This post is about the Texas “option fee clause” in the standard Texas “1 to 4 family residential contract” and what this clause has to do with home inspections.  I have lived in four states and each state has handled the home inspection process in a different manner.  In Texas all residential contracts have an “option fee” clause. This clause allows buyers and sellers to negotiate a specified time during which the buyer can fully evaluate the house.  For this right, they buyer pays the seller a nonrefundable “option fee”. 

So let’s say you have finished negotiations everything is signed and you are under contract.  If you chose to have an option period you are now going to be in your option period.  (Personally I think everyone should take this right).  Everything is negotiable but usually you will have put $50 to $100 down for a 5 to 10 day option period.  This period gives you the time to do your home inspections and if you get cold feet this option also gives you the right to back out at anytime during that option period and all you lose is your option check and any money you may have paid on inspections. 

When doing inspections time is of the essence.  You will need to quickly find an inspector to inspect the home.  If you would like more information about finding an inspector and what to ask check out my post on “What to ask your home inspector”.

The primary purpose of the inspection is to educate you so you can make an informed purchasing decision.  If you are buying a re-sale home I can almost guarantee you that the inspector will find something; that is what you are paying them for.  The big ticket items you will want to keep in mind are the foundation, the heat/air and the roof; almost everything else is small stuff.  Should you find something that needs to be repaired during the inspections you can either ask for repairs or negotiate an agreed upon price so that you can do the repairs yourselves.

If the repairs are more than what you want to do, or maybe you just got cold feet,  remember because of that Texas “option fee clause” you can back out for any reason during this option period.  As I said earlier the only money you will lose is the money you put down for the option and the cost of your inspections. The earnest money will be returned to you in full as long as you provide the owner a termination letter in the agreed upon days.  Again time is of the essence!

For all your Spring TX Real Estate needs, contact me today!
Marchel Peterson
Results Realty
Cell: 832-721-8332

When people move to the Houston area from other states they are often surprised by our high taxes. Texas is one of five states without an individual or corporate income tax. Most states derive about 40% of their revenue from income taxes, a third from sales tax and the rest from taxes on items such as business licenses and gasoline. Because of this Texas has a fairly high sales tax and significantly higher property taxes.

In Northwest Harris and Southeast Montgomery Counties there are basically three different property taxing authorities. There is a county tax; which covers such things as county, hospital, emergency services, port authority, flood control, community college etc. The second tax is a school tax. The amount of this tax will depend on which school district you live in. The amount of the school district taxes vary by district but they are very similiar; they differ by pennies. It doesn’t matter where you live you are going to have these two taxing authorities.

The third taxing authority is the MUD or Municipal Utility District. Basically this is your water. This is the taxing authority that is going to vary subdivision by subdivision. There are a few older subdivisions in the area that have paid their bonds and don’t have this tax. The rate will vary from .25 to over $2.00 per 100 value of your house. If you live in a country subdivision and are on a septic you will not have this tax.  Typically the country subdivisons are on septic and have community water.

The good news is that you get a LOT of home for your money in Texas; even with the high taxes.  We have lived in two other states and for the same money a month we bought a newer home with more square footage. 

To get information for Harris County taxes you can go to the Harris County Appraisal District HCAD. For Montgomery County taxes you can get information at the Montgomery County Appraisal Tax Office.

Even with the higher property tax Texas ranks 14th in the lowest overall taxes paid among all 50 states.  What a great place to live!

For all your Northwest Houston Real Estate  needs, contact me today!
Marchel Peterson
Results Realty
Cell: 832-721-8332

One of the most common reasons for a real estate transaction to break down before closing is due to the loan not being approved.  The buyer thinks that they are approved but the problem is the lender often issues pre-qualification and pre-approval letters based on limited information.  The lender pre-qualifies them on nothing more than what the client tells them their income is.  In addition they sometimes don’t run a credit report before issuing a pre-qualification letter.  This is changing some with the fallout of the subprime industry this last spring.  This makes it even more important that a lender get you totally pre-approved. 

If you think you are pre-approved but have not provided the lender with income and asset documentation you are not approved.  A true approval, unless for a specified no document program, will require income and asset documentation and credit reports are required on all loan types.Being pre-approved gives you an edge when you start looking for you home.  If you get in to the situation where there is more than one offer on a home it is often the person who has been pre-approved who will get the home.  I have even had the situation where the other offer was a little more but my seller preferred the person who had a true pre-approval.

What is a Pre-Qualification?

A prequalification is simply a meeting between a loan officer and a customer to determine what the mortgage needs of the customer are.  Income and assets are not verified.  The credit report may or may not be pulled.  The information is not submitted to an underwriter.  The lender does not receive enough information to make a credit decision.

