Option Period, Earnest Money and the Seller's Disclosure: Texas Contract Terms in Plain English

The standard TREC contract lets the buyer pay an option fee for an option period, a number of days you negotiate. During it, you can terminate for any reason at all: the inspection, the neighbor's inflatable dinosaur, cold feet. You just have to send the termination notice before the deadline.

Deadlines in the TREC contract end at 5:00 p.m. local time on the last day. Not 5:01. The contract doesn't care about traffic on 75.

Earnest money shows the seller you're serious. It's commonly around 1% of the price, but it's negotiable. Both the earnest money and the option fee are delivered to the title company, usually within 3 days of the effective date.

• Cancel within the option period: the earnest money comes back to you; the seller keeps the option fee.
• Cancel after it, without a reason the contract allows (like a financing or appraisal clause): you can lose the earnest money.
• Close: the earnest money is credited toward your down payment and costs.

Texas sellers of most homes must give buyers a written disclosure of known conditions: roof leaks, foundation repairs, flooding and so on. If you receive it after signing the contract, Texas law gives you a short window (7 days) to terminate for any reason.

Read it like a mystery novel. "Previous water penetration" is a plot twist you want to know about early.

1. Book a licensed home inspector right away (good ones fill up).
2. Add specialists if the report says so: foundation, roof, sewer line, pool.
3. Get insurance quotes; some homes are pricey to insure.
4. Negotiate repairs or a credit, or terminate before the deadline.

Tip: ask for written confirmation from the title company when your termination notice is received.