The Good News About Option Periods
You’ve found what you think is your dream home and have decided to make an offer.
The Bad News About Option Periods
You really don’t know what you’re buying yet, because you haven’t had the home inspected. You also don’t want someone else to swoop in and steal the property out from under you.
That’s why the option period is perhaps the most important phasewhich is negotiable). Within the option period, a buyer can amend his offer, requesting repairs for the problems he wants the seller to fix.
It is important to know that the option period can be extended, which is critical if the home inspector has requested further evaluation by licensed professionals. A home inspection does not cover all items and components of your home. Other specialists, like electricians, plumbers, and HVAC professionals have special training and equipment that may be needed to uncover additional (often expensive) defects.
What Is The Home Buyer Option Period?
The option period is the time that – as a home buyer – you can make sure your investment is sound. It gives you enough time to “sleep on it” so to speak, and make sure the decision you’re about to make is a good decision, the right decision for you, as a home buyer. A home is one of the most expensive purchases that you will most likely make in your lifetime. So, in order to give you, the home buyer, the time to make the proper decision, many States require an option period.
5 Steps to Optimize Your Option Period
Just like many other decisions during the home buying process, you should take your time and make sure that you use the home buyer’s option period to your advantage. Don’t just sit around and think about it, though. Here are 5 steps to make the most of your option period:
- Hire a reliable, reputable home inspector. A home inspector is your advocate during the option period, and you want him to inspect the home as if he were the one buying it. Most importantly, confirm he is licensed to perform home inspections in your state and understand what he will – and will not – inspect. Check his standing with the Better Business Bureau and his reviews. Ask for a sample inspection report, and make sure he’ll be available to explain his findings. (Review this list of 13 questions you should ask prior to selecting a home inspector.)
- Discuss problems, potential solutions, and risks with your home inspector. Your home inspector should provide a comprehensive, detailed home inspection report to you within a day of the inspection. He should also be available to provide insight and answer questions. (An ethical home inspector should never agree to perform repairs – something that is a clear conflict of interest and against the law.) Leverage your home inspector’s knowledge to decide what you want to ask the seller to fix.
- Negotiate repairs with your seller. Before the option period ends, negotiate with the seller to agree to the repairs he will make before closing and those he will be liable to fix after the closing date. (Make sure to include post-closing repairs in your final contract and specify that additional findings will be completed at the homeowner’s expense.) You may opt to fix problems yourself, perhaps for a lower closing price. This is your time to make those decisions.
- Confirm repairs have been made correctly before closing. It’s important to make sure the agreed-upon repairs were made with quality, because if additional defects are uncovered, the seller has no obligation to fix them. Request receipts and work orders to verify that work was completed by licensed vendors. (A licensed electrician should complete electrical work, a licensed plumber should complete plumbing work, a licensed HVAC professional should complete HVAC work, etc.) These licensed professionals are equipped with additional training and equipment that goes beyond a home inspection. They can uncover defects that the seller should pay to fix. You don’t want to be saddled with the costs. It is not acceptable for a handyman or homeowner to complete repairs unless he is licensed in the area of expertise involved. Many licensed professionals will warranty their work. Handymen and homeowners likely will not warranty or guarantee anything.
- If needed, cancel the offer before the option period ends. If you can’t agree on repairs and pricing, you, the buyer, must cancel the contract before the end of the option period – regardless of whether that date falls on a business day or weekend. Failure to do so may mean you can’t terminate the contract unless specific circumstances exist.
This is an important time in your life, and you’re about to make a significant investment. Don’t overlook the importance of the option period in your home buying journey.
Licensed Dallas home inspector Keith Boggs proudly provides quality home inspections throughout North Texas 7 days a week, including evenings and weekends. Contact him at (214) 923-7304 or [email protected].