Buyers All

Cost to Buy a Home

The cost to purchase a home varies with EVERY single home purchase that takes place.  In order to get a really great estimate, one should meet with a lender to discuss their options.  The costs associated with a home purchase are mortgage, title, and government fees.  Often these fees can be paid by the seller or be a part of the mortgage.  A great Realtor can help guide you through these costs.  Below are good esimations of costs.


1. Earnest Money – $1,000 (Or More, Amount is Optional)
2. Private Home Inspection – $350 – $500
3. Liability Home Owner’s Insurance – $1000-$2000
4. Appraisal – $450 (Some Lenders allow this at closing)

Total Pre Paid Expenses : $3000

1. Mortgage Fees – 1 – 5% of the Purchase Price
2. Title Fees – $1,000 + (Depending on home price)
3. Down Payment – 3.5% + (Depending on Qualification)

Total Down Payment + Closing Costs : 6% or More of Purchase Price

THERE ARE PROGRAMS THAT ALLOW BUYERS TO PURCHASE A HOME FOR LITTLE OR NO MONEY DOWN!!!  THESE PROGRAMS ARE HANDLED ON A CASE BY CASE BASIS.  THE NUMBERS THAT ARE LISTED ON THIS SITE ARE FOR REFERENCE ONLY AND ARE NOT INTENDED AS A QUOTE.  IN FACT, MORTGAGE COMPANIES & TITLE COMPANIES WILL PROVIDE THEIR QUOTE IN A GOOD FAITH ESTIMATE.

ALSO KEEP IN MIND THAT SOME OR ALL OF THE CLOSING COSTS CAN BE PAID BY THE SELLER.

YOU CAN REQUEST A BOOKLET IN THE BUYER’S MORE PAGE.

Know Your Rights

Minnesota Law requires that early on in ANY real estate transaction that consumers be made aware of their legal rights. That’s how important this is.

So what are your rights? In order to understand fully your rights, you will want to understand the history behind them.


In the 1980’s in Minnesota buyers had NO legally protected rights of representation. The Media created a slogan “Buyer Beware.” This eluted to the fact the buyer may be taken advantage of when purchasing a home. The only way to visit a home in those days was to contact the Listing Agent directly. The listing agent of course was representing the seller and their best interests and no legal obligation to represent the buyer and theirs. (In fact that still holds true today)

In the mid 1980’s Minnesota responded. They decided to create a relationship between home buyers and Realtors called Buyer Agency. This relationship allowed for buyers to hire their own Realtor in order to negotiate the purchase contract without being taken advantage of. The relationship has grown into more than just negotiating a contract. With the implementation of the Multiple Listing Service, a Buyer’s Realtor has access to all pertinent information regarding the sale of ANY home in MN.

What does this mean for the buyer? The buyer now has the OPTION to hire a Realtor to help them throughout the entire process of purchasing a home.


If the buyer chooses NOT to hire their own Realtor – they will use the Seller’s Realtor by default and be catapulted back to the early 1980’s.


So, how much does something like this cost? The good news for home buyers is that ALL Realtor commissions are paid by the seller to the Listing company. This means that the buyer will pay nothing for full representation.

Furthermore, buyers that have no representation (and default to using the seller’s Realtor) pay 4% more for Real Estate than if they choose a Full time Realtor. The question you might ask yourself is Why wouldn’t I hire a Realtor?


If you are purchasing a home from a relative and you have already negotiated a price; you can hire a Realtor to facilitate the transaction for you. Neither party will have representation and neither party will have the protection you would receive if you did. A Facilitator agreement typically runs between 1 and 3 percent of the purchase price of the home.


A FINAL NOTE ON YOUR RIGHTS:

If you intend to purchase a home, call 651-485-6383 and set up a time to discuss your rights further. MN law currently protects the home buyer only if they have a Realtor. If not, than any one of these actions may default you back to the early 1980’s:

  1. Calling a For Sale Sign
  2. Calling an 800# in an ad
  3. Requesting information from an ad via email or fax
  4. Searching Open Houses

IT IS IN YOUR BEST INTEREST TO HIRE A REALTOR PER MINNESOTA’S LAW. HOWEVER, IT IS YOUR OPTION AND MOST REALTORS NEVER GIVE YOU THE CHOICE…BECAUSE THEY ARE WORKING FOR THE SELLER.

