Buying in Dallas moves fast. The option period is your built‑in pause button to make sure the home you love is the right one. If you are new to Texas contracts, this step can feel confusing at first. By the end of this guide, you will know exactly what the option period is, how it works in Dallas, what it costs, and how to use it to protect your purchase and negotiate confidently. Let’s dive in.
What is the Texas option period?
In Texas, the standard TREC residential sales contract includes a short, negotiated window called the option period. You pay a separate option fee for the right to terminate the contract for any reason during that timeframe by delivering written notice to the seller. This right is unilateral, which means you do not have to prove a defect or give a reason. The seller’s compensation for granting that right is the option fee.
Most buyers use the option period to complete inspections, review documents, and decide whether to move forward as‑is, request repairs or credits, or terminate.
Option fee vs. earnest money
These two payments serve different purposes:
- Option fee: a separate payment to secure your unrestricted right to terminate during the option period. It is usually non‑refundable if you terminate, unless your contract says otherwise.
- Earnest money: a separate deposit, typically held by the title company or escrow agent, that is applied to the purchase price at closing. If you validly terminate within the option period, your earnest money is ordinarily returned according to the contract.
Keeping these payments straight helps you avoid surprises later.
How termination works
If you decide to terminate, you must send written notice before the option period expires, using the delivery methods allowed in your contract. Once timely notice is delivered, the contract ends and your earnest money is typically returned per the contract. If you miss the deadline, you lose the unilateral right to walk away under the option provision and remain bound by the contract’s other terms.
Timing and deadlines in Texas
The option period starts on the effective date of the contract and runs for the number of days you negotiate, such as 5 or 7 days. Texas contract deadlines are strict. Many deals rely on a 5:00 p.m. local time cutoff for the final day unless the contract says otherwise. Confirm the exact timing and approved delivery methods with your agent so your notice is valid.
Dallas norms: timeframes and fees
In Dallas County, most single‑family purchases use a 5 to 7 day option period when the market is balanced. In competitive, seller‑leaning conditions, sellers may push for shorter periods. Some buyers offer a shorter period plus a higher fee to win multiple‑offer situations.
Option fees commonly range from about $100 up to several hundred dollars, often $100 to $500. In hot markets, buyers sometimes raise the fee or even waive the option period to strengthen their offer. The option fee is typically paid directly to the seller or the seller’s agent per the contract, not held in escrow, and it is usually non‑refundable.
Norms vary by neighborhood, price point, and property type. Luxury homes, new construction, or properties with unique features may come with different expectations for period length and fee size.
How to use your option period
Use this time to gather facts and make a clear decision.
Focus your inspections
Schedule a general home inspection right away. Based on findings, add specialists as needed. Common specialty inspections include:
- Roof
- HVAC
- Foundation or structural
- Plumbing and sewer or septic
- Electrical
- Wood‑destroying insect or termite
- Pool and spa
Prioritize the big‑ticket unknowns first so you have time to respond.
Review documents early
Ask for and review title commitments, restrictive covenants, and HOA documents if applicable. Some document delivery has separate deadlines, but starting during the option period helps you keep your decision options open.
Coordinate with financing
Your option window is separate from lender milestones such as appraisal and loan approval. Coordinate inspection timing with financing deadlines so you understand all your exit rights and keep your timelines aligned.
Check neighborhood and utilities
Visit the property at different times of day, confirm commute routes, and check available utilities and service providers. This simple fieldwork can validate your assumptions before you commit.
A practical 7‑day timeline
- Day 0: Contract goes effective and the option period begins.
- Day 1: Order the general home inspection and any obvious specialist inspections. Request HOA and title documents if not already provided.
- Days 2–4: Complete inspections. Review reports as they arrive.
- Days 4–6: Draft and deliver a repair request or credit request based on the findings. Negotiate with the seller.
- Before the deadline on the final day: Either send written termination or confirm you will move forward.
Negotiating during the option period
The option period is also your negotiation window for property condition issues.
