An agreement giving a party the exclusive right, but not the obligation, to purchase property within a set period.
Why Option Contract matters on the exam
This term belongs to Contracts. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Option Contract
Every Freehold question shows why the right answer is right — and cites its source.
When a seller responds to a buyer's offer by changing the price, the seller has:
Accepted the offer with conditions
Created an option contract
Rejected the original offer and made a counteroffer
Kept the original offer open while negotiating
Show answer & explanation
Rejected the original offer and made a counteroffer — Any change to an offer's terms operates as a rejection of the original offer and creates a new counteroffer. The original buyer is then free to accept, reject, or counter the new terms.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
In an option contract to purchase real estate, which party is legally bound to perform?
Both the optionor and the optionee
Neither party until closing
The optionee who paid the option fee
Only the optionor who granted the option
Show answer & explanation
Only the optionor who granted the option — An option is a unilateral contract: the optionor must sell at the agreed terms if the option is exercised, while the optionee has the right, but no obligation, to buy during the option period.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
A counteroffer legally operates to:
Reject the original offer and substitute a new offer that the original offeror may accept, reject, or counter
Keep the original offer legally open while the parties consider entirely new terms
Automatically bind both parties to a compromise price without either party's further consent
Convert the entire transaction into a separate, freestanding option contract
Show answer & explanation
Reject the original offer and substitute a new offer that the original offeror may accept, reject, or counter — A counteroffer rejects and terminates the original offer while proposing new terms, placing the original offeror in the position of deciding whether to accept, reject, or counter those new terms.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
Freehold is an independent study resource and is not affiliated with, endorsed by, or sponsored by PSI, Pearson VUE, or any state real estate licensing board or commission. Freehold does not guarantee passage of any licensing exam.