Why Hire a Realtor

Let’s face it, searching for a home seems easy enough.  After all, 80% of buyers survey that the internet was their greatest source for home searches.  So why then should a buyer hire a Realtor?  The same 80% that used the internet also source using a realtor to help with the process beyond the search.  Also, in today’s competitive market, wouldn’t it be nice to hire a realtor for FREE and have all these benefits:


1. Protection

A Realtor owes their client fiduciary duties.  In MN this means that a Realtor is required by law to work in their clients best interests. Realtors hold a license and are insured as well; so if something goes wrong with a transaction and the buyer becomes liable; so does their Realtor. This may help the buyer be protected under law. One wouldn’t sue another individual without an attorney.  One shouldn’t buy a home without a Realtor.


2. It’s FREE

It’s hard to believe that it’s FREE for a buyer to hire a Realtor, but it is absolutely true.  In Minnesota, Realtors are paid by the Listing Company.  This means that the buyer doesn’t have a Realtor Commission.  For More information on how Realtors do get paid, visit the buyer’s


3. Knowledge & Negotiation

Purchasing a home is one of the most stressful times a person can go through in their lives.  A Realtor will use their knowledge of Foreclosures, Short Sales, and Traditional sales to help you get the best possible price of a home.

By the way, not every home that is listed for sale is available for sale.  In fact, only Realtors have access to some of this information.  When we talk about Negotiating a purchase agreement we are talking about numbers that most people deal with a couple times in their lifetime.  Realtors deal with these numbers every single day.  Realtors take the emotional attachment away from the negotiation and have the knowledge to handle the daunting paperwork.


4. Facilitate the Closing

Again, most people buy and sell real estate a few times in their lifetime.  Realtors deal with the pending and closing process every day.  Realtors are better prepared to facilitate the transaction to a close than is a consumer.

Below you will find Three Articles from the National Association of Realtors (NAR) regarding hiring a Realtor:


Why Hire a Realtor NAR


1. Your REALTOR® can help you determine your buying power — that is, your financial reserves plus your borrowing capacity. If you give a REALTOR® some basic information about your available savings, income and current debt, he or she can refer you to lenders best qualified to help you. Most lenders — banks and mortgage companies — offer limited choices.

2. Your REALTOR® has many resources to assist you in your home search. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your agent to find all available properties.

3. Your REALTOR® can assist you in the selection process by providing objective information about each property. Agents who are REALTORS® have access to a variety of informational resources. REALTORS® can provide local community information on utilities, zoning. schools, etc. There are two things you’ll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

4. Your REALTOR® can help you negotiate. There are myriad negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

5. Your REALTOR® provides due diligence during the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your REALTOR® can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Your REALTOR®, title company or attorney can help you resolve issues that might cause problems at a later date.

6. Your REALTOR® can help you in understanding different financing options and in identifying qualified lenders.

7. Your REALTOR® can guide you through the closing process and make sure everything flows together smoothly


How a Realtor Can Help NAR


A real estate agent can help you understand everything you need to know about the buying process. The process of buying a home or investment generally starts with determining your buying power; that is, your financial reserves plus your borrowing capacity. If you give a real estate agent some basic information about your available savings, income and current debt, he or she can refer you to lenders best qualified to help you. Most lenders — banks and mortgage companies — offer limited choices.

Looking  Once you know how much you can and want to invest, the next step is to find the properties that most nearly fit your needs. This is the time to choose a real estate licensee. When picking a real estate agent look for one who is also a REALTOR®.

A REALTOR® is a member of the NATIONAL ASSOCIATION OF REALTORS®, a real estate trade association, and all members agree to abide by a 17 article Code of Ethics. A REALTOR® has many resources to assist you in your search. Sometimes the property you are seeking is available but not actively advertised in the market. It will take some investigation by your agent to find all available properties.

Choosing a property Your job is to make the final selection of the right property for you. This is when excitement and emotion run high. Your real estate agent can assist you in the selection process by providing objective information about each property. Agents who are REALTORS® have access to a variety of informational resources. REALTORS® can provide local community information on utilities, zoning, schools, etc. There are two things you’ll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

Negotiating There are myriad negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

Due diligence With a negotiated agreement in hand, it is time to complete the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your agent can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property. Title indicates ownership of property. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Your agent, title company or attorney can help you resolve issues that might cause problems at a later date.

