Hi All! Ok as most buyers and sellers out there, they always ask the say questions. As many times as you ask it, they still need to be asked or explained because each transaction is different.
Option Period- the amount of time (days) buyer has to decide if they are truly going to move forward with purchase of property. You can back out at anytime during this time period.
Earnest Money- Amount on money to show sellers you are interested/serious in property. If you back out of contract after your option period time frame- you will NOT get this amount of money returned to you. If buyer moves forward with purchase of property- It is applied to sales price at closing. However, if buyer is doing third party financing- the Property Approval from lender (bank) must meet all approvals in order to close on property. If it does NOT meet all the lenders property approvals then buyer can terminate contract and earnest money refunded back to buyer.