Making an offer on a house in Texas - Do I need a lawyer?

Posted about 2 years ago. Applies to Texas, 1 helpful vote

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Buying a home, especially for first time homebuyers, can be a rather daunting process. The purpose of this guide is to give you a very general overview of the offer process and to acquaint you with the principal document which appears most frequently at that stage of the transaction. This guide is not a substitute for having a lawyer represent you in the transaction - remember - for most people their home is their largest investment. Having a lawyer help you through the process is typically not expensive and can provide a lot of comfort, advice and value.

Most people start by hiring a realtor. This guide does not discuss the issues attendant with the realtor's contract.

Once you find a house you want to buy, there will be a negotiation phase which typically begins with the Buyer making a written offer. The offer is often an EARNEST MONEY CONTRACT (EMC) completed and signed by the Buyer and offered to the Seller. It is in this document where I see people make the most mistakes. This document sets out all of the pertient parts of the agreement to buy the house. This is the "deal" document and once it is signed by both sides - it reflects the deal. Its often difficult to change it later, so PRIOR to offering it to the other side it is wise to have it reviewed by a lawyer. I am not going to go into every provision of the EMC, but it will include the price, how long you have to do inspections, what you can do if you don't like the inspections, how long you have to close, what happens if your financing does not come through etc.

All of these terms are negotiable. You should make very sure that you understand that when you are making an offer, the other side might accept it! So for instance, you should be very cautious making an offer that includes a short inspection period - if you cannot get your inspections done in time, you might be stuck in an uncomfortable situation where you either have to terminate the deal or go forward without having the inspection complete. A similar analysis applies to the financing contingency and the survey and the title commitment.

Typically the offer will bounce back and forth between the Buyer and Seller until the parties agree on all of the deal points. You should be VERY cautious about spending any money on appraisals, surveys or inspections until you have a signed EMC. Until there is a signed EMC, there is no deal. Texas law specifically makes oral contracts for the purchase of real estate unenforceable.

Once both sides sign the EMC, there is very little that a lawyer can do to change the deal that has been made. Many people do not realize that they are making the "final" deal at the time that they sign the EMC - but in most cases - this is the deal and there is very little negotiation after it is executed. Therefore, especially if you are not a sophisticated real estate purchaser, I recommend very much that you have a lawyer help you at this stage of the process. It will cost some money, but typically not a huge amount. The EMC used in Texas is quite standardized so you will not be paying a lawyer to draft it from a blank page. At least have a lawyer go over it with you so that you understand the deal you are making. I very frequently talk with people who have entered into an EMC and do not understand how it works and what happens if they do not like the inspection report or how to handle a problem in the title commitment.

In short, I recommend that unless you are very familiar with the EMC, that you have a lawyer explain it to you. It will provide you peace of mind and can help you avoid some common pitfalls in the process. Good luck!

Additional Resources

Texas Real Estate Commission

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