What California Buyers Need to Know About Texas Option Periods

In Texas, a buyer can purchase an "option period" — a defined number of days during which the buyer has the unrestricted, unilateral right to terminate the contract for any reason. The buyer pays a non-refundable option fee for this right, typically ranging from $100 to $500, though on higher-priced homes it can be more. The option fee is credited toward the purchase price at closing if the buyer proceeds.

This is fundamentally different from a California contingency. Here is the distinction in plain language:

• California contingency: You can cancel if a specific condition (inspection failure, appraisal shortfall, financing denial) is not met. You must have a reason rooted in the contingency language. Your earnest money is protected.
• Texas option period: You can cancel for any reason — or no reason at all. You do not need to justify your decision. You do not need to prove that something was wrong with the house. You simply notify the seller in writing before the option period expires. The option fee is forfeited, but your earnest money is returned.

The option period is not a contingency. It is a paid insurance policy on your right to change your mind.

The typical option period in the Texas Hill Country runs five to ten days, though it can be negotiated longer or shorter depending on market conditions and the specifics of the transaction.

Here is what I see in practice in the Boerne, Fair Oaks Ranch, and San Antonio markets:

A few important points about the fee. The option fee is non-refundable — you lose it if you terminate, regardless of the reason. However, it is credited toward your purchase price at closing if you proceed with the transaction. On a $500,000 home with a $300 option fee, you effectively pay $300 for up to ten days of absolute freedom to walk away. That is inexpensive insurance.

The option fee must be delivered to the seller or the seller's agent within three days of the effective date of the contract, as specified in the TREC One to Four Family Residential Contract. If you do not deliver the fee within that window, you may lose your right to exercise the option.

The option period is your window for due diligence. During these days, you should be:

• Scheduling a professional home inspection. This is the single most important thing you do during the option period. In the Hill Country, inspections are especially critical because many homes sit on limestone with private wells and septic systems — neither of which a standard California inspection would typically cover. Budget $400 to $700 for a thorough general inspection, plus additional fees for septic, well, termite, and foundation evaluations if applicable.
• Reviewing the seller's disclosure notice. Texas sellers are required to provide a written disclosure about the property's condition. Read it carefully. If the seller discloses foundation issues, past flooding, or well problems, you have every right to terminate during the option period — and you should take that right seriously.
• Verifying property boundaries and easements. In rural Hill Country areas, fence lines do not always match property lines. If you are buying acreage, a survey may be warranted. The TREC contract includes a survey contingency, but the option period gives you a parallel exit if the survey reveals something you cannot live with.
• Researching the neighborhood further. Drive the area at different times of day. Talk to neighbors. Check flood maps. Verify school district boundaries. This is your last window to walk away without financial consequence beyond the option fee.
• Getting final financing confirmation. While your lender works toward underwriting approval, the option period provides one exit path if something changes in your financial picture. Your financing addendum may provide an additional exit if your loan is not approved within the specified timeframe.

The differences are not just procedural — they affect how you negotiate, how you schedule inspections, and how you manage risk.

Having worked with hundreds of California buyers in Texas, I see the same mistakes repeatedly. Here are the ones that cost the most.

Treating it like a California contingency

California buyers are trained to think in terms of "inspection contingencies" — they assume that if the inspection comes back clean, they are obligated to proceed. In Texas, the option period does not work this way. Even if the inspection reveals nothing wrong, you can still terminate. You can terminate because you changed your mind, because you found a different house, or because you do not like the color of the front door. The only cost of terminating during the option period is the option fee.

Not understanding it is paid separately from earnest money

The option fee and the earnest money deposit are two distinct payments. The option fee is typically $100 to $500 and is paid directly to the seller. The earnest money deposit is typically 1% to 2% of the purchase price and is held in escrow by the title company. Both must be delivered within the timeframes specified in the contract — the option fee within three days of the effective date, and the earnest money typically within three days as well. Confusing the two or missing a deadline can jeopardize your position.

Not scheduling inspections early enough

The biggest mistake I see is buyers who wait until day four or five of a seven-day option period to schedule their inspection. In the Hill Country, good inspectors book out. If you do not schedule your inspection within the first 24 to 48 hours of going under contract, you risk not having results before the option period expires. This means either extending the option period (which requires seller agreement) or making a decision without complete information.

My standard recommendation: schedule your general inspection for day two or three. Schedule specialty inspections — well, septic, termite — for day three or four. This gives you time to review results, ask questions, and make a decision before the deadline.

Failing to negotiate the option period in a competitive market

In a seller's market, sellers may push for a shorter option period — three days, sometimes even fewer. If you are a California buyer unfamiliar with the process, you may agree without realizing that three days is barely enough time to schedule and complete a full inspection, let alone review the results. Push for at least five days. The seller may not agree, but you should ask.

Not exercising the option when they should

I have seen buyers discover significant issues during the option period — foundation movement, well flow rates below two gallons per minute, septic system failures — and proceed with the purchase anyway because they felt emotionally committed. The option period exists for exactly this reason. If your inspections reveal a problem you are not comfortable with, walk away. The option fee is a few hundred dollars. The problem you ignore could cost tens of thousands.

The Texas Real Estate Commission promulgates standardized contract forms that most residential transactions use. The One to Four Family Residential Contract (Resale) is the most common. Within this contract, the option period is addressed in Paragraph 23 (Termination Option), which specifies:

• The number of days in the option period
• The amount of the option fee
• The deadline for delivering the option fee to the seller
• That the buyer may terminate for any reason during the option period by giving written notice to the seller before 5:00 PM on the last day

Critically, the option period runs concurrently with other timelines in the contract. Your financing contingency, appraisal contingency, and title commitment review are all happening in parallel. The option period is not your only protection — but it is your most flexible one, because it does not require you to demonstrate a specific contract violation to terminate.

The contract also specifies that if the buyer terminates during the option period, the seller must return the earnest money within a specified timeframe, and the buyer forfeits only the option fee. This clean separation is what makes the option period powerful — during the option period, your maximum downside is limited to the option fee. After the option period expires, other contract provisions (such as financing, appraisal, and title contingencies) may still provide exit paths, each with their own terms.

Based on years of guiding California buyers through Texas transactions, here is my practical advice for using the option period effectively.

• Book your inspector before your offer is accepted. Have a trusted inspector identified and ready to schedule the moment you go under contract. Every day you wait is a day off your option period.
• Get your option period in writing with specific dates. Do not rely on verbal agreements or assumptions about timing. The TREC contract specifies exact dates. Know them.
• Set calendar reminders for the option fee deadline and the option period expiration. Missing either deadline can cost you the right to terminate — or the deal itself.
• Use the option period for Hill Country-specific inspections. A standard home inspection is necessary but not sufficient. In the Hill Country, you also need to evaluate the well (flow rate, water quality), the septic system (aerobic vs. conventional, condition), and the property's relationship to the Edwards Aquifer or other groundwater sources. These are not optional.
• Do not let the option period expire without making a decision. If you have not completed your inspections or reviewed the results before the last day, you are making a $600,000 decision on incomplete information. Push your agent to help you get extensions if needed — though be aware that extensions require seller agreement.
• Talk to your agent about the negotiation before you make the offer. The option period length and fee are negotiable terms. In a buyer's market, you can often get a longer option period for a lower fee. In a seller's market, you may need to offer a higher fee or accept a shorter period. Knowing what to ask for — and what to push back on — is where an experienced agent earns their value.