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This is my 6th post in my Spring TX first time home buyers series.  I have chosen to discuss the Texas option fee and the home inspection in the same post.  Your option period is typically that period of time where you do your 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". 

Once you have finished negotiations and all parties have signed the contract you now have a fully executed contract.  Prior to this it was called an offer but you are now under contract.  As a Spring TX first time home buyer you need to know that this is a legally binding contract.  You have probably negotiated a certain amount of days for your option.  You are now going to be in your option period.  The option days start counting the day after the contract is fully executed by all parties.

Everything is negotiable but usually you will have put $100 (plus or minus) down for a 5 to 10 day option period.  This option period gives you the time to do your home inspections.  Typically a seller will allow you 10 days but I have found that many foreclosures only allow 5 to 7 days.  These are not business days; time is of the essence and strict compliance with the time for performance is required.

You will need to quickly find an inspector to inspect the home.  I have a list of home inspectors that I can give you or you are welcome to find your home inspector yourself.  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 re-inspection 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.  Sometimes the home inspector will have developed a relationship with a termite inspector or some of the other inspectors and can schedule that inspection for you.  You will need to discuss that at the time you set the appointment.  If not you will need to set the additional inspections yourself. 

I have heard the saying that there are two types of homes in Texas one that has termites and one that is going to get them.  What I am saying here is don't freak out if you find termites they are very common and treatment is fairly easy.  I have seen brand new construction where they have found termites.  The inspector should be able to give you an idea if there is any permanent damage.

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.  We will then fill out an Amendment to the contract which takes precedence over the Contract. If you remember right we had probably marked accept the property in its present condition on the Earnest money contract.  The Amendment amends the contract for any repairs or other changes that are made. 

If the repairs are more than what you want to do, or maybe you just got cold feet, you can back out for any reason during this option period and the only money you will lose is the money you put down for the option and the cost of your inspection. 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! 

This is a Spring TX first time home buyers series and as I add additional post I will add the links.  Please feel free to visit my prior post.

1. Spring TX First Time Home Buyers Guide - Part 1 - Loan Pre-approval!
2. Spring TX First Time Home Buyers Guide - Part 2 - The Web Search!
3. Spring TX First Time Home Buyers Guide - Part 3 - The Home Search!
4. Spring TX First Time Home Buyers Guide - Part 4 - What price do we offer!
5. Spring TX First Time Home Buyers Guide - Part 5- The Home offer!
6. Spring TX First Time Home Buyers Guide - Part 6 - The Texas option fee and your home inspection!
7. Spring TX First Time Home Buyers Guide - Part 7 - The Title policy
8. Spring TX First Time Home Buyers Guide - Part 8 - Why you need to live in an HOA!
9. Spring TX First Time Home Buyers Guide - Part 9 -  What to bring to your closing!

__________________________________________________________________________________________________

If you are buying or relocating to  Spring Texas and need help from a professional REALTOR®,  Marchel can be reached at Marchel@AgentwithResults.com or by phone at 832-721-8332. 

If you would like information about Spring TX please visit my websites at www.AgentwithResults.com and at www.ResultsRealtytx.com.  The AgentwithResults site is rich in Content about Spring and the surrounding areas of Tomball, The Woodlands and Magnolia.  If you prefer pictures with your content then visit my ResultsRealtyTX site.

Want to find out about new Spring TX properties immediately as they come on the market, then click here to sign up for a free automatic notification of new listings.

Click the button to the left to search our local MLS.

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In my last post we discussed what price a Spring TX first time home buyer might want to offer.  In this post I am going to discuss the other items that we will need to negotiate.  In Texas we have an 8 page resale contract.  Price is what most Spring TX first time home buyer's think of when making an offer but there are a number of other terms that will also need to be negotiated.

I am going to go through the items on our Texas contract that I expect we will be negotiating. 

Section 3 - Sale Price- I covered this extensively in my last post Spring TX First Time Home Buyers Guide - Part 4 - What price do we offer!

Section 4 - Financing - The only way we would not mark this sections is if you were paying cash for your transaction.  If you are getting a loan we will be marking that "this contract is subject to buyer being approved for the financing described in the Third Party Financing Condition Addendum".  We will be attaching the Third Party Financing addendum and it goes in to more detail about whether your financing is going to be conventional, FHA or VA.

Section 5- Earnest money - In our area it is typical to put either $500 or $1000 Earnest money down (depending on the price of the home).  If the home is over $250,000 there's usually more earnest money put down.  In other states it is often 1% of the purchase price; for the most part that is not the case here in our area of Texas.  This is the place where we also decide what title company to use.  When the seller pays for the title policy they often feel they should get to choose but it is a negotiable item between the buyer and the seller.  Please note as soon as we finish negotiations the Earnest money will go to the title company we have chose and they will cash the check and hold the money in escrow.

Section 6 -Title policy and the survey - Typically in our area the seller pays for the title policy and the buyer pays for the survey.  This is however totally negotiable between the buyer and the seller.  If the seller has an existing survey this is the place where we request it.  Most lenders will allow an old survey to be used if the survey has been done within the last 10 years and if nothing has changed.  If a pool or fence has been put in then the survey will need to be re-done.

