lateral lines may be aging.
- Foundation evaluation, which can be important for older homes and any property with visible cracking or settlement.
- Environmental tests as appropriate: mold, radon, lead-based paint for pre-1978 homes, and asbestos in older finishes.
- HOA document review and specialist checks for pools or additions.
Interpreting results
Prioritize safety and major systems first. Separate “must fix” items from cosmetic preferences. If inspections reveal significant issues, you can request repairs, seek a price reduction or credit, or terminate within the option period. Put any agreed changes into a written amendment.
Negotiation tips during the option period
- Focus requests on health, safety, and costly items. Cosmetic asks can weaken your leverage.
- Provide contractor bids to support credits or price changes.
- If the market is competitive, consider offering a shorter option period and a stronger option fee to preserve a quick inspection window while keeping some protection.
- If the seller will handle repairs, clarify scope, who will perform the work, timelines, and any warranties in writing.
Simple timeline
- Offer accepted, contract effective
- Day 0: Option period begins. Pay option fee and deliver earnest money per contract.
- Days 0 to X: Complete inspections, gather reports and bids, negotiate repairs or credits.
- Option deadline: Deliver written Notice of Termination or continue toward closing.
- After option period: Unrestricted termination right ends. Any changes require agreement or other contractual remedies.
Buyer checklist for the option period
- Pay the option fee and deliver earnest money by the contract deadlines.
- Schedule and attend your general home inspection immediately.
- Order specialty inspections as needed: foundation, sewer scope, roof, HVAC, pool, pest.
- Collect contractor estimates for significant items.
- Review the seller’s disclosure, permits when relevant, tax records, and HOA documents.
- Decide whether to request repairs or credits, accept the property as is, or terminate.
- Send notices or amendments in writing and keep proof of delivery.
Costs to expect in Dallas
Plan for a basic home inspection in the Dallas area to run about $300 to $600 depending on size and age. Specialty inspections like foundation reports, sewer scope, roof evaluations, and HVAC diagnostics can add several hundred dollars each. If you anticipate multiple specialty inspections, budget for several hundred to over a thousand dollars during the option period.
Risks and common pitfalls
- Late delivery: Missing the option deadline can cost you the unrestricted right to terminate and may put your earnest money at risk.
- Vague communications: Label termination notices clearly so there is no confusion between a repair request and a termination.
- Funds handling: Confirm who holds earnest money and how refunds are processed after a timely termination.
- Inspection limits: Inspections offer professional opinions at a point in time. They are not guarantees, which is why your option period is so important.
Guidance for relocating buyers
If you are relocating, time is tight and local vendors may be unfamiliar. Lean on a local team to schedule inspections quickly, prioritize specialty checks for the property type, and keep your timeline on track. Dallas homes vary widely by age and construction, so a targeted plan helps you use a shorter option window without unnecessary stress.
Your next step
You do not have to navigate deadlines, inspections, and negotiations alone. For a clear plan tailored to your property and the current Dallas market, connect with our team. For personalized next steps and current local norms, see Next-step guidance with Torelli Properties Group.
FAQs
What is the Texas option period in real estate?
- It is a negotiated window after your contract is effective that gives you the unrestricted right to terminate for any reason in exchange for paying an option fee.
How are option fee and earnest money different?
- The option fee buys your termination right and is typically nonrefundable if you terminate, while earnest money shows good faith and is generally refunded if you terminate properly within the option period.
When does the option period start in Dallas?
- It begins on the contract’s Effective Date as defined in the Texas contract forms, so confirm the date and time cutoffs in your executed agreement.
Can I extend my option period if I need more time?
- Only if the seller agrees and both parties sign a written amendment, which may include an additional fee.
What if I miss the option deadline?
- You may lose the unrestricted termination right and could risk your earnest money if you try to cancel without other contractual grounds.
