Home Inspections in Texas: What Agents Need to Know in 2026
Joseph Casey
September 25, 2026
Texas has become one of the most buyer-friendly places in the country to buy a home. In Houston, there are now 130% more sellers than buyers. And that leverage is showing up in the data: Houston and San Antonio had two of the five highest contract cancellation rates of any major metro this summer.
19.6%
of Houston home-purchase agreements fell through in July 2026
Most of those cancellations happen in one place: the option period. It's the short window where your buyer inspects the home, negotiates repairs, and decides whether to move forward. How you guide them through those seven to ten days often decides whether the deal closes.
The rules also just changed. TREC's updated contract forms became mandatory on July 1, 2026, with a new resale contract, a new amendment form, and new seller's disclosure questions. Here's what you need to know to guide your clients through a Texas inspection today.
How the Texas Option Period Works
Most states use an inspection contingency: the buyer can back out if the inspection turns up problems. Texas works differently. For a negotiated fee, the buyer gets an unrestricted right to terminate the contract for any reason during the option period. The buyer doesn't need to point to a defect. They just need to deliver notice on time.
| Step | Deadline | What to Know |
|---|---|---|
| Deliver the option fee | Within 3 days of the effective date | Goes to the escrow agent (usually the title company). Miss it and the buyer has no option period. |
| Inspect the property | During the option period | General inspection plus any specialists — foundation, sewer scope, termite, pool. |
| Negotiate repairs | Before the option period ends | Agreed changes go on the Amendment to Contract (TREC No. 39-11), signed by both parties. |
| Terminate (if needed) | By 5:00 p.m. local time on the last day | Written notice to the seller. The buyer gets their earnest money back; the option fee is not refunded. |
The option fee is small, but it matters
There's no standard amount. It's negotiated, and it's never refunded. If the deal closes, the fee is credited back to the buyer at closing. In today's market, a modest option fee with a reasonable number of days is usually an easy yes for sellers. What matters most is that the fee actually reaches the escrow agent on time. If it doesn't, your buyer loses the option period entirely.
Seven days goes fast
Seven days sounds like plenty until you try to fit a general inspection, a structural engineer, a sewer scope, and two contractor bids into it. Book the general inspector the day the contract is signed, and have specialists lined up before the report comes back. If a finding needs more time, like a foundation evaluation, you can negotiate an extension on an amendment. Just make sure it's signed before the option period expires.
Deadline warning
A repair agreement only protects your buyer if the amendment is fully signed before the option period ends. If the seller is still “thinking about it” at 4:30 p.m. on the last day, your buyer has a decision to make: terminate or move forward without the repairs. Calendar the deadline the moment the contract is executed, and talk through that scenario with your buyer ahead of time.
What Changed on July 1, 2026
TREC updated its standard forms this summer, and the new versions are mandatory for contracts written on or after July 1, 2026. Nothing here changes how the option period works day to day, but several updates affect what your buyers see during due diligence.
| Form | TREC No. | What It Means for Your Buyers |
|---|---|---|
| One to Four Family Residential Contract (Resale) | 20-19 | Adds a formal definition of legal holidays for option fee and earnest money deadlines, lists permanently installed generators as improvements, and reorganizes broker compensation into Paragraph 12B. |
| Amendment to Contract | 39-11 | The form you'll use for repair agreements, credits, and price changes after the inspection. |
| Seller's Disclosure Notice | 55-1 | New questions about insurance, private road maintenance, above-ground storage tanks, and conservation easements. |
| Seller's Disclosure about Groundwater and Surface Water Rights | 61-0 | New form covering water rights — especially relevant for rural and acreage properties. |
The new insurance question deserves your attention
Of all the new disclosure questions, the one about insurance is likely to matter most for your buyers. Sellers now have to disclose insurance issues that could affect the property, and a history of water, mold, or roof claims can make a home harder or more expensive to insure.
Read the disclosure before the inspection, not after. If the seller reports past claims, ask them for a CLUE report (a five-year claims history the homeowner can request from LexisNexis) and have your buyer get an insurance quote during the option period. An old roof and a claims history can mean an unexpectedly high premium, and it's much better to learn that on day three than at closing.
Don't forget the seven-day rule
Under Texas Property Code Section 5.008, if the seller delivers the disclosure notice after the contract's effective date, the buyer can terminate for any reason within seven days of receiving it and get their earnest money back. If you're on the listing side, get the disclosure to buyers before you accept an offer. If you represent the buyer, note when it arrived.
Reading a TREC Inspection Report (and Why It Looks So Alarming)
Texas home inspectors are licensed by TREC and must use TREC's Property Inspection Report form, REI 7-6. Every item gets one or more boxes: Inspected, Not Inspected, Not Present, or Deficient.
That word — deficient — causes more buyer panic than anything else in a Texas transaction. TREC's Standards of Practice require inspectors to mark certain conditions as deficient even if the home met code when it was built. Missing GFCI protection, a range without an anti-tip bracket, and older smoke detectors all show up as deficiencies. So even a well-kept 10-year-old home can come back with 40 or more.
Set this expectation before the inspection. When your buyers know that “deficient” means “worth noting,” not “broken,” they read the report calmly and focus on the findings that actually matter.
