Here is a sequential outline of the mechanics of a real estate option transaction:
Step 1: The optionee pays a real estate option fee to the optionor.
Step 2: The optionor grants the optionee the exclusive, unrestricted, and irrevocable right and option to purchase a property at a fixed purchase price during the option period by executing a real estate option agreement with the optionee.
Step 3: The optionee assigns or exercises his or her real estate option or lets it expire.
Step 4: Once exercised, a real estate option agreement turns into a bilateral agreement in which the optionee becomes the buyer and the optionor becomes the seller.
Step 5: The seller transfers the property's title to the buyer at the closing.
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