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What Is A Real Estate Option Agreement?

Jun 1, 2008
If you are a sports fan, you have likely heard of option agreements as part of a professional athletes' contract with his or her current team. The world of real estate has option agreements, as well. They are very common agreements that allow for someone to essentially place a reservation on a piece of property. They have the option of buying it if they want or allowing someone else to swoop in and buy it if they like. Let's take a look at an average real estate option agreement and see if they are the right thing for you.

While a real estate option agreement may sound complicated, it is actually a very simple legal agreement. What an agreement like this means is that a buyer is paying the seller for the exclusive right to buy a piece of property from the seller for a predetermined price for a predetermined amount of time. It is essentially like a reservation for a hotel room or a fine meal, except it is for a piece of property. The seller, on the other hand, has no legal responsibility to sell the property to the person taking out the option agreement, nor do they have to stop shopping around or even going through with a sale with another party. The option agreement simply allows a prospective buyer the chance to buy the property at a fixed rate for a fixed period of time.

Real estate option agreements are very common, especially when real estate is being bought and sold in a volatile or extremely competitive market. As anyone who has ever looked to buy real estate can tell you, depending on the particular climate in that area, prices can soar and dive in a matter of weeks. While there is a cost involved with getting a real estate option agreement, many people would agree that paying the money to get one is worth it to lock in a price on a hot piece of property. Getting a real estate option agreement allows a prospective buyer a chance to sit back and really analyze if they want to go through with a purchase at a set price instead of wondering what the price is going to do over the next days, weeks or months.

The average real estate option agreement is fairly straight forward and simple to fill out. Even with all of the usual legal jargon associated with binding legal agreements, the average real estate option contract is only a few pages long. The contract will outline where the property is that is being optioned, the price of the option, the price paid to the seller for the option and then the general information about the seller and the person buying the option. Most contracts such as these can be downloaded off of the Internet for free or for a low price depending on what state you are located in. A real estate option agreement is a pretty straight ahead legal agreement.
About the Author
Mark Warner is a Legal Research Analyst for RealDealDocs.com. RealDealDocs gives you insider access to millions of legal documents drafted by the top law firms in the US. Search over 10 million Documents, Clauses, and Legal Agreements for Free at http://www.RealDealDocs.com
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