Texas

Texas is one of the simpler states for residential closings, with three structural features that distinguish it from most of the country. There's no state real estate transfer tax at all. Title insurance rates are state-promulgated by the Texas Department of Insurance, every insurer charges the same premium for the same coverage, so there's no shopping for title insurance. And Texas has no state income tax, which means no state-level capital gains tax on home sales.

Closings are handled by title companies, with attorneys involved on a case-by-case basis rather than as a default. The Texas Real Estate Commission (TREC) publishes the standard residential contract forms, which most transactions use without significant modification.

What property taxes look like

Without a state income tax, Texas relies heavily on property tax for school district and county funding. Effective property tax rates are among the highest in the country (typically 1.6%–2.5% of home value annually depending on jurisdiction) which is the trade-off for the absence of state income tax.

The homestead exemption is one of the most valuable post-closing filings for new homeowners in Texas. As of 2023, the school district homestead exemption is $100,000 (raised from $40,000), plus additional exemptions from county, city, and special district taxes. There's also a 10% annual cap on assessed-value increases for homestead properties (separate from market-value growth), which provides some protection against rapid tax growth in fast-appreciating markets.

The application is filed with the county appraisal district, typically due by April 30 of the year following the purchase. New owners moving in mid-year can usually file a homestead exemption that takes effect for the following tax year. Veterans, surviving spouses, seniors over 65, and disabled homeowners qualify for additional exemptions on top of the standard homestead.

What buyers should know

Buyer's agents in Texas operate under the standard post-2024 NAR settlement framework, with a written buyer-representation agreement required before MLS showings. Earnest money is typically 1%–2% of purchase price, held by the title company.

Title insurance pricing is a meaningful difference from most other states. Because rates are promulgated, the owner's title policy for a $400,000 home costs the same at every insurer, about $2,275 under the current Texas rate schedule. The seller customarily pays for the owner's policy in Texas; the buyer pays the lender's policy and any endorsements.

The Texas residential contract uses an "option fee" structure where the buyer pays a small fee (typically $200–$500) for an unrestricted termination right during the option period (usually 7–10 days). This is distinct from the inspection contingency in other states, the option period is a no-questions-asked walk-away right, in exchange for the option fee, regardless of inspection findings. The option fee is non-refundable but is typically credited toward the purchase price at closing.

What sellers should know

Sellers face the Texas Seller's Disclosure Notice, a required form covering known material defects, prior repairs, environmental conditions, and HOA matters. As-is sales don't waive the disclosure requirement; sellers still have to complete the form honestly.

Without a state transfer tax, the seller-side closing costs are dominated by the real estate commissions (~5–6% historically; more variable post-2024 NAR settlement) plus the owner's title insurance premium and standard recording and closing fees. The full-stack seller closing costs typically run 7%–9% of sale price.

Without a state cap-gains tax, sellers with significant appreciation pay only the federal capital gains rate (and the federal Net Investment Income Tax for higher earners), not an additional state layer. This makes Texas particularly favorable for sellers with gains above the federal § 121 exclusion compared to high-tax states like California or New York.

How closing typically works

Texas closings happen at the title company's office, or remotely via mobile notary or remote online notarization. The title company prepares the closing disclosure for the buyer (alongside the lender), the settlement statement, and the deed. Both sides sign their respective documents, funds are wired, the deed records at the county clerk, and keys change hands.

For contract questions or disputes, a real estate attorney licensed in Texas can review the relevant provisions. For the closing process itself, the title company's escrow officer is the primary point of contact. TREC handles broker and salesperson licensing complaints; the Texas Department of Insurance handles title-insurance complaints.