Buying a Home in Texas

By
Real Estate Agent with 12810 Telge,Cypress,TX 77429 -Houston,Cypress,Spring,Tomball

 

Buying a Home in Texas

Buying a home in Texas is similar to purchasing a home in some of the other states and very different from yet other states.

Texas is one of nine community property states.  Generally speaking, a community property state is a state in which property accummulated during a marriage (other than by gift or inheritance or property owned by one spouse prior to the marriage), is equally owned by each spouse.

Texas homeowners may apply for a Homestead Exemption on their principal residence.  A Homestead Exemption protects the home from most creditors; however, this does NOT include the homeowner's mortgage company, taxing authorities nor the noteholder of a home improvement loan (home improvement loans have to meet certain conditions for the lien to be valid).  The Homestead Exemption also lowers property taxes on the property, by exempting a portion of the home's value from taxes.

 

FIRST THINGS FIRST . . . the preliminaries:

 

Whether you are moving within Texas or from another state, it would be a good idea to choose a Buyer's Agent, a Realtor who you feel confident in and who you feel you can work closely with, to guide you through the homebuying process.  When you begin working with an agent, you will be asked to sign disclosure notices such as Information about Brokerage Services, a Residential Buyer/Tenant Representation Agreement and a Broker Notice to Buyer/Tenant.  In most cases, buyer representation is free to the buyer.

It may help to make one list of things you want and a separate list of things you need in a home and let your Realtor know upfront, so they can focus only on homes that will be of interest to you.  If you need and will only consider one-story homes, there is no point in looking at two-story homes.

Prioritize which things are the most important to you such as the neighborhood itself; size of home, number of bedrooms, other rooms (study, gameroom, other), size of yard, age of home, pool or no pool, one-story or two-story; and proximity to work, freeways, schools, hospitals, golf courses, shopping, etc.

If you will be working outside the home, it will probably be important to decide, before looking at homes, how far you are willing to drive to work and how long you are willing to spend in the car driving each day.  In some larger cities, many people who live in the suburbs like to rely on a transit system for getting to and from work.  Check with your Realtor for transit system information in a particular city.

Let your Realtor know what time frame you have to work with -- when you want or need to be in a home.  If the home you choose is occupied, the seller will need time to move.  Many sellers will be prepared to move on short notice.  Just get things clarified upfront.  If you will be looking at short sales, you may need to allow extra time to close (discusss with your Realtor).  Short sales can be good deals, but they often require a lot of extra patience, time (sometimes months) and understanding.  Foreclosures usually move along a little more predictably.  

One good thing about a short sale is that the homeowner is normally still involved and will be providing a Seller's Disclosure Notice.

If you are purchasing a foreclosure, the bank is the owner and never lived there, so is not required to provide the Seller's Disclosure Notice.  Before purchasing a foreclosue property, try to find out as much about the property as possible.  Your Realtor may be able to provide you with information regarding things such as previous sales amount(s).  If previous MLS information is still available, you may be able to find out about known defects of the property, age of certain updates and other information you would not otherwise know about.  And, of course, the neighbors may be a good source of additional information.

 

Be sure, in any transaction, to understand when you will be allowed to do property inspections, who will be responsible for turning on utilities (you or the seller) and under what terms and conditions you will be able to withdraw from the contract and get your earnest money back.

 

Discuss with your Realtor what things could help or hinder resale of a property.  These may vary by city.  For example, a certain location within a subdivision may be fine with you, but is there anything about the location that may make the property harder to sell if you should decide to sell the property at a later date?  Or, you may not have children in school, so schools may not be important to you; but it could be important when it is time to sell your property.  In some cities, especially larger cities, school district, and even individual schools within a district, can affect resale values as well as how long it will take a property to sell. You can search for and compare all public schools in Texas at www.HAR.com/school.

Not all cities have zoning.  Check with your Realtor about local zoning laws.

Crime statistics for different areas can be checked by calling the local police department.  Another source is www.spotcrime.com/tx.  In larger cities, obviously there will be more incidents of crime since there are more people.  Go to www.txdps.state.us to search the Texas Department of Public Safety's database of registered sex offenders. 

Before heading out to look at homes, one of the first things your Realtor will suggest is getting pre-approved (not just pre-qualified) - sellers will expect it, especially if you purchase a foreclosure or short sale.  Waiting until you find a home and then getting pre-approved can cause you to loose the home you want.  If another buyer likes the same property and is already pre-approved, that buyer may well have the advantage.  

Your Realtor will probably be able to give you a list of experienced lenders known to give good service if you don't already have a lender lined up.  Many buyers also check with their bank or credit union.   Check to see if friends or relatives have had a good experience with a lender.  Ultimately, who you choose is your choice.  Compare interest rates and fees of at least two or three lenders and ask about any special loan programs they have available.

 

 READY TO START LOOKING AT HOMES!

Once the preliminaries are out of the way, you are ready to look at homes!  With the prices of homes being what they are and interest rates being at or near historical lows, 2011 should be a great time to buy a home! 

