THE MCCRORY TEAM WILL GUIDE YOU THROUGH THE TRANSACTION

This section will provide helpful information about various aspects of the real estate transaction.

If you are moving to Texas from another area you may not know how buying and selling homes is different from other areas.  And even if you are a long time resident, you may have not purchased a home recently or really understood the meaning of some of the terms involved.  From A to Z, this page will clear up all the terms and information connected to your sale or purchase.

If a property is outside the limits of a municipality, the buyer should be aware that the property may later be annexed by a nearby municipality.  The buyer may find information on the the boundries of nearby municipalities by contacting the municipalities directly.  

An appraisal is a valuation of the property.  An appraiser renders an estimte of value as of a certain date under assumptions and conditions stated in the appraisal report.  Typically, a buyer's lender requires an appraisal to verify that the loan is secured by property that is worth a certain amount.  An appraisal is not the same as an inspection.

A real esate broker may represent a party (buyer, tenant, landlord, or seller) in a real estate transaction or may act as an intermediary between the parties.  A party may work with the broker or with one of the broker's agents.  Buyer, tenant, landlord, and seller will be provided a form titled "Information About Brokerage Services" which defines agency relationships.  An agent may help a seller or landlord market the property or help a buyer or tenant locate a property.  The agent is obligated to negotiate the transaction and may assist in gathering information and may coordinate many details in the transaction.  Brokers and agents are not inspectors.  They do not possess the expertise to condict inspections and therefore do ot make any representations, warranties, or guarantees about a property's condition.  Agents are not attorneys.  Parties are encouraged to seek the assistance of an attorney to help in understanding any of the legal consequenes and provisions of the contract or transacton.

COMPENSATION

Compensation means any commission, fee, or other valuable consideration for real estate brokerage services provided by a broker or agent.  Broker compensation or the sharing of compensation between brokers is not set by law or fixed, controlled recommended, or suggested by the Association of REALTORS®, any Multiple Listing Service (MLS), or any other listing service.  Broker compensation is fully negotiable.  Brokers independently determine their fees.  There are many different compensation models brokers may use including commission, flat fee, hourly fee, and fees for specific tasks.  Broker compenstion may come from different sources:  buyer and tenant may pay their broker directly, or the seller, landlord or listing broker may offer to pay certain buyer or tenant's expenses, which can include broker fees.

CONCRETE ISSUES (Alkali-Silica Reaction)

Alkali-Silica Reaction (ASR), also known as Concrete Cancer, is a chemical reaction in concrete that can comproise structural integrity over time.  ASR typically occurs in concrete structures exposed to moisture, such as foundations, slabs, swiming pools, and retaining wallls.  Diagnosing ASR definitively requires testing by a licensed structural engineer who can examine the concrete's compositin and condition.  Because swimming pools are in constant contact with water, they are particularly vulnerable to ASR.  Over time, ASR-related damage may render the pool or surrounding deck areas unusable or unsafe.  If you are buying or selling home and have concerns about potential ASR, you should: (1) Consult a sructural engineer to inspect and test the property if you notice signs such as cracking, uneven surfaces, or unexplained expansion in concrete areas.  (2) Engage an attorney for guidance on disclosure obligations, inspection contingencies, and how ASR issues may affect negotiations or contracts.

ENVIRONMENTAL CONCERNS

General.  Over the years the market has identified certain environmental concerns that may affect a property and that a buyer or tenant should be aware of. These enviromental concerns include but are not limited to, the presence of hazards such as asbestos, lead-based paint mold, pesticides, radon gas, toxic waste, underground storage tanks, urea-formaldehyde insulation, and other pollutants.  There may also be other types of environmental concerns, such as wetlands or endangered species, affecting the property that could restrict the use of the property.

Environmental Inspections.  If the buyer has an environmental concern about the property, the buyer should hire a qualified expert to inspect the property for such items.  The parties may include a promulgated addendum in the contract that may address such matters.

Lead-Based Paint.  If a property was built before 1978, federal law requres that the seller or landlord provide the buyer or tenant with: (1) the pamphlet titled "Protect Your Family from Lead in Your Home"; (2) the records and reports the seller or landlord has concerning lead-based paint or hazards; and (3) an oppoortunty to have the property inspected for lead-based paint or hazards.

Mold.  It is not uncomon to find mold spores in a property.  The concern about mold increses when there are large amounts of mold found in a property.  The Texas Department of Insurance publishes a document titled "Protect Your Home from Mold" which discusses mold in more detail.   

