Essential Guide to Buying a Starter Home in Houston

Starter homes have always been an important stepping stone for first-time homebuyers. 

More compact, usually more affordable, and a great way to start climbing the property ownership ladder, starter homes don’t just make you a homeowner but also give you a taste of homeownership responsibilities. 

Buying a starter home in Houston is usually just the beginning of your home buying rodeo; these properties are often sold in favor of upgrades down the line. That said, you are buying a home in the "Energy Capital of the World," so don’t be surprised if your starter home becomes a forever one.

Below, our team from Prevu Real Estate highlights the most important things to remember before you buy your first home in Houston. We’ll guide you through the necessary prep work, how to navigate your search and what to look out for, and how to potentially save money when you buy.

Buying a starter home in Houston

• Start with a mortgage pre-approval
• Prepare a structured budget
• Choose the right buyer’s agent
• Use a commission rebate to save 
• Find the right neighborhood
• Select the right starter home
• Have an inspection completed

Start with a mortgage pre-approval

Today’s homebuyers, regardless of their experience, shouldn’t consider making an offer without having a mortgage pre-approval.

Getting a pre-approval is a good start, but your best bet is to get that approval fully underwritten. You must ensure your credit score is healthy and your W-2s and pay stubs are in order, as the process can be lengthy. But the result is often a very attractive offer that immediately stands out to the seller. 

The advantage of a pre-approval is two-fold: it shows sellers you are a serious buyer with their financing in order, and it gives you a clearer picture of your price range. These two reasons alone make pre-approval a safe first step to tackling the homebuying journey.

Remember, you can always get a basic pre-approval, but a fully underwritten pre-approval will allow you to close quicker, depending on your lender. Be sure to shop around as much as possible to find the most favorable interest rate.  

Prepare a structured budget

The groundwork of setting up an effective budget is on every homebuyer’s to-do list, even if they’re upgrading homes for the third time.

When you’re shopping for a starter home, you’ll want to dedicate a specific portion of it towards potential renovations. 

The term "starter home" doesn’t always mean the home will need repairs or renovation. But if you’re searching for budget-friendly home prices, the properties you’ll likely run into may require maintenance in exchange for a manageable price tag. While you generally want to avoid homes requiring major repairs, such as HVAC replacement or damaged pipes, putting together a budget for new fixtures, lighting, paint, and even basic plumbing fixes can be practical.

Leverage the pre-approval to help guide your price range. Once you know how much your potential loan amount will be, you can start to estimate potential closing costs in Houston, what to set aside for a down payment, and how much you can muster for potential repairs.

It also helps to consider monthly expenses down the line, such as your mortgage payment and property taxes.

Choose the right buyer’s agent

Let’s start with an essential tip for first-time buyers: though you can go it alone, a buyer’s agent will make your home-buying process a lot easier; the key is interviewing multiple agents.

A buyer’s agent will not only know what to look out for during an inspection but they’ll also help pinpoint where in Houston you can find the best home to fit your needs and help negotiate the best offer. Most importantly, they’re the key to saving money when you buy.

Your real estate agent will have access to Multiple Listing Services, which can immediately expand the listings you can consider. That tool will allow them to do a comparative market analysis of average home prices for similar houses, pinpointing the fairest price for such a property.

Be sure to take the time to look for an agent you will feel comfortable working with. Constant communication and experience are essential, but be sure to ask if they offer a commission rebate.

Use a commission rebate to save

Commission rebates are an invaluable tool for a first-time home buyer searching for a starter home.

In simple terms, a commission rebate is a portion of your buyer’s agent’s commission fee returned to you after you close on a home. Modern brokerages like Prevu Real Estate unlock commission rebates for buyers to help them achieve affordability. 

Currently, Prevu offers access to the largest rebate in Texas, allowing homebuyers to receive thousands via a commission rebate after closing. These savings can be especially crucial if you buy a starter home that needs fixing.

Find the right neighborhood

If there’s one thing first-time buyers can expect from Houston’s real estate market, it’s variety.

The fourth largest city in the United States has a diverse palette of appealing neighborhoods, each offering distinct characters, lifestyles, and cultural offerings. If you prefer to venture outside city limits, Houston’s suburbs challenge the meaning of suburbia by showcasing unique towns with plenty of entertainment and events.

The best thing you can do is to cast a wide net. Having your list of favorite neighborhoods or areas is great, but it’s always essential to consider where you’ll get the most bang for your buck. Use your agent's expertise to help navigate your search through Houston’s top places to live.

Areas like Houston Heights, for instance, offer a blend of historic and new construction homes, appealing to those who appreciate a mix of old-world charm and modern amenities. In contrast, suburbs like Sugar Land can be ideal for those who want to be away from the city bustle but still have immediate access to daily necessities. 

Accessibility to work, quality of life, and proximity to amenities like parks, shopping centers, and entertainment options are also pivotal in decision-making. The Energy Corridor, prized for its proximity to major employment hubs, or Montrose, known for its artistic vibe and eclectic dining scene, might appeal to young professionals. 

Meanwhile, neighborhoods like Cypress and Katy, with their more suburban feel, might appeal more to those looking for a quieter lifestyle.

Select the right starter home

Taking the time to carefully consider your needs and preferences is crucial before committing to buying a starter home in Houston. Even if you aren’t buying a long-term home, you want to make sure you’re happy with your purchase and that it meets your expectations. 

Buying a condo offers the convenience of low-maintenance living, often with amenities like fitness centers and pools. They are ideal for individuals or couples who prioritize proximity to the city’s heart and a lock-and-leave lifestyle. However, space can be limited, and considerations like HOA fees and less privacy than detached homes must be factored in.

Buying a single-family home, on the other hand, typically offers more space and allows for more customization and expansion but come with increased responsibilities in terms of maintenance and upkeep.

Finally, buying a townhouse presents a middle ground. They can offer more space than condos but require less maintenance than single-family homes. With shared walls, they can offer a sense of community while still providing enough space and privacy.

Have an inspection completed

Starter homes often come with the added risk of pending repairs. This doesn’t always mean you’ll have to choose from homes requiring fixing, but it does add a layer of importance to doing your due diligence.

Hiring an experienced inspector is necessary; you’ll want to leverage your buyer’s agent for any potential contacts they can recommend. In Houston, where climate factors like humidity can affect homes differently, it's important that the inspector understands regional specifics. They should thoroughly check the foundation, roofing, electrical systems, plumbing, and HVAC systems, as these can be costly to repair or replace.

As you approach the closing date, pay special attention to potential flood damage, a significant concern in some Houston areas. Ensure the inspector checks for water damage signs and assesses the home's susceptibility to flooding. In older homes, checking for outdated materials like lead paint or asbestos, which can pose health risks, is crucial.

During the inspection, it’s beneficial for buyers to be present. This allows you to ask questions, understand the home's condition, and learn about maintenance requirements. An inspector can also advise on regular upkeep and potential future issues.