Financing As soon as you are reasonably sure the property is right for you, the process of obtaining financing begins. Your agent can help you in understanding different financing options and in identifying qualified lenders. Closing or settlement

Facilitate Finally, there is the closing, or settlement, as it is known in different parts of the country. Every area has its own unique customs. In some areas, the title or escrow company will handle this process. In other parts of the country, an attorney does it all. Again, your real estate agent can guide you through this process and make sure everything flows together smoothly. Why use a REALTOR®?

All real estate licensees are not the same. Only real estate licensees who are members of the NATIONAL ASSOCIATION OF REALTORS® are properly called REALTORS®. They proudly display the REALTOR “®” logo on their business cards or other marketing and sales literature. REALTORS® are committed to treat all parties in a transaction honestly. REALTORS® subscribe to a strict code of ethics and are expected to maintain a high level of knowledge of the process of buying and selling real estate. An independent survey reports that 84% of home buyers would use the same REALTOR® again.

You be the judge Real estate transactions involve one of the biggest financial investments most people experience in their lifetime. Transactions today usually exceed $100,000. If you had a $100,000 income tax problem, would you attempt to deal with it without the help of a CPA? If you had a $100,000 legal question, would you deal with it without the help of an attorney? Considering the small upside cost and the large downside risk, it would be foolish to consider a deal in real estate without the professional assistance of a REALTOR®!


What a Realtor Can Do NAR


The REALTOR® you work with could be one of your most valuable resources. Unlike many real estate agents who are simply licensed by their state to do business, REALTORS® have taken additional steps to become members of the local board of REALTORS® and have agreed to act under and adhere to a strict Code of Ethics. Plus…

1. A REALTOR® can help you determine how much home you can afford. Often a REALTOR® can suggest ways to accrue the down payment and explain alternative financing methods.

2. A REALTOR®, in addition to knowing the local money market, also can tell you what personal and financial data to bring with you when you apply for a loan.

3. A REALTOR® is already familiar with current real estate values, taxes, utility costs, municipal services and facilities, and may be aware of local zoning changes that could affect your decision to buy.

4. A REALTOR® can usually research your housing needs in advance through a Multiple Listing Service–even if you are relocating from another city.

5. A REALTOR® can show you only those homes best suited to your needs–size, style, features, location, accessibility to schools, transportation, shopping and other personal preferences.

6. A REALTOR® often can suggest simple, imaginative changes that make a home more suitable for you and improve its utility and value.

7. A REALTOR® is sensitive to the importance you place on this major commitment you are about to make. Look for a real estate professional to facilitate negotiation of a win-win agreement that will satisfy both you and the seller.

Foreclosures and Short Sales

By Definition:

Foreclosure – is a property that has been redeemed by a lien holder.  In other words, a property that has transferred legal rights to a bank, corporation, or government agency.  Click Here to view the Foreclosure Timeline Chart in MN.

Shortsale – is a property that is in the process of Foreclosure or Mediation (working with the bank to change the terms of the original agreement), but the legal rights to the property remain with the current homeowner.  Therefore, the homeowner must receive an approval to sell their home from the bank.  Usually the homeowner owes more to the bank than the home is worth in the current market selling the home “short” of its mortgage lien.

If you are in the process of foreclosure and would like to know more information about your rights, Click Here.

If you would like to sell your home and avoid Foreclosure, Click Here


Foreclosures & Shortsales

How they affect a buyer’s decision.There are many myths when we talk about Foreclosures & Shortsales in today’s market.  In fact, most of the information we hear is an extreme story that affects less than 1% of the buying population.  Below is what you need to know about Foreclosures & Shortsales if you are in the market to buy a home in Minnesota.


1. Is buying a Foreclosure & a Short Sale a GOOD DEAL?

Maybe, Maybe Not.  The truth is that EVERY foreclosure and Short Sale sell for what the home is worth at the time of the sale.  Foreclosures are listed on the MLS just like any other property that is For Sale, and Short Sales are as well.  In fact, if they are not listed, it can be  a violation of Federal Law.  That being said, homes that are in  Foreclosure are generally in worse shape than homes that are not in Foreclosure.  Nonetheless, a buyer can purchase these homes for less money than a traditional sale.


