And if the funds are held in escrow, then there could be a request or debate later by the tenant to have the funds returned if they failed to exercise the option.On the flip side, you may want to record a memorandum of option and service your option payment to the seller through escrow to cloud the title and make it possibly more professional and binding if you have a large option fee at stake that you've paid the seller and if it gives the seller some peace of mind... but not Necessary...

My realtor says that is common practice with listing agents... is that true?

Get up early to read, value exercise, and be willing to pour yourself into your real estate adventure.

Decide who will be responsible for general maintenance (lawn care, appliance repair...).Also consider a 6%-8% maintenance add on each year to the final purchase price if the person decides to exercise the option.

Go view student rentals  and start asking the questions you have practiced and learned from your reading and research see how the landlords or managers respond, if there are other people around talk to them ask them what they think, see how that correlates to your knowledge.

I have no idea what that means in a practical and/or cost sense.  

If they purchase, the option fee amount paid will be reduced from the purchase price to lower the purchase price on the sales agreement, after they exercise their option to purchase.* The property is not sold and title is not transferred until the tenant exercises the option to buy.

I would start developing a relationship with an attorney that practices as a settlement agent too.

Upon Optionee exercising of this option, both parties agree to move forward with thenecessary standard purchase and sales agreement.6.

Each state has varying real estate laws and practices.