What is an "option contract"?

An option contract is fundamentally a contract that grants the buyer the exclusive right, but not the obligation, to purchase a specified property at a predetermined price within a designated time frame. This type of contract essentially allows the buyer to reserve the opportunity to buy the property while giving them time to consider their decision without pressure from competing buyers or market fluctuations.

The term of the contract includes specific details about the purchase price and the timeline in which the option can be exercised, providing flexibility for the buyer. This is especially valuable in real estate transactions, where market dynamics can change rapidly. Therefore, the essence of an option contract lies in the right it provides to the buyer, allowing them to secure a potential acquisition without a mandatory commitment until they are ready to proceed.