How Long Is The Term Of The Option

Category: Finance, Real Estate.

A real estate purchase option is a document that gives someone the right to purchase a piece of property at a fixed price during the term that the real estate purchase option is in effect. The purchaser has the right, but not the obligation, to purchase the property.

During the option period, the owner can not sell the property to anyone else and must sell the property to the purchaser of the option if the purchaser desires the property. The purchaser can let the option expire without purchasing the property. There are three things you must determine at the time that the option is created for the property. Your only lose, would be the, in this case price you paid for the real estate purchase option. How much will you pay for the property if you decide to purchase it? If the value goes up, but if the, you win value goes down, you should let the option expire and just purchase it for the going value at the time.

It does not matter if the value of the property goes up or down during the option term, you will be able to purchase the property for the price agreed upon in the option. Your maximum loss is the amount you paid the owner for the real estate purchase option. The term is a fixed amount of time and depends on what you and the owner will agreed upon. How long is the term of the option? Most option contracts have a one or two year term but it can be any amount of time that you agree. You must purchase the option from the owner of the property. How much are you willing to pay for the option?

This money belongs to the owner no matter if you decide to purchase the property or let the option expire. However, you may want to consider the consequences of this action as some mortgage companies will call the loan due if they see a purchase option for the property as they consider it a sale. To prevent the owner from selling the property while the option is in effect, you can record the real estate purchase option with the county courthouse. You should use your judgment for this. Also, the real estate purchase option is also an asset that may be sold, or assigned to another person if you wish. Once you own a real estate purchase option, you control the property. Look for the next article to see what you can do with your property now that you have secured the purchase option.