What defines an option contract?

An option contract is specifically characterized by granting the buyer a right, but not the obligation, to purchase a property within a specified timeframe, often at a predetermined price. This type of agreement is beneficial for buyers who want to secure the right to buy a piece of property while they take the time to make a final decision. It provides a degree of commitment from the seller, as the property is effectively taken off the market during this period.

In contrast, an agreement for exclusive representation refers to a listing agreement where a real estate professional represents the seller, which is different from an option contract. An agreement allowing the seller to back out does not align with the essence of an option contract, as it would undermine the buyer’s right to purchase. Lastly, an agreement to lease the property pertains to rental arrangements rather than the buyer’s potential purchase of the property, making it distinctly separate from the concept of an option contract.