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Buying a House in Texas: An In-Depth Guide

Are you looking to buy a home in Texas? You’re not alone. Texas is a popular real estate market that has much to offer. Being well-prepared is the best way to experience success. Here’s an in-depth guide to purchasing a home in Texas.
Are you looking to buy a home in Texas? You’re not alone. Texas is a popular real estate market that has much to offer. Being well-prepared is the best way to experience success. Here’s an in-depth guide to purchasing a home in Texas.

Texas draws many prospective home buyers each year. It’s not hard to see why. Between the fact that Texas doesn’t charge transfer taxes and that many politicians constantly push for leniency when it comes to real estate policies, the Lone Star State tends to be very real estate-friendly.

Add to that the vibrant communities, rich culture, fascinating history, and gorgeous scenery, and you’ve got a dream come true for many would-be buyers.

However, buying a home is a complicated process.

There are many viable options for people looking to buy a home in Texas, but getting the most home for your money depends on understanding critical elements like timing, the market, taxes, closing costs, and other pertinent information.

This guide can help you find the best home for your budget in Texas. The first step any prospective home buyer should make is to partner with a buyer’s agent in their local market. Partnering with an experienced agent can help you benefit from expert advice right from the outset so your home buying journey is as successful as possible.

How to Find a Texas Buyer’s Agent

The first step that any prospective home buyer should take is to partner with an experienced, local real estate agent. Only an experienced agent can provide guidance and support through the entire home buying process. They can also help you find the best deals, and they can help you time your offer correctly when you find the property you want to purchase.

The real estate market can vary greatly between cities and, in some cases, even between zip codes. Having an experienced real estate agent at your side who is familiar with the local market can ensure that you have an advocate during the entire process. It’s particularly important to partner with a real estate agent who is good at negotiating and who understands your chosen market inside and out.

Clever can instantly connect you with top-rated buyer's agents in your chosen market. This can help you save money since all Clever Partner Agents work on a flat fee basis.

You should get in touch with a Clever Partner Agent today for a no-obligation consultation.

Learn More: What Does a Real Estate Agent Do for a Buyer?

Texas Housing Market Forecast for 2019 - and Beyond

On average, Texas is a buyer's market right now. The median home value in Texas is $196,100. The median listing price is $275,000, and Texas has experienced a one-year growth of 8.0%. The market also has a one-year growth forecast of 5.1%, meaning that those who purchase now are likely to enjoy a decent appreciation rate in the near future.

According to Texas A&M Real Estate Center, February 2019 saw an increase in home sales of 5.2% from January alone. The mortgage rates throughout the state are lowering, as well, and the typical home stays on the market for just 60 days.

This makes it a great time to be a home buyer in Texas. With increasing home sales and increasing home values, you can take advantage of the market before it heats up and home prices increase.

What’s more, taking advantage of current mortgage rates, which are lower than average, can help you save money in the long run.

It’s also interesting to note that 14.82% of listings had price cuts in February of 2019. Those discounts can come to your aid when you’re looking to save money and score a deal on your new home.

The outlook here is good for home buyers who jump on deals while the market is relatively cool before values begin to rise again.

Best Time of Year to Buy a Home in Texas

Sometimes, it’s difficult to determine when the best time to buy a home in any given market is. Even so, it’s important to make an educated guess when it comes to timing. The month in which you choose to buy your home has a pretty dramatic effect on the deals you get, how much you’ll pay, and other related factors.

To that end, it’s critical to look at a few of the common determinants of timing. In other words, looking at the characteristics most often associated with good deals for buyers can help you narrow down your timeframe and choose the best month to buy your home.

Some of the factors you want to look at include the month when the highest number of new listings appear, the months that are the most competitive, the times of year that have the most discounts, and the months that have the highest inventory levels.

These metrics can help you pinpoint when you should be looking to make an offer, and that information can help you time the rest of your home buying journey.

Months with the Highest Number of New Homes in Texas

In Texas, most of the new listings appear during the months of May through July. While each city and metro area varies, looking at two of the largest cities in Texas can help you determine when the best time to buy overall might be.

In Dallas, the months that see the highest number of new listings are June, July, and December. June tends to see about 11,300 new homes on the market, July tends to have 11,600, and December meets July’s number.

In Houston, the months with the most new listings are May, July, and August. May tends to have around 11,200, while July and August have 11,500 each.

Most Competitive Months

One key to finding the best home at the best price is to choose months that don’t have a huge amount of competition.

While competition has its advantages, most home buyers have the highest level of success when they choose to buy in months that are slightly competitive but just outside of the most highly competitive months.

The most competitive months in Dallas are March, April, and May. In March, about 37.6% of homes sell above list price. In April, that number is 39.6% which is just slightly beat by May’s 39.7%.

In Houston, the most competitive months are February, March, and April. In February, about 37.6% of homes sell above list price, while in March and April that figure is 38.2% and 37.8% respectively.

