How Buying a Home Works in Texas

Texas runs a resale purchase on a standard state contract, a short paid inspection window called the option period, and a closing handled by a title company rather than an attorney. If you are arriving from a state with attorney closings, escrow companies or open-ended contingencies, the sequence below is what changes. It follows a typical Houston purchase from pre-approval to keys, with the 2026 rules that newcomers most often miss.

The sequence, step by step

1. Pre-approval

Houston sellers expect a lender's pre-approval letter with every offer, and a pre-approval, unlike a quick pre-qualification, means the lender has verified your credit, income and assets. It usually takes a day or two and stays valid for 60 to 90 days. Because Houston property taxes and insurance take a larger share of the payment than in most states, ask the lender to underwrite with a 2.2 percent tax rate and a realistic insurance quote rather than national defaults; our calculator shows the difference. Compean Group is a brokerage, not a lender, and does not originate loans; we will introduce you to several lenders and compare their quotes with you.

2. The written buyer agreement

Since January 1, 2026, Texas Occupations Code Section 1101.563, added by Senate Bill 1968 of the 89th Legislature, requires a license holder to have a written agreement with a prospective residential buyer before showing any residential property, or before presenting an offer if nothing will be shown. The agreement must state the services the agent will provide, its termination date, whether it is exclusive, whether the agent represents you, and how the agent is paid and how that amount is determined. A non-representation agreement for showings only is allowed, but it must be non-exclusive, run no more than 14 days, and the agent may not give opinions or advice about the property under it. The rule covers residential purchases; commercial purchases are outside it. In practice, you will sign before the first tour, and you should read it like any contract.

3. The offer: the TREC One to Four Family Residential Contract

Resale homes are bought on the Texas Real Estate Commission's promulgated One to Four Family Residential Contract (Resale), Form 20-19, effective July 1, 2026, with addenda for third-party financing, property owners association, seller financing, lead-based paint and other situations. The contract sets the price, the earnest money and option fee, the title and survey terms, the closing date and what the seller must disclose. Texas is a fill-in-the-blanks state: the negotiation is in the blanks, not in redrafting paragraphs, which is why the option period, the survey choice and the financing terms carry so much weight.

4. The option period

Paragraph 5 of the contract lets you pay the seller a small option fee for the unrestricted right to terminate within a stated number of days after the effective date. In Houston the period is commonly 7 to 10 days and the fee a few hundred dollars, both negotiated; the fee is credited to the price at closing if you buy. The option fee and the earnest money are delivered to the title company within three days after the effective date. This is the window for the general inspection, any termite, sewer-line, pool or foundation specialists, insurance quotes, a read of the deed restrictions and HOA documents, and a look at the flood map and elevation. Repairs are negotiated by amendment before the period ends; if you cannot agree, you terminate and the earnest money comes back.

5. Earnest money and the title company

Earnest money, often about 1 percent of the price in Houston, is held by the title company named in the contract, not by the broker. Texas closings run through title companies, which issue the title commitment, clear liens and defects, prepare the settlement statement, collect the funds and record the deed. Title insurance premiums are set by the Texas Department of Insurance; under the rate chart effective March 1, 2026, an owner's policy on a $450,000 purchase costs $2,509, and by Houston custom the seller usually pays for the owner's policy while the buyer pays for the smaller lender's policy. Texas has no real estate transfer tax.

6. Disclosures, the MUD notice, the survey and the T-47

Texas Property Code Section 5.008 requires the seller of a previously occupied home to deliver a Seller's Disclosure Notice on or before the effective date; TREC's current form is 55-1. It covers the condition of the systems and structure and, in its flood section, whether the property is wholly or partly in a 100-year or 500-year floodplain, a floodway, a flood pool or a reservoir, whether it has flooded or taken water from a reservoir release, and whether flood insurance is in place. If the notice arrives after you sign, you may terminate for any reason within seven days of receiving it. If the home is in a municipal utility district, Texas Water Code Section 49.452 requires a separate notice of the district's tax rate and bonded debt before a binding contract, and a signed copy is recorded at closing. Paragraph 6C of the contract handles the survey: the seller can deliver an existing survey with a T-47 Residential Real Property Affidavit swearing that nothing has changed since it was drawn, or either party orders a new one. Lenders and title companies will reject an old survey if the affidavit does not match the lot, so we check for additions, fences and pools against the drawing.

