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Old 09-19-2015, 10:56 AM
 
Location: Austin
7,244 posts, read 21,755,019 times
Reputation: 10014

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Quote:
Originally Posted by SouthernBelleInUtah View Post
In Texas, they can pay a $100 option fee that allows them 10 days (I think) to cancel for any or no reason. Smart buyers get inspections done in that time and can cancel - I did. There were so many small and medium things wrong, but expensive to fix. It would have been like putting lipstick on a pig. I gave the seller the report.
This is a very simplistic view of the Option Period. The Option Period is the "Termination Option" which grants the buyer the "unrestricted right to terminate" within a negotiated PAID amount of time. The option period is not a given to a buyer. They must purchase the right to terminate in order to retain their earnest money.

In many of Texas' hot markets, it's no longer 10 days for $100. Most are $200-250 for 5 days. If you want 10 days to run inspections and think about terminating, you can pay upwards of $1000, no joke. I currently have one under contract for $500 for 10 days, and another for $200 for 8 days. I've had other contract for $1500 for 5 days. You can't take the house off the market for 10+ days anymore without paying for it as there are too many buyers waiting in line... in many of the markets. In the slower areas, you could possibly still get away with $100 for 10 days, but not very often.
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Old 09-19-2015, 11:35 AM
 
Location: Somewhere in America
15,479 posts, read 15,564,516 times
Reputation: 28462
I attempted to purchase a house a few years ago and the inspection was HORRIFIC! The house needed to be torn down. It would have been significantly cheaper to burn it down and build a new house....Seriously the repair list was significantly more than the price we were paying for the house.

In our paperwork from the inspector, we had to select whether or not we wanted to share the inspection. We did not. Why? I paid for it! You want to know what's wrong, then pay for your own inspection! Sellers ALWAYS have the option to have their own inspection done.

We told our realtor a handful of the issues with the house and that we wanted our deposit back. We did not have cold feet. We didn't want to buy a money pit that was unsafe and a health hazard. We were able to walk away from the house and received a full refund on our deposit. In our contract, we could terminate if repairs exceeded a specific dollar amount.

Funny thing about that house. We were one of a handful of people to look at it the year and a half it was on the market. We were the only offer. They countered for far more than we wanted to pay, but agreed because of the potential we saw. After the inspection, I would have reduced my offer to less than half. They took the house off the market shortly thereafter. It's back on the market now for $20K less than our contract amount and it doesn't look like anything has been fixed on the outside. The inside still has many of the same issues as well judging by the photos. I can only imagine what the house is like now 3 years later. YIKES!

The house I ended up buying had a few issues as well, but they were significantly less. We didn't need to spend $200K to fix the house. To bring it up to the 2010's from the 1940's, it would be about $20K, but it wasn't unsafe or a health hazard. It was just dated. Because of the issues that came up, the sellers paid us for the repairs at closing. They didn't want the deal to far apart.
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Old 09-19-2015, 11:39 AM
 
536 posts, read 849,195 times
Reputation: 768
Quote:
Originally Posted by FalconheadWest View Post
This is a very simplistic view of the Option Period. The Option Period is the "Termination Option" which grants the buyer the "unrestricted right to terminate" within a negotiated PAID amount of time. The option period is not a given to a buyer. They must purchase the right to terminate in order to retain their earnest money.

In many of Texas' hot markets, it's no longer 10 days for $100. Most are $200-250 for 5 days. If you want 10 days to run inspections and think about terminating, you can pay upwards of $1000, no joke. I currently have one under contract for $500 for 10 days, and another for $200 for 8 days. I've had other contract for $1500 for 5 days. You can't take the house off the market for 10+ days anymore without paying for it as there are too many buyers waiting in line... in many of the markets. In the slower areas, you could possibly still get away with $100 for 10 days, but not very often.
This is a great example of how much real estate laws & practices differ in Texas versus California.

The CA Residential Purchase Agreement gives Buyers 17 days to conduct inspections (unless otherwise agreed upon) & to remove contingencies.

The buyer has the right to cancel for any reason, up to that time.

The idea of a seller routinely charging the buyer for the right to conduct inspections is foreign in CA.
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Old 09-19-2015, 02:26 PM
 
914 posts, read 1,131,856 times
Reputation: 935
Quote:
Originally Posted by ss20ts View Post
I attempted to purchase a house a few years ago and the inspection was HORRIFIC! The house needed to be torn down. It would have been significantly cheaper to burn it down and build a new house....Seriously the repair list was significantly more than the price we were paying for the house.

In our paperwork from the inspector, we had to select whether or not we wanted to share the inspection. We did not. Why? I paid for it! You want to know what's wrong, then pay for your own inspection! Sellers ALWAYS have the option to have their own inspection done.

We told our realtor a handful of the issues with the house and that we wanted our deposit back. We did not have cold feet. We didn't want to buy a money pit that was unsafe and a health hazard. We were able to walk away from the house and received a full refund on our deposit. In our contract, we could terminate if repairs exceeded a specific dollar amount.

Funny thing about that house. We were one of a handful of people to look at it the year and a half it was on the market. We were the only offer. They countered for far more than we wanted to pay, but agreed because of the potential we saw. After the inspection, I would have reduced my offer to less than half. They took the house off the market shortly thereafter. It's back on the market now for $20K less than our contract amount and it doesn't look like anything has been fixed on the outside. The inside still has many of the same issues as well judging by the photos. I can only imagine what the house is like now 3 years later. YIKES!

