Property Buying & Selling in Texas

Successfully navigating the real estate market in Texas involves much more than finding the right home or price. It requires an in-depth understanding of local laws, title rules, and due diligence steps.

Buying and selling real estate means managing market conditions while carefully reviewing public ownership records, deeds, liens, and title documents to ensure a lawful transfer of property.

Understanding the Real Estate Market in Texas

Texas markets vary significantly by region, from major metros like Austin, Dallas-Fort Worth, Houston, and San Antonio to smaller, rural counties. However, despite the differences in local property markets across the state, market conditions continue to dictate pricing, timing, and leverage for buyers and sellers in the state.

The table below identifies typical market conditions and the strategies that buyers and sellers often adopt:

Note that a seller's market refers to when inventory is low and competition is high, while a buyer's market is characterized by high housing inventory and low demand.

Buying a Property in Texas

The Texas homebuying process typically follows this process:

• Get Pre-Approved for Financing: Secure pre-approval from a lender before shopping. A strong pre-approval letter improves negotiating power, especially in competitive markets.

• Identify the Right Property: Consider location, school zoning, proximity to employment centers, flood zones, and community features.

• Review Seller Disclosures: Texas law requires sellers to provide a Seller's Disclosure Notice detailing material defects they know about. Some Texas contracts also require a Property Inspection Notice regarding non-homestead property used for farming or ranching.

• Check Public Records: Review public records for deed history, current liens/mortgages, easements, and restrictive covenants. Title companies typically perform these searches.

• Inspections and Surveys: Order a professional property inspection and (if relevant) a land survey. Inspections reveal structural or mechanical issues not visible from a simple walkthrough.

• Title Search and Title Insurance: A title search identifies liens and clouds on title. Buyers generally purchase owner's title insurance to protect against hidden defects.

• Closing: In Texas, closings are often facilitated by a title company or real estate attorney. Funds and documents are exchanged, liens are satisfied from sale proceeds, and the new deed is recorded with the county clerk.

Common challenges faced by buyers in Texas include the following:

• Competition in high-demand markets, such as Austin and Dallas-Fort Worth

• Rising mortgage rates affecting affordability

• Floodplain or environmental issues affecting insurance costs

• Unpermitted improvements found in public records

• Liens or judgments that must be cleared before closing

Selling a Property in Texas

Selling a property in Texas generally follows these steps:

• Prepare and Price the Home: Work with a real estate professional to conduct a Comparative Market Analysis (CMA) and set a listing price that reflects current local trends. Make necessary maintenance and cosmetic updates to enhance the appeal of the property.

• Provide Required Disclosures: Texas requires sellers to fill out a Seller's Disclosure Notice identifying known material defects. Other contractual forms may also apply.

• Receive and Review Offers: Offers are evaluated not only on price but also on financing, contingencies, and proposed closing timeline. Cash offers or fewer contingencies are often viewed favorably.

• Title Clearance and Closing: Once an offer is accepted, the title company reviews all liens and encumbrances. Sale proceeds are used to pay off mortgages or liens so the buyer receives a clear title.

• Close the Sale: Title documents are signed, funds are disbursed, and the new deed is recorded with the county clerk, legally conveying ownership.

Sellers in the Texas property market often face certain challenges, such as:

• Overpricing in a shifting market

• Last-minute issues found in the title or inspection

• Delays in lien releases or lender payoffs

• Buyer disputes over condition or repairs

Buying and Selling at the Same Time in Texas

Some property buyers in Texas sometimes have to buy a new home and sell the existing one at the same time. This process can be challenging due to reliance on funds from the sale proceeds to close the purchase deal.

To synchronize the process, common strategies include:

• Contingency Offers: The buyer offers to purchase the new home contingent upon the sale of their current home closing first. In competitive markets, such contingencies are typically rejected, as they introduce significant risk for the seller.

• Back-to-Back Closings: The sale of the old home and the purchase of the new home are scheduled hours apart on the same day. The closing agent uses a wire transfer of the sale proceeds to immediately fund the purchase of the new home.

• Temporary Lease-Back: If the sale is delayed but the purchase closes on time, the seller may negotiate a temporary lease-back of their old home. This allows the buyer of the old home to move in while the seller waits for the new home to close.

Note that if the sale is delayed, the seller may lack the cash required for the new purchase closing, potentially forfeiting deposits or defaulting on the second contract. In addition, unforeseen issues in the title search on either property, such as an unreleased old lien, can delay one closing, collapsing the synchronized schedule.

Records to Review Before Buying or Selling

Whether buying or selling in Texas, consider reviewing the following records before closing a deal:

• Deeds: Confirm the names on the last recorded deed match the current seller

• Title Report: Reveals liens, easements, and encumbrances

• Lien Records: Includes mortgages, tax liens, HOA liens, and contractor liens

• Deeds of Trust/Releases: Verify that any previous mortgages have corresponding recorded Release of Lien documents

• Abstracts of Judgment: Check for any recorded judgment liens or other involuntary claims that must be paid off at closing

• Property Tax Records: Shows assessed value, exemptions, and payment history

• Building Permits and Code Compliance: Confirms legal improvements

• HOA Documents: Confirms Covenants, Conditions & Restrictions (CC&Rs), bylaws, and fees

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