You asked that I just write a step-by-step explanation of how to buy a home in Texas, and my experience indicates the following:
The 1st step would be to contact a buyer’s representative in an area of town that you choose to locate. The broker should have an ABR designation and be a certified residential specialist in the neighborhood and type of home that you are trying to pursue (whether a townhouse, a single-family residence, or condominium). They can give you a variety of information on housing values, schools, traffic issues, shopping areas, community developments and a plethora of other issues that can make the home buying experience much easier.
The 2nd person to contact would be a lender (the Realtor may be able to help you with this) who can confirm the buyer’s qualifications for credit and give a commitment letter for a loan amount and rate which may be extremely helpful when negotiating for the home. It confirms to the seller that the buyer is serious and has money available for the purchase.
It is important to note that because of new Real Estate Settlement Procedures Act issues, it may take as long as 90 days to close a loan regardless of the borrower’s credit score and the amount of money. The buyer and the seller both need to understand this. It has nothing to do with your credit, quality of the buyer or seller, but is the result of new federal regulations.
After you have decided on a home to purchase, the Texas Real Estate Commission requires that the Realtor use a TREC promulgated form which must be utilized in the acquisition of the property. These forms are published by the Texas Real Estate Commission, are written by the Texas Real Estate Commission’s Broker/Lawyer Committee and are standard forms for use in all areas of residential real estate in Texas. The buyer or seller is allowed to make changes to the contract, but the Realtor is not.
Once the contract is signed it is deposited with a local title company, who has 20 days to issue a title commitment to confirm whether or not they will issue title insurance on the property and under what conditions. In Texas, title companies are 100% controlled by the Texas Department of Insurance. They all use the same forms, they have to charge the same fees, and all their escrow officers are bonded and licensed by the State of Texas. The title commitment is also a standard, promulgated form by the Texas Department of Insurance and there is very little that can be changed on the policy in a standard residential transaction. One should review the title commitment very carefully to determine whether or not the title is satisfactory. If there are any questions, those must be sent to an attorney-at-law licensed by the State of Texas. Texas also board certifies residential real estate lawyers and it is strongly suggested that if you don’t know a lawyer in Texas, the list of board certified residential lawyers are available through the State Bar of Texas. Any board certified residential lawyer will be familiar with title commitments, exceptions to title commitments and TREC promulgated forms.
Once the title commitment has been reviewed, and corrections made if necessary, the title company can issue a revised title commitment to confirm their willingness to issue the title policy based on the new or revised exceptions.
The buyer then needs to order a survey (the Realtor can give you a list of surveyors), and have the property surveyed. If the survey shows encroachments, protrusions or other boundary line or set back problems, it is considered a valid objection to title.
Additional title coverage is available through endorsements to guarantee the location of boundaries and provide protection against overlapping improvements or encroachments of fences or buildings on the boundary lines. It is strongly suggested that this additional coverage be obtained. It is a very minor cost (5% of the title insurance premium) which the buyer usually pays.
After the title commitment has been reviewed, loan funds are confirmed; they can set the date for the closing through the title company. In Texas, buyers and sellers are seldom represented by counsel, but if they are, counsel will prepare the deed on behalf of the seller and the loan documents are normally prepared by the lender’s counsel. There are certain title insurance documents that will be provided by the title insurance company (affidavits and closing statements) which will also have to be reviewed. The title companies normally make these documents available a few days prior to closing upon request. Don’t hesitate to ask for them.
At closing, the escrow agent is normally the key player. The seller will execute the conveyancing documents. The buyers will execute the loan documents. The title company will oversee the execution, take acknowledgements and send the documents to the courthouse to be recorded. They will also oversee collection of, and disbursement of, all funds. All fund disbursements must be shown on the RESPA required HUD-1 closing statement. As stated previously, escrow officers in Texas are licensed and bonded, and can handle a lot of complicated questions as it pertains to disbursing the proceeds, recording, and HUD-1 statements. One should never hesitate to ask all the questions they want to the escrow officer.
After closing and recording, the title company will send the original, recorded documents to the person entitled to have them, and the original title policies will be issued and sent to the person entitled to have them, and the original title polices will be issued and sent to the insured. Depending on the county’s recording system, this may take a few days or weeks.
Chuck Jacobus
6750 West Loop South, Suite 615
Bellaire, Texas 77401
Phone: 713-839-8800
Email: [email protected]
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