What defines an "option contract" in real estate?

An option contract in real estate is defined as a legally binding agreement that grants the buyer the exclusive right to purchase a property within a specified time frame at a predetermined price. This type of contract is advantageous to buyers, as it secures their interest in the property without requiring an immediate purchase. During the option period, the seller cannot engage with other potential buyers regarding that specific property, which gives the option holder a significant strategic advantage in the real estate market.

The essence of an option contract lies in its unilateral nature; while the buyer has the right to decide whether to proceed with the purchase, the seller is bound to sell if the buyer chooses to exercise that option. This concept makes option contracts particularly useful for individuals who are considering a property but need time to arrange financing or make a final decision without losing their opportunity to buy.