Navigating the Lone Star Market: Land Purchase Guide

Are you looking to purchase land in Texas to build upon? The Lone Star State’s real estate market is currently very strong. According to the Texas A&M Real Estate Center, the average cost of an acre of land went from $2,950 in 2019 to $4,670 in late 2023. There’s definitely been a steady rise in the value of land. This guide will discuss how to buy land in Texas, going over each step involved and what you can expect.

a home in texas countryside

 

Is Purchasing Land and Constructing a House on it More Cost-Effective?

The answer to this question really depends on the individual situation involved. However, know that the team at Davis Custom Homes can help you both buy land in Texas and build on land in Texas you already own. Not all home builders can say that. But as a full-service home builder, it’s no problem for the Davis Custom Homes crew. When us, you get the convenience of having a versatile and flexible building team who can see your project through to completion.

What is the first step in buying a home in Texas?

The first step is securing financing for that home, unless you plan to pay in cash. It’s very important to do this before you even begin looking for homes in the desired area you wish to live in. If you don’t, there is always the chance another buyer will swoop in with an all-cash offer before you have secured financing. No seller is going to wait for you if they have a cash offer in place. If you have financing secured already, you can make a bid on a home the moment you decide you’re interested in it.

How do I qualify for an FHA loan in Texas?

There are several requirements that must be met in order to qualify for an FHA loan in Texas. They are the following:

  • Credit Score of at Least 580
  • Ability to Make a Down Payment of 3-5 to 10 Percent of the Total Loan Amount
  • At Least Two Years of Verifiable, Steady, and Consistent Income
  • Mortgage Insurance
  • Property Must Meet Higher Home Inspection Standards
  • Loan Must Be Used to Purchase a Principal Residential Property
  • Debt-to-Income Ratio of Less Than 57 Percent

Step 2 – The Search

Now comes looking through current listings of available land plots and homes currently on the market. It will, of course, depend on what you’re looking for, as well as what you can afford. Our team will help

Step 3 – The Offer & Contract

By default, all mineral rights of a property are transferred to the buyer, unless the contract specifically states otherwise. There may also be an option period written into the contract which allows you to back out of the sale while only losing “option money.” Closing costs are typically spelled out here, as well as which party is responsible for paying them. This is usually a point in negotiations.

Step 4 – The Property Inspection

This step involves a thorough examination of the land to identify any issues or repairs necessary before finalizing the purchase.

Step 5 – Rural Land Survey (if applicable)

For rural properties, a land survey is conducted to precisely define the property’s boundaries and confirm legal descriptions. This survey is crucial for avoiding boundary disputes and ensuring the land complies with zoning regulations.

Step 6 – The Title Commitment

Typically, this is begun once the contract is agreed upon and signed. It’s best to use a title company in the same county you plan to purchase land in, as it will be used to the existing county record system. A title commitment is typically one of the last things completed prior to closing.

Step 7 – The Closing

You’ve made it to the final step, where the title, financing agreements, promissory notes, and a bunch of other documents will be signed, officially completing the property sale.

Davis Custom Homes helps with buying land, then building a house on it, as well as building on land that is already owned. Texas has a vast amount of land. But the search for the perfect plot of land can quickly become overwhelming. That’s where our team can help. There are many things to consider when selecting a plot of land. Whether you’re interested in land acquisition or building on land you already own, our team can assist with zoning, accessibility, and facilitating land improvements.

If you’re looking to acquire land and/or build on land in the Houston, Texas area, contact Davis Custom Homes to get started today!

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