What is a "real estate option" agreement?

A "real estate option" agreement is a contract that grants a buyer exclusive rights to purchase a property within a specific time frame. This type of agreement creates a unique opportunity for the buyer, allowing them to secure the right to buy the property at a predetermined price while giving them the flexibility to decide whether or not to proceed with the purchase within the specified period.

This mechanism is particularly useful in situations where the buyer may need time to secure financing, conduct due diligence, or assess the property's potential value without the immediate pressure of making a purchase. The seller, on the other hand, retains ownership of the property during the option period but is obligated to sell if the buyer decides to exercise the option.

The other options do not accurately describe a real estate option agreement: a bond pertains to financing, a lease agreement relates to rental terms, and the option for sellers to negotiate post-signing does not capture the essence of exclusivity afforded to the buyer in an option agreement.