Option contracts are often misunderstood, but when drafted properly, they can give sellers upfront cash, stronger pricing opportunities and a structured pathway for buyers to unlock future value.
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JtA Real Estate · EDUCATION
For sellers, option deeds can create upfront cash and stronger price opportunities. For agents, they can keep complex deals moving — provided the commission position is clearly documented.
Option contracts can make some real estate agents nervous.
Agents who avoid option contracts because they feel unfamiliar may leave value on the table. A well-structured option can give a seller upfront cash, attract developer interest, support a higher price, and create a clear pathway where an ordinary sale contract may be too rigid.
Mention an Option Deed, Call Option, or Put and Call Option, and you will often see the room split into two groups. One group sees complexity, delay and risk. The other sees flexibility, strategy and opportunity.
The truth is this: option contracts are not something to be feared. Used properly, they can be one of the most powerful tools in Queensland real estate.
They do, however, need to be understood.
This article is not legal advice, and sellers, buyers and agents should always obtain appropriate legal, accounting and duty advice before entering into an option arrangement. But for educational purposes, it is worth unpacking why option contracts matter, why they are different from ordinary contracts of sale, and why they can create value when a standard contract cannot.
This article is broad in nature and is not financial advice. Reach out to a JtA Licensed Property Specialist to get information specific to you.
In simple terms, an option gives a party a legally structured right to buy, sell or require a future transaction on agreed terms.
The most common forms are:
Call Option
A buyer, often called the grantee, receives the right to “call” for the purchase of the property within a defined period.
Put Option
A seller, often called the grantor, receives the right to require the buyer to purchase the property in certain circumstances.
Put and Call Option
Both sides have rights. The buyer may have the right to call for the purchase, and the seller may later have the right to put the property to the buyer, depending on how the deed is drafted.
Unlike a standard contract of sale, an option arrangement can separate control, due diligence, approval risk and settlement timing.
That is where the superpowers begin.
One of the first misunderstandings is the option fee.
A normal contract deposit is generally paid under a contract of sale. It is usually security for the buyer’s performance of that contract.
An option fee is different. It is paid for the option right itself.
In other words, the buyer is paying the seller for something valuable: time, exclusivity, control and the opportunity to decide whether to proceed on agreed terms.
That option fee may be:
The correct answer depends on the wording of the deed.
That is why the option deed should clearly state what the fee is for, whether it is refundable, and whether it forms part of the later sale consideration if the option is exercised.
One of the most overlooked seller benefits is upfront cash.
An option fee can give the seller money at the beginning of the arrangement, before settlement and sometimes before a standard contract would even be formed.
Depending on the deal, that option fee may be:
For a seller, this can be attractive because they are being compensated for granting the buyer time, exclusivity and control.
Instead of simply waiting while a buyer “thinks about it”, the seller can receive an agreed amount in return for giving the buyer a structured opportunity.
That can be a very different commercial position.
A seller may be able to say:
“If you want time and exclusivity, I am prepared to give it — but I need to be paid for that opportunity.”
That is fair.
Option fees should not be casually described as “stamp duty exempt”.
In Queensland, option agreements can have transfer duty consequences. In some circumstances, duty paid on an option may later be credited against duty payable on a resulting transfer or contract, depending on the structure and drafting.
That is very different from saying the option fee is automatically exempt.
This matters because the wording of the option deed can have practical duty consequences. A buyer and seller should obtain legal and duty advice before assuming how an option fee will be treated.
From a seller’s perspective, a standard contract is often simpler. The buyer signs, pays a deposit, works through any conditions, and settlement occurs.
But not every property fits neatly into that pathway.
Some properties have hidden or unrealised value. Some have development potential. Some need planning work, due diligence, engineering investigation, access assessment, subdivision analysis, infrastructure review, or council engagement before a buyer can confidently pay the price the seller wants.
That is where an option deed can be extremely powerful for a seller.
A standard buyer may look at a property and price it based on what it is today.
A developer or strategic buyer may look at the same property and price it based on what it could become.
The challenge is that the developer may need time to prove that future value. They may need to investigate whether the land can be subdivided, whether a development approval is achievable, whether services can be provided, whether access works, whether costs stack up, and whether finance can be obtained.
A standard contract may not give them enough time or flexibility to do that properly.
An option deed can.
That can allow the seller to access a buyer pool that might otherwise not participate, and that can often produce a stronger price than a straightforward sale to a buyer who is only valuing the property “as is”.
A well-structured option can also help a seller achieve a higher price.
This is especially true where the property’s strongest value depends on a future use, approval or development outcome.
For example, a property may be worth one amount to a standard residential buyer, but significantly more to a developer if it can be subdivided, reconfigured, intensified or packaged into a broader project.
The option structure can give the developer enough confidence to pursue that higher-value outcome, while giving the seller a pathway to participate in that higher price.
Without the option, the buyer may discount heavily for risk.
With the option, the buyer may be prepared to offer more because they have time to reduce that risk before being required to settle.
That is the real commercial magic.
An option deed does not guarantee a higher price. But in the right circumstances, it can create the conditions for a higher price to become possible.
Developers like options because they allow risk to be staged.