The house I ended up buying had a few issues as well, but they were significantly less. We didn't need to spend $200K to fix the house. To bring it up to the 2010's from the 1940's, it would be about $20K, but it wasn't unsafe or a health hazard. It was just dated. Because of the issues that came up, the sellers paid us for the repairs at closing. They didn't want the deal to far apart.
Sounds exactly like the first house we had a contract on this year. It never ceases to amaze me how people just let their homes go to pot and then expect the same price as everyone else in the market. That house is also STILL on the market as it's one nasty health hazard and death trap that cannot be easily repaired. It might as well be a tear down too. I am so grateful to our inspector.
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Old 09-19-2015, 03:35 PM
 
Location: Austin
7,244 posts, read 21,755,019 times
Reputation: 10014
Quote:
Originally Posted by BrokerHarry View Post
The idea of a seller routinely charging the buyer for the right to conduct inspections is foreign in CA.
The buyer doesn't have to pay money to have the right to run inspections. A buyer can do whatever inspections on a property they want at any time.

If they want the "unrestricted right to terminate", they have to purchase that right. If they want to terminate during the period of time they purchased, they have to do inspections during that time. Some buyers let the time lapse, get inspections later, and then try to negotiate repairs, but with no unrestricted right to terminate in place anymore, most sellers laugh at any repair requests.
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Old 09-19-2015, 07:38 PM
 
Location: DFW
40,936 posts, read 49,025,568 times
Reputation: 54962
Quote:
Originally Posted by KathrynAragon View Post
An option period is a very common addition to real estate contracts in Texas - in fact, I've never written one, or sold a home myself, or bought a home myself without including at least a 10 day option period in the contract. You pay an extra $100 for this protection, and it's non refundable, and generally that is the time period in which you get the inspections done.
Option Period - The time and money is negotiable. In this Hot market I seldom will now accept more than a 7 day option period for a listing.

That $100 is obsolete. You want to buy my Hot listing you'll put a minimum of $300-500 option fee and many have been putting up to $1000 in multiple offer situations.

You wanna play, you gotta pay.
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Old 09-19-2015, 07:45 PM
 
Location: DFW
40,936 posts, read 49,025,568 times
Reputation: 54962
Quote:
Originally Posted by FalconheadWest View Post
The buyer doesn't have to pay money to have the right to run inspections. A buyer can do whatever inspections on a property they want at any time.

If they want the "unrestricted right to terminate", they have to purchase that right. If they want to terminate during the period of time they purchased, they have to do inspections during that time. Some buyers let the time lapse, get inspections later, and then try to negotiate repairs, but with no unrestricted right to terminate in place anymore, most sellers laugh at any repair requests.
Yep, that's why they call it an "Option Period". When you buy any type of option you have to pay consideration for that option.

Repairs? LOL, you're now buying it mostly as is. Don't like it? Fine terminate and just try and find another house.
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Old 09-19-2015, 08:50 PM
 
Location: Great State of Texas
86,052 posts, read 84,321,515 times
Reputation: 27718
Quote:
Originally Posted by Rakin View Post
Yep, that's why they call it an "Option Period". When you buy any type of option you have to pay consideration for that option.

Repairs? LOL, you're now buying it mostly as is. Don't like it? Fine terminate and just try and find another house.
Not everywhere in Texas. Some areas have normal RE sales with $100 option periods and negotiation on inspection results.

All of Texas is not like the trendy DFW and Austin areas.
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Old 09-19-2015, 10:28 PM
 
Location: Wonderland
67,652 posts, read 60,572,966 times
Reputation: 101051
Quote:
Originally Posted by Rakin View Post
Option Period - The time and money is negotiable. In this Hot market I seldom will now accept more than a 7 day option period for a listing.

That $100 is obsolete. You want to buy my Hot listing you'll put a minimum of $300-500 option fee and many have been putting up to $1000 in multiple offer situations.

You wanna play, you gotta pay.
All I can tell you is that we bought a house last year and we had a 10 day option period and paid $100 for it. We live in a mid size market that moves quickly. Those are common terms around here, though of course they're negotiable.
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Old 09-20-2015, 09:04 AM
 
Location: City Data Land
17,156 posts, read 12,912,897 times
Reputation: 33164
Quote:
Originally Posted by BrokerHarry View Post
This is a great example of how much real estate laws & practices differ in Texas versus California.

The CA Residential Purchase Agreement gives Buyers 17 days to conduct inspections (unless otherwise agreed upon) & to remove contingencies.

The buyer has the right to cancel for any reason, up to that time.

The idea of a seller routinely charging the buyer for the right to conduct inspections is foreign in CA.
That doesn't happen here either. The buyer pays for the inspection in almost all cases, the buyer owns the inspection report, the buyer presents their request for repairs or repair credits to the seller based on the contents of the report, or if they don't want the house, they cancel the contract prior to the end of the option period and get their earnest money back. The option period varies here, but normally it's 10 days. In some cases it's 7 days, and if the buyer uses exceptionally poor judgment, it can be as little as 5 days.
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