Section 7 - Property Condition-

7B- Seller's Disclosure notice pursuant to 5.008 Texas property code (notice) - This is where we mark that you have seen the seller's disclosures.  If you have not seen the disclosures then we will mark how many days the seller has to provide it to you and you may back out if you see something you don't like in that amount of negotiated days.  The one exception to providing a seller's disclosure is a foreclosure.  The seller of a foreclosure is not required to furnish the notice under the Texas Property Code.

7D - Acceptance of Property Condition -You either accept the property in its present condition or there is a place that you can ask for specific repairs and treatments.  I will be covering this in more detail when I write about the termination option.

7H - Residential Service Contracts - In today's age most sellers will pay for a buyer to have a one year home warranty.  If there's a pool or spa we will typically try to negotiate coverage on that also.  This is a totally negotiable item and if the seller declines you can still buy a policy yourself when we close.  As I said most sellers will pay for a 1 year warranty but foreclosures and relocation companies may not offer this to the buyer.  We will of course ask for it as all they can say is no.

Section 9 - Closing - This is where we put the closing date.  I have found that this item often requires as much negotiation as the sales price.

Section 10 - Possession - We will either mark that possession is on closing or funding or it will be according to a temporary release.  I almost always mark that possession is on closing and funding but if I was representing the seller I would come back and ask for closing plus 48 hours.  Typically in that case there is not any money involved but it gives the seller time to get out.  I have heard nightmare stories of the seller moving out and then everything fell apart.  This is something that should be negotiated at the time we write the contract but it is something that I have found often comes up later. 

Section 11 - Special Provisions - Rarely do I have to write anything in special provisions.  On our old contracts we often wrote lots of items in this section but when the contracts were overhauled years ago they left no stone unturned or very few.

Section 12 - Settlement and Other Expense - If we are going to ask for any help from the seller with closing cost this is where it will go.

Section 16 - Mediation - Typically we are always going to mark that you would agree to mediate before you will sue.  The exception on this is again foreclosures and relocation listings.  They will typically not allow you to mark "will" on this.

Section 21 - Notices: - This is a place for you to write all your contact information. 

Section 22 - Agreement of Parties - This is where the addenda we are attaching are marked.  Typically we will have marked Third Party Financing Condition Addendum and Addendum for Property Subject to Mandatory membership in a Properties Owners' Association.

Section 23 - Termination Option - In this section you can put an option fee amount and a number of days.  Typically this will be $100 and 10 days but again this is totally negotiable.  This gives you the unrestricted right to terminate for the amount of days that we negotiate.  This is the time to get your inspections done.  I will be discussing this in more detail in my next post on home inspections.  I always mark that the fee will be credited to you at closing.  Time is of the essence for this paragraph and strict compliance with the time for performance is required.  During this option period you may back out at an time and all you lose is the option money.  The earnest money you put down will be refunded to you.

As you can see there are lots of items for the Spring TX first time home buyer to negotiate.  I never fail to be amazed at what can end up being a hot button.  I recently had someone buy one of my listing who could not agree on the Title Company on a prior home that they made an offer on.  That one was amazing to me.

My job is to ensure that as a Spring TX first time home buyer you have the tools and information you need to make an informed decision. I will help you prepare the offer. Then I will present it to the seller on your behalf and try my best to get it accepted at your price and terms!  My next post will be on the option period and the inspection.

This is a Spring TX first time home buyers series and as I add additional post I will add the links.  Please feel free to visit my prior post.

1. Spring TX First Time Home Buyers Guide - Part 1 - Loan Pre-approval!
2. Spring TX First Time Home Buyers Guide - Part 2 - The Web Search!
3. Spring TX First Time Home Buyers Guide - Part 3 - The Home Search!
4. Spring TX First Time Home Buyers Guide - Part 4 - What price do we offer!
5. Spring TX First Time Home Buyers Guide - Part 5- The Home offer!
6. Spring TX First Time Home Buyers Guide - Part 6 - The Texas option fee and your home inspection!
7. Spring TX First Time Home Buyers Guide - Part 7 - The Title policy
8. Spring TX First Time Home Buyers Guide - Part 8 - Why you need to live in an HOA!
9. Spring TX First Time Home Buyers Guide - Part 9 -  What to bring to your closing!

__________________________________________________________________________________________________

If you are buying or relocating to  Spring Texas and need help from a professional REALTOR®,  Marchel can be reached at Marchel@AgentwithResults.com or by phone at 832-721-8332. 

If you would like information about Spring TX please visit my websites at www.AgentwithResults.com and at www.ResultsRealtytx.com.  The AgentwithResults site is rich in Content about Spring and the surrounding areas of Tomball, The Woodlands and Magnolia.  If you prefer pictures with your content then visit my ResultsRealtyTX site.

Want to find out about new Spring TX properties immediately as they come on the market, then click here to sign up for a free automatic notification of new listings.

Click the button to the left to search our local MLS.

Subcribe in a reader