- Ask for repairs or credits: You can request seller repairs or a closing credit. The seller can accept, counter, or refuse. If you cannot reach an agreement and the issues are unacceptable, you can terminate within the option period.
- Shorter period plus higher fee: In competitive Dallas situations, offering a shorter option period combined with a larger option fee can protect your inspection rights while keeping your offer attractive.
- Waiving the option period: Some buyers waive the option period to compete. This increases risk because you lose the unconditional right to terminate for inspection reasons. Other contract protections may still exist, but they serve different purposes and timelines.
Risks and pitfalls to avoid
A few preventable missteps can have big consequences:
- Missing the deadline: If you do not deliver written termination before the option period ends, you give up your unilateral termination right and your earnest money could be at risk if you later try to cancel without another valid contractual reason.
- Under‑inspecting: Waiving or shortening the option window can leave you exposed to costly surprises discovered after the period ends.
- Mixing up payments: Track your option fee and earnest money separately and know which is refundable and when.
- Improper notice: Use the contract’s approved forms and delivery methods. Keep records of delivery and receipt.
How Texas differs from other states
Texas uses a paid option period that gives you an unconditional, short‑term termination right. In many other states, buyers rely on inspection contingencies that allow termination if inspections reveal unsatisfactory issues, without paying a separate option fee. Because practices vary, relocating buyers should understand that in Texas the timeline is often shorter and the option fee is commonly paid directly to the seller.
Checklist for Dallas buyers
Use this quick reference to plan your offer and next steps.
Before making an offer
- Decide on a target option period length and fee based on market conditions and your risk tolerance.
- Line up an inspector and specialists who can schedule quickly.
- Coordinate with your lender on appraisal and loan approval timelines so you can align deadlines.
Right after acceptance
- Pay the option fee per the contract and document receipt.
- Book the general home inspection for the earliest available slot.
- Order specialist inspections if the property has features that require them or the general report flags issues.
- Request HOA, title, and seller disclosures right away if you have not received them.
During the option period
- Review all inspection reports and highlight major items such as structure, roof, drainage, HVAC, and WDI.
- Decide whether to request repairs or credits. Deliver your request or, if needed, a written termination before the deadline.
If terminating
- Use the contract’s termination form or a clear written notice. Deliver it using the methods allowed and keep proof of delivery.
- Confirm release of earnest money per the contract.
If moving forward
- Monitor appraisal and loan approval dates. Keep communicating with your lender and title company to stay on track for closing.
Your next step
Handled well, the option period gives you the information and leverage you need to buy with confidence in Dallas. Get your inspections moving fast, keep close tabs on deadlines, and negotiate with clarity. If you want a strategic plan tailored to your price point and neighborhood, connect with an experienced local advocate. Let’s talk about your goals and craft an offer that wins while protecting your interests.
Ready to move? Reach out to Chris Holmes-Hill to get a step‑by‑step plan for your Dallas purchase.
FAQs
What is the option period in Texas?
- It is a short, negotiated window in the TREC contract during which you can terminate for any reason by paying an option fee and sending written notice within the deadline.
Who keeps the option fee if I terminate?
- Typically the seller keeps the option fee because it is consideration for granting the option right, unless your contract states otherwise.
Is the option fee credited to me at closing?
- Only if your written contract says the option fee will be credited at closing. Some agreements credit it, many do not.
What happens to earnest money if I terminate on time?
- If you validly terminate within the option period, the contract ends and your earnest money is ordinarily returned in line with the contract.
How long is a typical Dallas option period?
- In a balanced market, 5 to 7 days is common for single‑family homes. In competitive markets, sellers may push for shorter periods.
How much is a typical option fee in Dallas?
- Option fees commonly range from about $100 to $500. Buyers may offer more in multiple‑offer situations to make their offer stand out.
Can the seller refuse repairs I request?
- Yes. The seller can accept, reject, or counter. If you cannot reach agreement and the issues are unacceptable, you can terminate within your option period.
How do I properly terminate during the option period?
- Deliver written notice before the deadline using the contract’s allowed delivery methods. Use the contract form if available and keep proof of delivery.