Oak Wilt and Diseased Trees.  There are diseases such as oak wilt and onther conditions that may affect trees and other plants.  Oak wilt is a fungus that affects certain oak trees.  If the buyer is concerned about such matters, the buyer may have the trees and other plants inspected by a professional.  

Noise.  Surrounding properties are used for a variety of purposes.  Some of the uses cause noise (for example airports, railways, highways, restaurants, bars, schools, areanas and construction).  The buyer or tenant is encouraged to drive to review the area around the property at various times and days.

EXPANSIVE SOILS

Soil conditions vary greatly througout Texas.  Many soils will move; some more than others.  This movement will many times, affect the foundation of homes and buildings and may cause cracks to appear in walls or other parts of the buiding.  Additionally, if a property is newly constructed, the concrete curing process may also cause the foundation of the building to move.  Seasonal changes in the moisture in the soil may also cause foundations to move.  The buyer should check with an inspector and other experts on preventive methods to minimize the risk of such movement.  The tenant may be required to water the foundation of a leased property as part of the tenant's responsibilities under the lease agreement.

FIRPTA

The foreign Investment in Real Property Tax Act of 1980 (FIRPTA) may require buyers in certain transactions involving a seller who qualifies as a "foreign person" to withhold up to 15% of the amount realized by the seller (usually the sales price) for federal taxes.  A "foreign person" is defined as a: (1) nonresident alien individual; (2) foreign corporation that has not made an election under section 897(i) of the Internal Revenue Code to be treated as a domestic corporation; or (3) foreign partnership, trust, or estate.  The definition does not include a resident alien individual.  A seller should notify the buyer whether the seller is a "foreign person" as defined by federal law.  If the seller is unsure whether he or she qualifies as a "foreign person", the seller should consult a tax professional or an attorney.

FLOOD HAZARD, FLOODWAYS, AND FLOOD INSURANCE

Many properties are in floor hazard areas.  Lenders who make loans on properties located in special flood hazard areas typically require the owner to maintain flood insurance.  Additionally, some prperties may lie in the floodway.  Texas REALTORS® publishes a form titled, "Information about Special Flood Hazrd Areas", which discusses flood hazard areas and floodways in more detail.  The buyer is encouraged to buy flood insurance regardless of whether the property is in a high, moderate, or low risk flood area.  A tenant may want to consider purchasing flood insurance if renting in a flood hazard area.  The landlord's flood insurance typically does not cover a tenant from loss or personal property or displacement costs.

FOREIGN BUYERS AND RENTERS

Pursuant to Texas Property Code Chapter 5, Subchapter H, certain buyers and renters may be prohibited from purchasing real property or entering into leases for one year or more.  Buyers and renters who believe these restrictions may apply to them shoud consult an attorney before entering into the transaction.

HISTORIC OR CONSERVATION DISTRICTS

Proerties located in historic or conservation districts may have restrictions on use and architecture of the properties.  Local governments may create historic or conservation districts for the preservation of certain architectural appeal.  A property owner may or may not be aware if the property is located in such a district.  If the buyer is concerned whether the property is located in such a district, contact the local government for specific information.

INSPECTION, REPAIRS, AND WALK-THROUGH

Inspections.  The buyer is encouragted to have the property inspected by licensed inspectors.  The buyer should have the inspections completed during any option period.  The buyer should accompany the inspectors during the inspections and ask the inspectors any questions.  Brokers and agents do not possess any special skills, knowledge or expertise concerning inspections or repairs.  If the buyer requests names of inspectors or repair professionals from an agent, the buyer should note that the agent is not makeing any representation or warranty as to the ability or workmanship of the inspector or repair professionals .

Repairs.  The buyer and the seller should resolve, in writing, any obligation and any timing of the obligation to complete repairs the buyer may request before the option period expires.

Walk-Through.  Before the close of the sale, the buyer should walk through the property and verify that any repairs are complete.  If the condtion of the property does not satisfy the contractual provisions, the buyer should notify the buyer's agent before closing.

MANDATORY OWNERS' ASSOCIATIONS

If a property is subject to an owners' association, membership in the association is typically required.  The buyer is entitled to obtain subdivision informaton, which may include the applicable restrictions, the association bylaws and rules, and a resale certificate  Unless otherwise negotiated in the contract, the buyer may be responsible for the cost of obtaining this informtion.  Membership in an owners' association usually involves an obligation to pay periodic dues or assessments.  Failure to pay such dues could result in a lien on and foreclosure of the property.  A tenant is also required to comply with all owners' asaociation rules applicable to the leased property, and may be subject to fines for failure to do so.

