Purchase Residential Real Estate

Broadly, a real estate option is a specially designed contract provision between a buyer and a seller. The seller offers the buyer the option to buy a property by a specified period of time at a fixed price. The buyer purchases the option to buy or not buy the property by the end of the holding period.

The strike price of $70 means that the stock price must rise above $70 before the call option is worth anything; furthermore, because the contract is $3.15 per share, the break-even price would be $73.15.

Sell one out-of-the-money put option for every 100 shares of stock you'd like to own. Wait for the stock price to decrease to the put options' strike price. If the options are assigned by the options exchange, buy the underlying shares at the strike price.

Typically, the seller grants the buyer an option to purchase the property based on the terms and conditions in the Option to Purchase, in return of a sum of money from the buyer called the Option Fee. The Option Fee is typically 1% of the sale price of the property, but is negotiable between parties.

An Option to Purchase agreement is a legal contract signed between a buyer and a seller of a residential property, and basically gives the buyer the exclusive rights to purchase a property from the seller in the future.

A lease-option is a contract in which a landlord and tenant agree that, at the end of a specified period, the renter can buy the property. The tenant pays an up-front option fee and an additional amount each month that goes toward the eventual down payment.

The primary difference is that an option contract entitles the buyer to the option to purchase the items at a later time, whereas a firm offer gives the buyer the right to buy the items outright at any time.