What is a Pre-Approval?

Pre-approval includes a complete loan application.  A credit report is pulled and asset and income are verified.  The information is submitted to underwriters for “credit only” decision.  Once you have been pre-approved your credit package can be used with any property.  Final loan approval will be subject to the underwriter approving the property only.  A pre-approval is normally good for 90 days.  The borrower receives a written pre-approval letter.

So you have your loan in place, the title commitment is in and you have completed any inspections etc. you wish to have on the property; now it is time to go to your real estate closing.  So what do you need to bring to the closing table?

The biggest item you will need to bring is of course money.  I have had a few clients who did not have to bring funds to the closing table but those have been few and far between; even if they had a 100% loan.  Actually the only two times that I remember that happening it was a VA loan.  The money to pay all your fees and closing cost will need to be in the form of “guaranteed funds” such as a Cashier’s Check.  Your agent or escrow officer will notify you of the exact amount.   You will receive a closing document required by HUD that outlines the settlement cost. The Title Company prepares this document.   The HUD statement is a little difficult to read as you read it backwards.  You start with page two and then go back to page 1.  Page 1 is the page that shows the funds you need to bring for your real estate closing.  For additional information on HUD statements go here. 

 In a perfect real estate world you would receive the HUD statement the day before closing so you would have time to go over it before closing.  Unfortunately real estate is not perfect; I can’t tell you how many times we get the HUD from the Title Company at the closing table.  I honestly don’t know why it takes so long but it is a very complex process.  Should that happen you can bring a check using the figures your lender have come up with from your good faith statement.  Should you not bring enough money you can write a personal check to the title company for up to $1500.  On the flip side if you bring too much money the Title Company will cut you a check for the overage.

The other item you will need to bring is a picture ID such as your driver’s license.  A number of years ago I had a client who was moving to another state.  He came back to Texas for the closing and to get his furniture.  A few days before closing I found out that he had turned in his driver’s license to the other state and only had a piece of paper for a drivers license.  He did not have another picture ID.  Back then I talked the title company in to letting us get a membership at Sam’s Club and using it as a picture ID.  As I told you this was quite a few years ago I’m not sure if that would fly today.  Long story short I highly recommend not turning in your driver’s license if you are planning on buying a house unless you have another type of picture ID like a passport.

For all your Northwest Houston Real Estate needs, contact me today!
Marchel Peterson
Results Realty
Cell: 832-721-8332

I have lived in states that have closed homes at attorneys offices and in states that close homes at title companies.  In Texas we close at Title companies and if you are getting a loan you will probably be required by your lender to have a title policy.  If you are paying cash you can choose whether to get a policy or not.  In my opinion you are taking a big risk that could come back to bite you later on by not acquiring a title policy but that will be your choice.  I have heard nightmare stories about people who have not bought policies and something going way back has come back to bite them.

Title insurance provides protection against title defects that were unknown to you at the time you purchased the policy.  Before writing a policy, a title company will check for defects in your title by examining public records, including deed, mortgages, wills, divorces, court judgments, tax records, liens, and encumbrances.  The company will then defend in court any claims to the property that are covered by your policy, subject to certain limitations.  If the company loses, it will pay you for covered losses up the amount of your policy.

In Texas, the two most common types of title policies are “mortgagee policies,” which protect lenders, and “owner policies,” which protect buyers.

Most lending institutions won’t loan you money to buy a house or other property unless you purchase a mortgagee policy.  This policy will repay the balance of the mortgage if a claim against your property voids your title.  Mortgagee policies remain in effect until the loan is repaid.  Most lenders will require you to buy a new mortgagee title policy if you refinance your home. 

Owner policies insure property owners against the specific kinds of claims listed in the policy.  Any owner policy remains in effect as long as you or your heirs own the property or are liable for any title warranties made when you sell the property.  You should keep your owner policy, even if you transfer your title or sell the property.

In Texas our title policy forms are standardized.  This mean the policy language is the same, regardless of the company. Here is a blank title policy from Alamo title so you can see the standardized language.  Pay special attention to “Schedule B” of the policy which explains any limitations, exclusions, exceptions and special conditions.  You may want to discuss these exceptions with an attorney before you close on a real estate deal.

The premium for a title policy is paid only once, at the closing of the sale.  The buyer and seller may negotiate who pays the premium.  Generally in Texas the title policy is paid by the seller for the new buyer but everything is negotiable so this is not always the case.  Lots of times when you are buying a new home the builder will not pay for the policy. 

Title insurance premium rates are set by the Texas Department of Insurance and are based on the property’s sale value using a sliding scale.  You can check the Texas Title Insurance  rates out here. 