Have fun and be sure to take notes on the different properties as you go.  After you look at even three or four homes, features may start to run together.  Let your Realtor know your thoughts on each home, as well.  Before making a final decision, you may want to visit a particular home or homes a second time.

Once you decide on a home, ask your Realtor to do a market analysis for that home.  You want to make sure it isn't overpriced for the area before you enter into a contract.  If it's priced right, the seller may not be very negotiable on the price.  

Before entering into a contract, buyers should ask for the Seller's Disclosure Notice which is a disclosure of the seller's knowledge of the condition of the property.  It will also indicate if the current owner carries flood insurance.  Flood insurance may be required by a lender, depending on where a property falls on the flood plain maps.  If paying cash for a home, ask your homeowner's insurance agent if the home is in a flood plain and whether you should carry flood insurance.  Many homeowners choose to carry flood insurance as a preventative, whether required by their mortgage company or not.

Ask if there are any exclusions - things the seller is taking with them that you may have assumed stayed with the property.  It's much better to find out upfront and avoid possible disagreements later.

The offer is normally made using forms provided by the Texas Real Estate Commission, Texas Association of Realtors and/or the local Board of Realtors.  The following is not a complete list, but some of the forms that may be used for making an offer on a single-family home, in addition to the disclosure forms mentioned previously, are:

  • One to Four Family Residential Contract
  • Third Party Financing Addendum for Credit Approval
  • Notice to a Purchaser of Real Property in a Water District
  • Addendum for Property Subject to Mandatory Membership in a Property Owners Association 
  • Environmental Assessment . . . Addendum
  • General Information and Notice to a Buyer
  • Inspector Information
  • Information About Property Insurance
  • Information About On-Site Sewer Facility
  • Protect Your Family from Lead in Your Home
  • For Your Protection:  Get a Home Inspection
  • Relocation Addendum (if applicable)
  • Short Sale Addendum (if applicable)
There are many other forms for different types of properties and different transactions (such as rentals and foreclosures).  There are additional forms for the single-family home, as well; and not all of the above forms will be used in every offer on a single family home.  For example, not all homes are in a water district, not all homes will need the Short Sale Addendum, etc.  If you are purchasing a foreclosure or a property from a relocation company, they will probably have their own set of forms and addenda as well -- read them carefully! 

Forms are revised and updated frequently.  It's important to use the most current forms available.  You are welcome to have your attorney review the forms prior to signing them if you wish.

Most transactions include having a title search done and the purchase of a title policy, which is highly recommended even if the property is being bought and sold between family members.  There could be title issues, including liens, that neither party is aware of and that could be very costly for you at a later date if not resolved prior to closing. For example, sometimes liens show up that should not even be there and the current owner may be the only one that would know that; and you won't want to close until those are cleared.  If there is a lender involved, they will require clear title.

Even if you are paying cash and it is not required, it is suggested that you have a survey and appraisal of the property done; and as mentioned above, a title search and clear title should be a top priority.  A survey verifies boundary lines, easements and fencelines.   Don't take shortcuts just because you can.

Most offers on homes include earnest money and an option fee.  Earnest money deposits seem to be different in different areas.  Some sellers will require one percent of the sales price; some will ask for more, some will ask for less.  However, the amount is negotiable between the parties.  Option fees will vary as well.  The option fee is an amount the buyer pays to the seller for the unrestricted right to terminate the contract within a specified number of days.  It is normally within this period of time that a buyer has inspections done and negotiates any repairs to be done by the seller.

There will most likely be things on an inspection report that the seller was not aware of and, therefore, will not be on the Seller's Disclosure Notice.  It is up to the buyer and seller to negotiate if any repairs will be done by the seller.  Sometimes the buyer's lender will require that certain repairs be done before they will lend.  Still, it is up to buyer and seller to negotiate whether the seller will agree to do repairs.

Some items that may or may not be covered in a standard home inspection:  termite or pest inspection; in depth structural or foundation inspection; inspection of pools, spas, wells, septic systems, sprinkler systems, mold, lead based paint, environmental, stucco, and in depth assessment of heating and air conditioning.  There may be other items or systems in a home that would require inspections outside the standard inspection, as well.  Each buyer should analyze the specific home they are buying and determine what specialized inspections they want to have done, if any.

You can hire inspectors to do as many specialized inspections as desired or you can hire an inspection company that performs inspections for all or most all of the different items.  Be sure to get all inspections in a timely manner and within contract guidelines.

BEFORE selecting your inspection company, be sure to go over what inspections they cover and what inspections they do not cover so that you know upfront if you will want to order additional inspections.

On the Addendum for Property Subject to Mandatory Membership in a Property Owners Association, it is a good idea to request a Resale Certificate from the owner's association (if there is one), along with the deed restrictions and bylaws for the subdivision.

Plan on doing a walk-thru prior to closing.

lt's best that buyers not ask to move in prior to funding.  Funding is considered to have taken place once the seller's proceeds check has been issued.  An early move-in is not even an option in most cases where a relocation company or a bank is the seller (foreclosures).