Months with the Highest Inventory Levels

Paying attention to the months with the highest inventory is also important. High inventory means more selection and options for you as a home buyer.

The month with the highest inventory in Texas are June, July, and August in both Dallas and Houston Metro areas. In Dallas, there are about 25,000 homes on the market in June, 24,000 in July, and 26,000 in August.

In Houston, June sees about 36,000 homes on the market, July sees about 34,000, and August takes the cake with 37,000 homes on the market.

Months with the Most Discounts

It probably goes without saying that if you can find a home at a discount, you’re saving money. That’s why when you’re trying to time a market, it’s critical to pay attention to the months that traditionally have the most homes listed at a discount.

In both Dallas and Houston, July, August, and September are the months where you’ll typically see the most homes listed at a discount. In Dallas, about 15.2% of homes are listed at a discount in July, 16.4% are listed at a discount in August, and 15.4% are listed at a discount in September.

In Houston, 19.1% of listings have discounts associated with them in July, 18.2% have discounts in August, and the same percentage have discounts in September.

The Results

Taken together, this data makes July the best time of year to buy a home in Texas. During this month, home buyers will see the most discounts, the highest inventory, and the lowest competition. You'll also be able to choose from most of the new listings on the market.

Learn More: When Is the Best Time to Buy a House?

Calculate Your Property Taxes in Texas

Taxes are calculated based on the assessed value of your property. The assessed value includes both the land and the buildings on it. This value is calculated by tax assessors every five years. After the assessment is complete, the property owner will be charged to that new tax amount based on either the mill levy or the assessed property value.

The mill levy uses the measure of a mill, which is 1/10 of $0.01. For every $1,000 of assessed property value, $1 is equivalent to 1 mill. Tax levies for each individual jurisdiction are calculated independently, and then all the levies are combined to determine the regional mill rate. In other words, they decide how many mills your area will be charged.

If the assessed property value is used, the mill levy is multiplied by the assessed value of your property. In most areas, the assessed value is defined by the reasonable market value for your home.

In Texas specifically, the effective real estate tax rate is 1.83%. Annual taxes on a $194,000 home would total $3,544. The state median home value is $151,500, and the annual taxes you would expect to see on a home valued at the state median would be $2,775.

However, taxes can vary widely from region to region. In Houston, for example, the average tax rate is 2.259%, and annual property taxes on a $250,000 home would be $5,648.

In Austin, however, the average tax rate is 1.973%, so for a $250,000 home in that area, the annual property taxes would be just $4,933.

It's easy to see how this variance can make Financial in real estate decisions different depending on where the property you're buying is located. If you're considering buying a home in Texas, you should discuss the typical property taxes with an agent that is experienced in your local target market. This can help you assess the overall cost of homeownership in that area.

Learn More: How to Calculate Property Taxes

How Much Are Closing Costs for Home Buyers in Texas?

Closing costs are a necessary part of the home buying process. Having at least a basic understanding of the closing costs you can expect to pay can help you be financially prepared for the purchase of your new home.

Typically, there are two kinds of closing costs that buyers need to be aware of. There are non-recurring closing costs and recurring closing costs.

Non-recurring closing costs include things like endorsements, escrow fees, transfer taxes, home protection plans, real estate agent commission, lender fees, and notary and wire fees.

Recurring closing costs include things like fire insurance premiums, property taxes, mortgage and mutual insurance premiums, and other types of insurance premiums.

In general, buyers can expect to pay 3% of the sale price of their home in closing costs. Given that the median home value in Texas is $196,000, that means that you can expect to pay $5,880 in closing cost on average.

A plus for Texas home buyers is that there are no transfer taxes or fees. While Texas does have a property tax rate of 1.86%, the sixth highest in the country, not having to pay the transfer fee or tax at closing can save you a bit of money up front.

However, fees and taxes vary on a state, regional, and even local level, so it's important to consult with your real estate agent and allow them to guide you through the entire process to make sure you haven't missed anything.

Learn More: Who Pays Closing Costs on a House?

Clever Will Help Pay Your Closing Costs!

Closing costs are an unfortunate part of the home buying process, but you don’t have to be stuck with all of them. Fortunately, there are rebates available in most states — including Texas.

Clever's Home Buyer Rebate Program is an additional cost-saving opportunity for home buyers. Clever buyers who spend $150,000 or more can get a $1,000 rebate to help with closing costs.

Fill out the online form to learn more and connect with the top-rated Clever Partner Agent in your area for a no-obligation consultation today so you can benefit from expert guidance while saving on commissions and fees.

Learn More: How to Get a Home Buyer Rebate

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Reuven Shechter

Reuven Shechter is the Outreach Coordinator at Clever Real Estate, the free online service that connects you with top real estate agents to help save on commission. He spreads the word about Clever, disseminating studies to journalists and developing relationships with media outlets. Reuven is passionate about investing in real estate and creating lasting success for families. His writing has been featured in Max Real Estate Exposure, Leverage Marketing, and more.

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