A buyer may see potential in a site but need time to answer important questions before committing to a full purchase. For example:
A standard contract may force the buyer to either commit too early or make the contract so heavily conditional that the seller becomes uncomfortable.
An option deed can be a cleaner middle ground.
It can say: the buyer pays for the right to investigate, the seller grants that right for a defined time, and if the buyer exercises the option, the agreed contract pathway begins.
That is powerful.
Many agents do not dislike options because options are bad. They dislike them because options are unfamiliar.
Most residential agents work every day with standard contracts, deposits, finance clauses, building and pest conditions, cooling-off periods and settlement dates.
Option deeds are different. They raise different questions:
These are not reasons to reject options.
They are reasons to document them properly.
For Queensland agents, the PO Form 6 is the appointment document that governs the agency relationship, including the agreed commission and when commission is payable.
Ideally, the Form 6 and its annexures should expressly deal with option structures, including:
That is the cleanest approach.
However, real transactions do not always arrive in perfect order. Sometimes an option deed is put on the table after the agency appointment has already been signed, and the existing Form 6 does not specifically deal with options.
That is not ideal, but it does not automatically mean the transaction should fall over.
In those circumstances, the option deed itself can deal with the commission position, provided it is properly drafted and the parties agree. The option deed can expressly state how the agent’s commission is to be calculated, when it becomes payable, whether any option fee is to be taken into account, and how commission is to be paid from option monies, deposits, settlement funds or other transaction proceeds.
In other words, the option deed can become the document that clearly records the commercial understanding between the seller, buyer and agent about commission.
That may include acknowledgements that:
The better practice is still to have the Form 6 and option deed aligned from the beginning. But if the Form 6 is silent, a well-drafted option deed can still entirely contain the commission treatment for that option transaction.
The key is not to leave the issue assumed, verbal or vague.
A common mistake is assuming that a commission clause written for an ordinary sale will automatically work for an option structure.
It might not.
For example, if a commission clause only says commission is payable when a contract of sale settles, what happens if the seller receives a substantial non-refundable option fee but the option is not exercised?
What happens if the buyer assigns the option to another entity?
What happens if the transaction is completed through a nomination or related company?
What happens if the option creates the real commercial value, but the later contract is delayed?
These questions should be answered before the option is signed, not after a dispute arises.
That is why agents should not be afraid of options. They should be prepared for them.
Queensland’s seller disclosure regime also needs to be considered.
From 1 August 2025, a new statutory seller disclosure regime applies in Queensland. In broad terms, sellers must give buyers a completed seller disclosure statement and prescribed certificates before the buyer signs a contract, unless an exemption applies.
Option transactions need careful legal handling around when disclosure is required, what documents are provided, and how the later contract pathway is structured.
The practical point is simple: an option deed is not a shortcut around proper disclosure, legal advice or transaction preparation.
The greatest strength of an option contract is that it can match risk with timing.
A seller may want commitment before giving a buyer time.
A buyer may need time before giving full commitment.
An agent may need clarity before progressing a non-standard transaction.
A solicitor may need precise drafting before anyone signs.
An option deed can bring those competing needs into one structured document.
It can allow a seller to say:
“Yes, I will give you time and exclusivity, but only on agreed terms.”
It can allow a buyer to say:
“Yes, I am serious, and I will pay for that opportunity, but I need time to investigate the project properly.”
It can allow an agent to say:
“This can work, provided the commission position, seller instructions, buyer pathway, communication and payment mechanics are clear.”
That is the point.
Options do not create magic. They create structure.
Option deeds can be particularly useful for:
They are less suited to transactions where both parties simply want a standard sale with standard conditions and a standard settlement.
Before signing an option deed, a seller should ask:
These are commercial questions first, then legal drafting questions.
Agents do not need to become lawyers. But they do need to understand enough to know when a transaction has moved outside the ordinary contract pathway.
A good agent should:
The goal is not to block an option deal. The goal is to make it safe, clear and commercially useful.
For sellers, the message is simple: an option deed is not automatically a compromise. In the right transaction, it may be the very thing that allows a buyer to offer more, pay upfront, and pursue a value pathway that an ordinary contract would not support.
For agents, the message is equally important: do not reject an option structure simply because it is unfamiliar. Make sure the commission position is documented, the seller understands the commercial effect, and the parties obtain proper advice.
Option contracts have superpowers because they allow parties to do things a standard contract often cannot.
They can give a buyer time without giving them the property.
They can give a seller commitment without forcing immediate settlement.
They can give a developer a pathway to test feasibility.
They can give an agent a way to progress a deal that might otherwise die.
They can create structure where uncertainty would otherwise stop the conversation.
But those superpowers only work when the documents are clear.
The option deed should be properly drafted.
The Form 6 should ideally deal with commission.
If it does not, the option deed should clearly state how commission is handled.
The option fee should be clearly explained.
The duty position should be checked.
The seller should understand what control they are giving up.
The buyer should understand what rights they are paying for.
The agent should understand when and how commission is triggered.
Used carelessly, an option contract can create confusion.
Used properly, it can unlock value.
And that is why option contracts should not be feared.
They should be respected.
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