MINERAL INTERESTS

Determining who owns the mineral interests under a property (for example, rights to oil and gas interests) normally requires an expert to review the chain of title to the property.  Many times the mineral interests may have been severed from the property and may be owned by persons other than the seller.  Contract forms commonly used in Texas provide that the seller's interest, if any, in the mineral interests convey to the buyer as part of the property.  However a seller may wish to retain all or part of the mineral interests.  Texas REALTORS® publishes a form titled "Information About Mineral Clauses in Contract Forms" which discusses this issue in more detail.

MULTIPLE LISTING SERVICE

The Multiple Listing Service (MLS) is a database and cooperative tool between brokers.  Agents who use the MLS must comply with the MLS's rules.  The listing agent is required to timely report the current status of a listing, including when the property is sold or leased or is no longer available, as well as the sales price.  Subscribers (other brokers, agents, appraisers, and other real estate professionals) and appraisal districts have access to the information for market evaluation purposes.  Much of the information in the MLS, such as square footage, assessed value, taxes, school boundaries, and year built is obtained from different sources, such as the county appraisal district, an appraiser, or builder.  The broker or agent who provides information from the MLS does not verify the accuracy of the information.  The buyer or tenant should independently verify the information and not rely soley on information obtained from the MLS.

PERMITS

Permits may be required to construct, alter, repair, or imporve the property.  The buyer is encouraged to contact the local government to verify that all required permits have been obtained as this may impact future plans for the property. 

POSSESSION

Most contracts provide that the seller will deliver possession of the property to the buyer at the time the sale closes and funds or according to a temporary residential lease or other written lease required by the parties.  There may be a short delay between closing and actual funding; especially if the buyuer is obtaining funds from a lender.  The buyer may need to verify with the lender if the loan will fund on the day of closing.  The buyer should also take this potential delay into account when plannng the move into the property.  Any possession by the buyer before the sale closes and funds (or by the seller after the sales closes and funds) must be authorized by a written lease.

PROPERTY INSURANCE

Promptly after entering into a contract to buy a property and before any option period expires, the buyer should contact an insurance agent to determine the availablilty and affordability of insurance for the property.  There are numerous variables that an insurance company will evaluate when offering insurance at certain coverage levels and at certain prices.  Most lenders require that the property be insured in an amount not less than the loan amount.  The failure to obtain property insurance before closing may delay the transaction or cause it to end.  Texas REALTORS® publishes a document titled, "Information about Property Insurance for a Buyer or Seller", which discusses property insurance in more detail.  A tenant may want to consider purchasing liability insurance and insurance for casualties such as fire, flood, water damage and theft.  The landlord's insurance does not cover a tenant from loss of personal property. 

PROPERTY VALUES

The real estate market is cyclical and current property values may fluctuate.  Brokers and agents cannot guarantee desired future market conditions or property values.  The ultimate decision on the price and terms a Buyer is willing to buy and a Seller is willing to sell for a specific property rests solely  with that Buyer and Seller.  

RESIDENTIAL SERVICE CONTRACTS

A residential service contract is a product under which a residential service company, for an annual fee, agrees to repair or replace certain equipment or items in a property (for example, covered appliances, air conditioning and heating systems, and plumbing systems).  Co-payments typically apply to most service calls.  If the buyer requests names of residential service companies from an agent, the buyer should note that the agent is not making any representation or warranty about the service company.

SCHOOL BOUNDARIES

School boundaries may change and are, at times difficult to determine.  The school boundaries that an agent may provide or that may be provided through a Multiple Listing Service are only mapped estimates from other sources.  The buyer or tenant is encouraged to independently verify with the school district which schools the residents of the property will attend.

SEPTIC TANKS AND ON-SITE SEWER FACILITIES

Many properties have septic tanks or other on-site sewer facilities.  thee are several types of such systems.  Special maintenance requirements may apply to certain systems.  Please refer to a document titled, "Information about On-Site Sewer Facility" for more information.  The buyer should also determine if the county requires any registration or other action to begin using the septic system or on-site sewer facility.

SEX OFFENDERS AND CRIMINAL ACTIVITY

Neither a seller, landlord, seller's agent, nor landlord's agent of a residential property has a duty to disclose any information about registered sex offenders.  If the buyer or tenant is concerned about sex offenders who may reside in the area, access https://sor.dps.texas.gov.  Contact the local police department to obtain information about any criminal activity in the area.

