What is an option contract in real estate?

An option contract in real estate is a legal agreement that grants a potential buyer the exclusive right to purchase a specific property within a predetermined timeframe, under specified conditions. This type of contract typically requires the buyer to pay a fee, often referred to as an option fee, which secures this right.

The essence of an option contract lies in its ability to provide the buyer with a degree of control over the property without obligating them to complete the purchase until they decide to exercise that right. This can be particularly advantageous for buyers who may need time to secure financing, conduct due diligence, or assess the property before committing to the purchase. The seller, in turn, must hold the property off the market during the option period, which can be a strategic move in negotiations.

While the other options present various aspects of real estate agreements, they do not define an option contract. Leasing a property, outlining disclosure requirements, or detailing agreements between agents captures different facets of real estate transactions but does not encapsulate the unique characteristics of an option contract.