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Uploaded by: euinvest101 on Apr 30, 2012
Darwin Horan,The Seven Key Elements of a Real Estate Option Transaction,Darwin Horan-The Seven Key Elements of a Real Estate Option Transaction
A real estate option transaction consists of the following seven key elements:
Optionee: Optionee is the party buying a real estate option. Once a real estate
option is exercised, the optionee becomes the buyer.
Optionor: Optionor is the party selling a real estate option. Once a real estate
option is exercised, the optionor becomes the seller.
Real estate option: When an optionee buys a real estate option, he or she
buys an exclusive, unrestricted, and irrevocable right and option to purchase
a property at a fixed purchase price within a specified option period.
Option consideration: Option consideration is the amount of money paid by
an optionee to buy a real estate option from an optionor.
Option period: The option period is the specific period of time stated in the
real estate option agreement in which the option is in effect.
Exercise of option: The exercising of a real estate option occurs when the optionee
notifies the optionor, in writing, that he or she is going to exercise
the real estate option and purchase the property under option.
Expiration of option: A real estate option expires when an optionee fails to
exercise his or her real estate option within the option period stated in the
real estate option agreement.
How a Real Estate Option
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
Step 3: The optionee assigns or exercises his or her re