Option

In real estate, an option is when a purchaser puts money down for land, a home or other real property, but does not have an obligation to purchase said property. Under most contracts, the buyer is legally bound to purchase a piece of real estate if he puts money down, but this is written so that the purchaser may change he mind if necessary. This can be beneficial to the buyer if he wants to purchase a piece of land, but is not able to secure financing to build right away. The buyer offers a small amount of money to the seller with the option to purchase the property within a set period of time. If he does not purchase the property, the seller usually keeps the money from the option. If the seller does purchase the property, the option fee may or may not apply to the purchase price.