It varies by contract

To provide the buyers with opportunity to buy a property that they rent. Yet, we rarely use the option contracts in here. 

We paid $10K for an option to buy a property for $500K within a year.  We believed that the property would be rezoned, and skyrocket in value.  It did.  We exercised the option, and sold the property for $1,000,000 taking a $500K profit.

If that land had NOT appreciated in value, we would have walked from the $10K

Depends- it's case by case. There is more than one kind of option. Serious buyers will pay for an option.

Good luck with your studies.

To tie things up

people like to have options

The purpose is to lock in a propertys price to purchase at a later date. You can then purchase the property for the agreed upon price prior to end of option. It is an option to buy or sell for sepcific price and date.

Please stop using special characters before your question.  Thanks.

Minnette Olsen An option gives the potential buyer the opportunity to purchase the property at a later date. Options must have consideration or it isn't an option. The buyer will lose their option funds should they not exercise the option.

To meet the needs of your clients.

It depends.

It depends on the particular contract and the roles of each party in the contract.

It depends on which option you are talking about.

Inna Ivchenko provided the answer for buyers. For sellers it is a means to profit even if the option is not exercised, adding to their ROI on the rental property.

Minnette Olsen some of your questions help me learn something new...

Supposedly the NC Real Estate Commission's main purpose was to reduce the number of complaints and lawsuits over who gets the earnest money.  During the Due Diligence (option) period, the earnest money is refundable to the buyer; after 5 pm on the Due Dilgence Date, the earnest money is nonrefundable and if the buyer doesn't close for any reason it goes to the seller.

We've been using the DD contract since January 2011.  It works well.

Maybe I will buy or maybe I won't

to either tie something up for a certain period of time or have a crack at it

Provides buyers time to get their financing and/or contingencies in order.

To create a priority position to purchase a property.

To tie up parcels of ground

Not sure how to ask this one.

None as far as I am concerned.  If they can't qualify to buy the need to lease until they can.  Just my opinion.