7. Appraisal and loan approval

The lender orders the appraisal early in the process. If the value comes in below the price, the Third Party Financing Addendum and, where used, an appraisal addendum determine whether you can renegotiate, bring the difference in cash or terminate within the financing deadline with your earnest money returned. In Houston the appraiser's comparable choices matter: Inner Loop values change block by block, and a comparable from across a bayou or a freeway can move the number by tens of thousands of dollars, so we send the appraiser our comparables and the contract's repair amendments.

8. The Closing Disclosure

Under federal rules, the lender must deliver the Closing Disclosure, the five-page form with the final loan terms, payments and closing costs, at least three business days before closing. Compare it line by line with the Loan Estimate and the title company's settlement statement; a material change restarts the three days. Plan on total buyer closing costs of about 2 to 5 percent of the price, including lender fees, the appraisal, the lender's title policy, recording, prepaid interest and the first deposits into your tax and insurance escrow.

9. Closing, funding and keys

You sign at the title company, usually in under an hour, after wiring your down payment and closing costs the day before. Signing is not the finish line in Texas. The lender reviews the signed package and releases the money, the title company disburses to the seller and records the deed, and only then has the sale funded. Funding often happens the same day and sometimes the next business day for afternoon signings, and keys change hands at funding unless the contract provides otherwise. Confirm wiring instructions by phone with the title company before you send anything; wire fraud targets this step.

10. After closing

File the homestead exemption with the county appraisal district as soon as you move in; it is free, it removes $140,000 of value from school taxes, and once in place it caps the growth of your appraised value at 10 percent a year. Set up electricity with the retail provider of your choice before move-in day, and keep the survey, the title policy and the closing statement; you will need them when you sell.

A typical Houston timeline

What the buyer pays, and when

• Option fee: negotiated, commonly a few hundred dollars in Houston, paid within three days and credited at closing.
• Earnest money: often about 1 percent of the price, applied to your down payment at closing and refundable if you terminate within the option period or under a contingency.
• Inspections: paid at the time of service during the option period; Texas inspectors are licensed by TREC.
• Appraisal and lender fees: paid at or before closing; listed on the Loan Estimate and Closing Disclosure.
• Title: the lender's policy and escrow fees are the buyer's by custom; the owner's policy is usually the seller's in Houston. All premiums follow the state rate chart.
• Prepaids and escrow: prepaid interest, the first year of homeowners insurance and the opening deposits for taxes and insurance; the Houston tax line makes this larger than newcomers expect.
• Total: plan on 2 to 5 percent of the price. Seller credits toward closing costs are common in the current market and are written into the contract; see rates, seller credits and buydowns.

Three Houston habits worth adopting

• Read the deed restrictions before the option period ends. With no zoning, they decide what can be built next door and what you can do to the house. The City Legal Department enforces recorded restrictions but does not advise private parties.
• Treat the flood check as a contingency. FEMA map, county flood tools, slab elevation and the disclosure's flood section, on every address, because just under half of the homes Harvey flooded in Harris County were outside the mapped floodplains.
• Quote insurance before you waive anything. Houston premiums run $3,000 to $6,000 a year and the roof's age can decide whether a carrier will write the policy at all; a bad quote during the option period costs you the option fee, a bad quote after it costs you the deal or the earnest money.

Questions buyers ask about the Texas process

Start your Houston purchase with us Selling first? Get a value More buyer questions

Call or text (832) 777-3904. We speak English and Spanish. Evan Compean negotiates our offers; Amanda Milligan, our broker and compliance manager, oversees every contract and deadline.

Updated October 29, 2026.