SQUARE FOOTAGE

If the purchase price is based on the size of the property's building and structures, the buyer should have any information the buyer recieves about the square footage independently verified.  Square footage informatin comes from other sources such as appraisal districts, appraisers, and builders.  Such information is only an estimate.  The actual square footage may vary.  

STATUTORY TAX DISTRICTS

The property may be located in a utility or other statutorily created district providing water, sewer, drainage, or flood control faciities and services (for example a Municipal Utility District, Water Improvement District, or a Public Improvement District).  The buyer is likely to receive a prescribed notice when buying property in such a district.

SURVEILLANCE

Be aware that when viewing a property, a seller might record or otherwise electronically monitor a buyer without the buyer's knowledge or consent, and a buyer might photograph or otherwise record the property without the seller's knowledge or consent.  The parties should consult an attorney before recording or photographing another person or property.

SURVEY

A survey may identify the location of boundaries, major improvements, fence lines, drives, encroachments, easements, and other itmes on the property.  The buyer should obtain a survey early enough in the transaction to help the buyer identify any encroachments, encumbrances to title, or restrictions.  The contract will typicaly contain a provision which identifies who is responsible for providing a survey and the right to object to encumbrances to title disclosed in the survey.  

SYNTHETIC STUCCO

Synthetic stucco (sometimes know as EIFS) is an exterior siding product tht was placed on some properties in the recent past.  If the product was not properly installed, it has been known to cause damage to the structure (such as wood rot and moisture).  If the property has synthetic stucco, the buyer should ask an inspector to carefully inspect the siding and answer any questions. 

TAX PRORATIONS

Typically, a buyer and seller agree to prorate a property's taxes through the closing date.  Property taxes are due and payable at the end of each calendar year.  The escrow agent will estimate, at closing, the taxes for the current year.  If the seller is qualified for tax exemptions (for example, homestead, agricultural, or over-65 exemption), such exemptions may or may not apply after closing.  After closing the taxes may increase because the exemptions may no longer apply.  When buying new construction, the taxes at closing may be prorated based on the land value only and will later increase when the appraisal district includes the value of the new improvements.  The actual taxes due, therefore, at the end of the year and in subsequent years may be different from the estimates used at closing.

TERMINATION OPTION

Most purchase contract forms contain an option clause which provides the buyer with an unrestricted right to terminate the contract.  Most buyers choose to buy the termination option.  The buyer will be required to pay for the termination option in advance.   The option fee is negotiable.  Most buyers will conduct many of their reviews, inspections, and other due diligence during the option period.  The buyer must strictly comply with the time period under the option.  The option period is not suspended or extended if the buyer and the seller negotiate repairs or an amendment.  If the buyer wants to extend the option period, the buyer must negotiate an extension separately, obtain the extension in writing, and pay an additional fee for the extension.  The buyer should not rely on any oral extensions.

TITLE INSURANCE OR ABSTRACT OF TITLE

The buyer should obtain a title insurance policy or have an abstract of title covering the property examined by an attorney.  If the buyer obtains a title insurance policy, the buyer should have the commitment of title insurance reviewed by an attorney not later than the time required under the contract.

UTILITIES

The buyer should evaluate what utilities the buyer will require and check to be sure that the utilities available inthe area suit the buyer's needs.  Some structures may or may not have utilities and electrical facilities to support many modern appliances or equipment.

WATER LEVEL FLUCTUATIONS

State law requires the seller to notify a buyer of a property that adjoins a lake, reservoir, or other impoundment of water with a storage capacity of at least  5,000 acre-feet at its normal operating level that the water level may fluctuate.  The buyer and seller can find a list of lakes and reservoirs with at least 5,000 acre-feet storage capacity by accessing https://texasalmanac.com/topics/environment/lakes-and-reservoirs.

WATER WELLS

If the property has a water well, the buyer should have, and the lender may require, the equipment inspected and water tested.  The buyer should determine if the county requires a registration or other action to begin using the water well.

WIRE FRAUD

Criminals are targeting real estate transactions by gaining access to electronic comunications or sending emails that appear to be from a real estate agent, a title company, lender, or other trusted source.  Refrain from transmitting personal information, such as bank account numbers or other financial inforamtion, via unsecured email or other electronic communication.  If the buyer or tenant receives any electronic communication regarding wiring instructions, even if the communication appears to come from a legitimate source, the buyer or tenant should verify its authenticity prior to the transfer of funds in person or via phone call using a recognized phone number that is not found in the communication.