What Texas inspections commonly turn up
Texas has a few conditions that show up again and again: expansive clay soil, long cooling seasons, hail, and termites. Here's what to watch for and what repairs typically cost nationally.
| Finding | Why It's Common in Texas | Typical Repair Cost |
|---|---|---|
| Foundation movement | Expansive clay soils in DFW, Houston, Austin, and San Antonio swell when wet and shrink when dry | $5,000 – $25,000 (piers/underpinning) |
| Roof at end of life | Hail and wind shorten roof life — and roof age affects insurability | $8,000 – $16,000 |
| AC condenser at end of life | Long, hot cooling seasons wear systems out faster | $3,000 – $6,500 |
| Termite activity | Warm climate and wood-to-soil contact | $500 – $2,500 (whole-house treatment) |
| Corroded cast iron drains | Common under slabs in homes from the 1950s through 1970s | $1,000 – $5,000 (sections); $4,000 – $12,000 (sewer line) |
| Negative grading | Water pooling near the slab worsens soil movement | $500 – $3,000 |
Cost ranges are national figures from Warm Light's repair cost data. Local labor rates vary, so check the repair cost estimates for your ZIP code before putting a number in front of a seller.
Foundation findings need a specialist, fast
When a general inspector notes signs of movement (diagonal drywall cracks at door corners, sticking doors, sloping floors, or cracked tile), recommend a structural engineer's evaluation right away. A foundation repair company can give you a bid, but an independent engineer tells your buyer whether repair is needed in the first place. With a seven-day window, that call needs to happen the same day the report arrives.
Order the termite report and sewer scope up front
Wood-destroying insect inspections in Texas are performed by licensed pest control operators and documented on the official Texas WDI report. And for any home with original cast iron plumbing, a sewer scope is money well spent. Both are easier to schedule alongside the general inspection than after it.
Negotiating Repairs on the TREC Amendment
Once you know what matters, the Amendment to Contract (TREC No. 39-11) gives your buyer three main options. For a step-by-step walkthrough of building the request itself, see our guide on how to write a repair request after a home inspection.
Closing cost credit
Often the cleanest route. The seller contributes toward the buyer's closing costs, and the buyer handles repairs with their own contractor after closing. Keep in mind that a credit can't exceed the buyer's actual closing costs, and lenders cap seller contributions based on loan type. Check with the lender before you ask for a specific number.
Price reduction
Best for large findings like foundation work or a full roof replacement, where re-pricing the home reflects what it's actually worth. A price reduction also doesn't run into closing cost limits.
Seller-completed repairs
Under Paragraph 7F of the TREC contract, agreed repairs must be completed before closing by licensed contractors (or, where no license is required, by people commercially engaged in that trade). Required permits must be pulled, and the seller must provide documentation of the work and transfer any warranties. If your buyer goes this route, make sure the amendment names the specific repair, and plan to verify the work at the final walkthrough.
Be specific on the amendment
“Repair foundation” invites a dispute. “Seller to complete foundation repairs per the structural engineer's report dated September 3, performed by a licensed foundation contractor, with a transferable warranty” doesn't. The more specific the amendment, the smoother the closing.
Keeping Buyers Steady in a Market That Makes Walking Away Easy
With the option period giving your buyer an unrestricted exit and plenty of other homes on the market, a long inspection report can end a deal that should have closed. That doesn't mean you should talk buyers out of walking away. Sometimes that's the right decision. It means helping them make it with clear information, not in a moment of panic. (For more on this, see how to keep deals from falling apart after the inspection.)
Sit down with your buyer the day the report arrives. Separate the safety issues and major systems from the routine deficiencies. Put a realistic cost next to each item that matters. When a 50-page report becomes a one-page list of five items with price tags, most buyers can see the path forward.
Where Warm Light fits in
Upload the TREC inspection report and Warm Light turns it into a branded, easy-to-read summary for your buyer, organized by severity with localized repair cost ranges for each finding. It's in your buyer's hands the same day the report arrives, which matters when the option period is only seven days long.
Quick Answers
How long is the option period in Texas?
There's no set length. The buyer and seller negotiate it and write the number of days into Paragraph 5 of the TREC contract. Seven to ten days is common, and the buyer's right to terminate ends at 5:00 p.m. local time on the last day.
Is the Texas option fee refundable?
No. The option fee is never refunded, even if the buyer terminates. If the deal closes, it's credited toward the buyer's side at closing.
What TREC forms changed on July 1, 2026?
The One to Four Family Residential Contract (Resale) moved to TREC No. 20-19 and the Amendment to Contract moved to TREC No. 39-11. The Seller's Disclosure Notice (TREC No. 55-1) added questions about insurance, private roads, storage tanks, and conservation easements, and a new Seller's Disclosure about Groundwater and Surface Water Rights (TREC No. 61-0) was adopted.
Why does a Texas inspection report list so many deficiencies?
Texas inspectors must use TREC's Property Inspection Report (REI 7-6) and follow TREC's Standards of Practice, which require them to mark certain conditions as deficient even if they met code when the home was built. A long list of deficiencies is normal, even on newer homes.
The Bottom Line
The Texas inspection process moves fast and gives buyers a lot of freedom. That combination is exactly why agents who know the option period, the new TREC forms, and the state's common findings stand out. Your buyers won't remember every deadline, but they'll remember that you had it handled.
Working in more than one state? See our guides to Florida and New Jersey inspections.
Sources
- With Buyers Firmly in the Driver's Seat, Home-Purchase Cancellations Hit Highest Level in Nearly 3 Years — Redfin (August 2026)
- Contract Forms — Texas Real Estate Commission
- One to Four Family Residential Contract (Resale), TREC No. 20-19 — Texas Real Estate Commission
- Option Period Basics — Texas Real Estate Research Center
- TREC Contract Changes 2026: Key Updates for Texas Real Estate Agents — Republic Title
- Inspection Repair Negotiation on the New TREC Forms — Neuhaus Realty Group
- The Texas Seller's Disclosure Notice in 2026 — Eddie Weir
- Texas Property Code § 5.008 — State of Texas
- Property Inspection Report Form (REI 7-6) and Standards of Practice — Texas Real Estate Commission
- Repair Cost Estimates — Warm Light