I’ve seen the up front, non refundable option consideration called an up front profit quite a bit; so I don’t doubt that.
My question is this, I had always thought that if they are giving you that and in the end it is going to be used as part of their down payment, don’t you have to set it aside for the down payment?
If you are crediting all or a portion of the option fee towards the down payment then you are simply “crediting” those dollars. This does not mean you physically set aside the money in a special account. It is nothing more than a paper/accounting entry on the closing statement if and when the deal actually closes.