Results Realty Buzz: Spring TX First Time Home Buyers Guide – The Texas option fee and your home inspection! – Part 6 –

Informing you on the Real Estate Market in Spring Texas and the surrounding areas and other interesting tid bits!

Spring TX First Time Home Buyers Guide – The Texas option fee and your home inspection! – Part 6 –

Spring TX option feeThis 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.

  • Spring TX home inspectionThe 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 Spring Texas Termite inspectionhas 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!

 

Comment balloon 12 commentsMarchel Peterson • August 24 2009 05:11PM

Comments

Hi Marchel, This is a great series of posts you have going. Great job!

Posted by Shirley Parks, Broker, 210-414-0966, San Antonio TX Real Estate (Sands Realty 210-414-0966) over 10 years ago

Marchel- This is a nice series. Please keep this handy for our SEO webinar because I will give you some pointers there and you can come back to implement them in this series. I like how much information you are giving. That is important, and it is quality content. Katerina

Posted by Katerina Gasset, Get It Done For Me Virtual Services (Get It Done For Me Virtual Services ) over 10 years ago

Very good series with detailed education Marchel. The option period definitely can give the buyer an out.

Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) over 10 years ago

Great explanation.  I would add one thing.  The option fee is nonrefundable if the buyer backs out, however, the money is refunded back to them at closing.  This is negotiable, but I've never seen a contract where it's not returned at closing.

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com) over 10 years ago

Hi Marchel, Valuable information for  Texas first time home buyers. I like the detail that you have put in the post,

Posted by Mary Douglas, REALTOR, Red Feather Lakes, Colorado (United Country Ponderosa Realty, Red Feather Lakes, Colorado) over 10 years ago

Marchel, I love this series that you're doing. Very informate, and labor intensive, too. Plus, it's very eye catching. I can imagine you'll get great Google-juice with it.

Posted by Marianne Snygg, ABR, ASP, GRI, SFR (ERA Herman Group Real Estate) over 10 years ago

Marchel this was well presented.   In my market we do the inspection, then get all the issue out of the way before the contract is signed.

It is so important for the buyer to be at the inspection because the inspector go over stuff that will useful once the buyer moves in.

 

Posted by Jennifer Fivelsdal, Mid Hudson Valley real estate connection ( JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571) over 10 years ago

Hi Marchel, This all very interesting and the difference with CA is quite interesting. We have no option period and default of 17 unless changed for the Buyer's due diligence, we have no option fee. Our home inspectors are NOT licensed but are certified. I only use licensed contractors or engineers but that is a whole post in itself. Interesting and well constructed. PS, I like the idea of the fee but think it should be a lot higher. Does the Seller retain the fee if the Buyer opts out?

Posted by William Johnson, Retired Real Estate Professional (Retired) over 10 years ago

This is a great series you have done. Fine work!

your friend in Charlottesville Virginia!

Posted by Charles McDonald, REALTOR®, Blogger, Principal Broker®, Owner (Charlottesville Real Estate Solutions) over 10 years ago

Marchel, I find the Option Fee very interesting, I never heard of one here in Connecticut.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 10 years ago

Hi Marchel, lots of information and a great reason to use a professional like yourself.  Great series.

Posted by Gary White~Grand Rapids Home Selling Pro Call: 616-821-9375, Real Estate Services You can Trust! (Flexit Realty "Flexible Home Selling Solutions") over 10 years ago

Hello Marchel - Thanks for all your hard work on this information for 1st time home buyers. 

Posted by Andy Chaudoir, Your Home Inspection Connection in Central Texas (Professional Inspection Services - Georgetown, Texas) almost 10 years ago

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