Governor Abbott wants to rein in investors and make it easier for average Texans to buy a house.
Last Friday, Abbott took to social media to say that corporations are shutting out prospective home buyers by snapping up single-family homes.
That's especially evident in Tarrant County, where more than one out of every two homes are sold to investors.
Real estate agent Chelsie Timms says part of the reason is that the average homebuyer, who relies on securing a mortgage to buy a home, cannot compete with investors, who often pay with cash.
Anyone who has purchased a home with a mortgage knows the stringent process involved; and that includes contingencies.
"Let's say that there is an appraisal contingency," says Timms. "The house has to appraise for the value that it appraises for in order for the lender to loan that money to the buyers to pay the sellers."
That puts the average homebuyer at a major disadvantage to investors.
"These investors come in, and they offer cash -- all cash, close in two weeks, no contingencies," says real estate Chelsie Timms. "That right there to a seller is like a goldmine."
Aside from shutting out families from the dream of home ownership, Abbott says investors are distorting the market.
Timms agrees, saying investors will often lowball the sellers, turn around and sell the same house for twice as much as they paid for it.
"The home closed for less than market value, because that's what the investor offered," Timms says. "So when we run our (comparative market analysis) for a home next to the home that closed with the investor, we're seeing that it's lower priced, so we have to lower our house price. But then the investor turns around and sells it again at a higher price. So then that jacks up the prices of houses, whereas before it lowered it."
Governor Abbott says in his social media post that he wants the legislature to take this up during next year's legislative session.
Timms has one suggestion to level the playing field.
"I think one thing they could do is maybe grant some leniency on that contingency of appraisal especially," Timms says. "I think that would really help them sell to independent buyers, because they wouldn't be worried about if their house is going to appraise or if any repairs need to be done."
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