If you would like more information about title policies.  I found an informative article about Texas Title Basics by Roberts & Roberts Attorneys at Law.  Texas Title policies are a good thing as they protect what is probably one of your biggest investments your home.

For all your Spring TX Real Estate needs, contact me today!
Marchel Peterson
Results Realty
Cell: 832-721-8332

Any time you are buying a home whether it is a resale home or a brand new home you need to have the home inspected by a licensed home inspector.  Most people only think of one or two questions to ask a home inspector.  The most common being “How much is your fee” and “When you can inspect the home”.  Below I am including a list of additional questions you might ask.

The State of Texas does require testing and licensing of inspectors. 

• Ask them about their training and what kind of license they have.  
• Ask them how long they have been licensed in the state of Texas. 
• Make sure they are a full time home inspector.  I have found there are a lot of inspectors who dabble and you want someone who is making home inspections their career.   
• There are lots of codes they need to stay current on.
• Ask them if they also perform repairs? (If the answer is yes this may be a conflict of interest). 
• What will the inspection include?  (It should include heating, A/C systems, electrical, interior plumbing, visible insulation, visual roof, walls, ceilings, floors, windows, doors, foundation and the visible structure of the home.
• Ask them if they charge extra based on the size of the home.  I have found that most inspectors have different price breaks according to the square footage of the home.
• Find out how much they will charge if you ask for a reinspection after the repairs are completed.
• Be sure you can attend the inspection.  This is your time to learn about your new home and ask questions.  If the inspector does not want you following him around I would suggest finding a different inspector.
• Be sure that they don’t mind you calling with additional questions after the inspection. 
• Ask for references.  Get names and phone numbers of people they have recently inspected homes for.
• Make sure you are getting a written report in a timely manner. They may give you the report at the inspection or they may want to email it to you the following morning.   Either method is acceptable.  Just remember that time is of the essence.
• If you have a particular concern about the property, be sure to ask if it will be covered in the inspection.

The inspector may not inspect swimming pools, wells, septic tanks, wood destroying insects or other environmental test.  You will likely need to arrange for those inspections separately.

The primary purpose of the inspection is to educate you so you can make an informed purchasing decision.

For all your Tomball TX Real Estate needs, contact me today!
Marchel Peterson
Results Realty
Cell: 832-721-8332

On a regular basis I have people asking me to find them a home that is not in a homeowner’s association.   I am going to tell you why I don’t think that is a good idea living in the Northwest Houston area.    I have lived in three different states besides Texas; Kansas, Colorado and North Carolina.   In all of those states I did not live in subdivisons that had HOA’s.  It was not a big deal because all three of the areas that I lived in had zoning in affect.   The problem with not buying in a subdivision in the Houston area is that we do not have zoning in affect.  Since we don’t have zoning it makes living in Norwthwest Harris County or Southeast Magnolia County’s  a a free for all as far as homes are concerned.  People can build whatever they want wherever they want it.  That is why it is not uncommon to see cows in the middle of the city or suburbs.  If you have ever visited the Johnson Space Center you will notice cows grazing.  That is just part of the beauty of the Houston area; cows in the city. I will never forget when I found out that the Houston area did not have zoning.  We moved to the area in 1996 and I was taking the classes to get my real estate license.  One of the instructors’s nonchalantly said “well you know we don’t have zoning in the Houston area”.  I almost fell off my chair; I though every area was zoned.  At the time I wasn’t sure if I wanted someone telling me what I could and couldn’t do.  The longer I have lived here however the more I appreciate home owners associations for maintaining our property values.  To give you an example a few years ago my husband worked with someone who bought out in the country in a non-restricted area.  The guy loved it until the house next door was sold and the new owner decided to make it in to a salvage yard.  When that junk yard opened up his property values went down the tube.

The good news is that there is just about something for everyone as far as homeowner’s associations go.  There are associations with all kinds of restrictions such as in master planned communities and there are HOA’s that allow you to have mobile homes.   You can find subdivisions all the way between the two extremes.  Most country subdivisions will allow you to have horses. Typically it is 1 acre per horse but again that varies by subdivision.  The HOA’s fees also vary greatly.  I have seen fees as low as $10 a year and as high as $1500.  There are even a few subdivisions that have deed restrictions but no fees.  Most of the suburb HOA’s have similar restrictions.  If there is something in particular you are interested in doing it is a good idea to look the deed restrictions over before you ever put an offer on a house.  It is a fairly easy process to get the deed restrictions; usually you can get them from a local title company. It is important to decide what kind of restrictions you are looking for and find your home in a HOA that meets your needs.

For all your Spring TX Real Estate needs, contact me today!
Marchel Peterson
Results Realty
Cell: 832-721-8332