What is Option Fee?
An option fee is a non-refundable payment a wholesaler makes to a seller for the exclusive right to buy a property within a specified period (typically 30-90 days). Different from earnest money — the option fee buys time, not commitment to close.
An option contract gives the wholesaler control of the property — they can market it to their buyers list — without committing to actually buy. If they find an end buyer, they assign or double-close. If they don't, they let the option expire and the seller keeps the option fee.
Typical option fees: $10-500 for small properties, $1,000-5,000 for larger ones. Specifically structured to be small enough that walking away isn't catastrophic but meaningful enough to be enforceable consideration.
Option contracts are state-law-sensitive — some states require specific consideration language and recordation; others treat options like any other contract. Always use attorney-drafted documents for option deals.
Concepts that connect.
Wholesaling is the real-estate strategy of putting a distressed property under purchase contract and assigning that contract to a cash buyer for a fee. The wholesaler never owns the property — they're paid for connecting motivated sellers to investor buyers.
Earnest money is the deposit a buyer puts down at contract execution to demonstrate commitment. In wholesale deals, EMDs typically range from $10 to $1,000 — far smaller than retail. The EMD goes toward closing costs at closing, or to the seller if the buyer defaults.
An assignment fee is the amount a wholesaler is paid for assigning the rights of a real estate purchase contract to an end buyer. Typical fees in 2026 range from $5,000 to $25,000 on single-family deals, depending on the spread and the market.
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