Be prepared to bring money in the form of a Cashier's Check to closing. The title company or closing attorney's office will calculate the amount you need to bring after they get closing doucments from your lender.  This amount should be close to the amount on your Good Faith Estimate which you should have already received from your lender, so you should have a pretty good idea of the amount needed to close.  You will also be asked for at least one form of identification - check with the title company or closing attorney's office where you will be closing to see what they will require.

Before signing papers (closing), be sure that the title is clear, any agreed upon repairs have been done, homeowner's insurance is in place, including flood insurance (if applicable), arrangements have been made for utilities, mail, alarm, etc.  If there is something you don't understand or fees that you do not understand at closing, be sure to ask and get clarification before signing papers.

Depending on the type of transaction or type of loan (Cash, Conventional, FHA, VA, or Other), typical Buyer closing costs may include the following, as well as other items:

  • Origination fee
  • Discount point(s)
  • VA Funding Fee (VA loans only)
  • Survey 
  • Appraisal 
  • Credit Report
  • Document Preparation Fee
  • Underwriting Fee
  • Processing / Funding Fee
  • Tax Service Fee
  • Recording Fees
  • Amortization Schedule
  • Flood Certificate
  • PMI or MIP Premium
  • Mortgagee's Title Policy
  • Escrow Fee
  • Homeowner's Assoc. Transfer Fee

Certain prepaid items may also be due at closing.  These usually include approx. one-year of homeowner's insurance paid upfront, several month's worth of taxes (discuss with your lender), buyer's pro rata share of any homeowner association dues and some portion of one month's interest (discuss with your lender). 

Sometimes buyers will negotiate in the contract that the seller will help with closing costs.  This should be done at the time of the initial offer if it is something the buyer wants to request.

It is suggested that new owners have locks changed or rekeyed after taking possession of the property.  It's not necessarily that you don't trust the seller, but more so that you have no idea who all may have keys to the property or who the seller may have forgotten that has keys to the property (neighbors, relatives, contractors, friends, kids, the previous owner, tenants, etc.).

After closing, you will want to make sure the name has been changed on county and other records.  If you are eligible to apply for the Homestead Exemption, be sure to do so after the first January 1 that you live in the property.  You will have until April of that year to apply for a Homestead Exemption for that year and subsequent years. 

 

Information contained herein is believed to be accurate and correct; however, it is not guaranteed and should be verified.  The information contained herein is general information only and no portion of it is intended to be considered as legal advice.  An attorney should be consulted for any and all legal advice.

 

 

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Rainmaker
228,967
Brenda Whitman, Live in Laramie Real Estate
Live in Laramie Real Estate, Laramie, Wyoming - Laramie, WY
Broker/Co-Owner, Laramie, Wyoming

Community property is so different than what we have.  I did not know about the exceptions you stated, nor how the Homestead Exemption worked there.  This is going to be a great resource for your future buyers, I can see you put a lot of effort and thought into this.  Good Job!

Feb 28, 2011 06:43 AM #1
Ambassador
1,709,615
Dale Baker
Baker Energy Audits and Commercial Properties Inspections - Claremont, NH
New Hampshire Relocation Real Estate Information

Howdy and afternoon to you Joyce

Joyce, this here mighty fine written blog post, sure does show folks that you know about every aspect of their Home Buying needs. And that you are the Real Estate Agent in your area they need to be sure to use.

Have a good one
Dale in New Hampshire

Feb 28, 2011 08:04 AM #2
Rainmaker
246,692
Joyce Godwin
12810 Telge,Cypress,TX 77429 -Houston,Cypress,Spring,Tomball - Cypress, TX
RE/MAX Realty Center, Houston Area Relocation Info

Brenda, It got pretty lengthy, but I do hope it is helpful to buyers.

Dale, I hope they will.  Thanks.

 

Feb 28, 2011 02:49 PM #3
Ambassador
2,264,468
Belinda Spillman
Aspen Lane Real Estate Colorful Colorado - Aurora, CO
Colorado Living!

Joyce this is great information for buyers.  You should print this out and give it to your prospective buyers.  Nice job.

Mar 01, 2011 06:17 AM #4
Rainmaker
2,336,724
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hi Joyce,  Great post.  This is great information to learn and past on.  Hope you have a great week.

Mar 01, 2011 08:27 AM #5
Rainmaker
246,692
Joyce Godwin
12810 Telge,Cypress,TX 77429 -Houston,Cypress,Spring,Tomball - Cypress, TX
RE/MAX Realty Center, Houston Area Relocation Info

Hi Belinda, Thanks for the idea - I will do that!

Hi Will, Hope you have a great week too!

Mar 01, 2011 09:35 AM #6
Rainer
1,300
ricky martin

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Dec 04, 2013 05:47 PM #7
Rainer
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Nick Davis
Heritus Lead Transfer - New York, NY
Have best mortgage leads, harp leads, etc.

Excellent post. For one to enjoy the home equity advantage, more commonly known as a government-insured reverse mortgage, there are several criteria’s that need to be fulfill. Check out the essential credentials for reverse mortgage here.

Dec 24, 2015 03:26 PM #8
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Rainmaker
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Joyce Godwin

RE/MAX Realty Center, Houston Area Relocation Info
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