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