2. Do Foreclosures & Short Sales take a long time?

A bank owned Foreclosure will typically respond to an offer within 72 hours of receipt.  The bank will have requirements that the buyer must fit into in order to purchase the home.  If the buyer hasn’t submitted the proper information, the bank will sit on the offer without notice.  Having a Good Realtor will help in this process.Shortsales are a different story.  Because the bank doesn’t have legal rights to the home, they may NEVER respond to the offer.  The seller will have signed off on the offer and submitted it to the bank within 72 hours of acceptance.  (Although there is no legal timeline)


3. General Requirements of a Short Sale:

1. Home owner must be in mediation or foreclosure
2. Home must have had proper market time on the MLS (30+ days)
3. Home owner must have a Hardship
4. Home owner must be willing to obtain all information needed
5. A purchase agreement is required.Less than 30% of Short Sale listings in MN sell as a Short Sale.  In fact many go back to the bank and sell as a Foreclosure.  The problem isn’t with the bank.  In most cases, the problems arise because the seller doesn’t qualify for the process.  A Good Realtor can help avoid these troubled issues that arise.


4. Dos & Don’ts

Do keep Foreclosure and Shortsales in your search.

Do Not solely look at Foreclosures and Shortsales.  There are homes that are neither that may be the best DEAL that you are looking for.

Do Not take your Realtor’s advice for Granted and Utilize an Inspector.

Do use your best common sense when you are searching.

Short Sales

If you have a short sale need, feel free to contact us for a free, no obligation consultation.

1) What is a Short Sale?

A short sale is when the lender or lenders agree to take less than what is currently owed on the mortgage for the home. If the homeowner can provide some sort of hardship the lender will look into accepting fair market value (determined by a BPO) for the home and pay for all costs associated with the sale. The lender would much rather sell the home via short sale than incur all the costs that come with the foreclosure process.

2) When is the best time for me to start the process for my Short Sale?

As soon as you know it will be difficult or impossible to budget payments for your mortgage; you owe more than “fair market value” for your home; or you have little equity in the home which will not cover the costs to sell the home.

3) Why would my lender want to allow a Short Sale to help me?

A short sale can save the lender thousands and thousands of dollars compared to the foreclosure process. When a lender forecloses on a home the lender incurs legal fees, insurance fees, damage to the property while vacant, utility costs, taxes, possible assessments, and losses on money that could have been liquidated many months earlier via short sale.

4) How long does the Short Sale process usually take?

The approval process of a short sale generally takes 30 to 60 days. This can depend on many factors and are unique to every short sale situation, thus we cannot guarantee a specific amount of time.

5) What is a hardship?

A hardship can be one of many circumstances that make it difficult or impossible to fully pay your monthly mortgage payment. It can be a loss of job, lower income, medical problems, divorce/separation, increasing payments because of an adjustable rate mortgage, etc.

6) What is the difference on my Credit between a Foreclosure and a Short Sale?

A foreclosure will show as A Foreclosure or A Debt NOT PAID. A negative mark on your credit of this magnitude can prevent you from purchasing a home for up to 7 years and really hurt your chances on obtaining other loans! A short sale will show as Debt Paid or settled. It is a far better mark and will allow you to obtain credit in the near future. Please consult one of the three major creditors for further explanation.

7) Who benefits from the Short Sale?

Short sales are a win-win situation. Lenders, Mortgagees and Realtors all benefit from the successful short sale. Mortgagors get the majority of their money back, Mortgagees get the relief they need and are able to sell their property and avoid foreclosure, and Realtors can facilitate the transaction and receive compensation (commission) from the sale of the property.

8) Why would banks forgive the difference?

To mitigate their losses, banks often accept a settlement of less than what is owed on the property. When faced with the option of getting the property ‘back’ through foreclosure, a short sale often makes a much wiser business decision for the bank.

9) This sounds too good to be true?

Not really. Things that are ‘too good to be true’ usually don’t make good economic sense. The short sale makes good common and financial sense for the banks who grant them. The fact of the matter is,

Mortgage companies and banks are NOT in the real estate business. They are in the LENDING business. The last thing they want is that property back.

10) Can FHA, Conventional or VA loans receive a short sale?

Yes, I have successfully negotiated short sales for each of these loan types.

11) Why does my property have negative equity?

Here are a few common reasons:

  1. Person bought at the height of the market and the market has now declined or paid more than the property was worth.
  2. The area has become less desirable for any number of reasons, so property values have declined.
  3. Person purchased the home with little or no money down and wants to sell within a few years of purchase… and the property value has not increased during that time. Therefore, costs associated with selling the property may create a balance due at closing,
  4. Person refinanced the home (with a high appraisal value) and now has little or no equity.
  5. Person bought in a brand new subdivision or recently developed area that has not been fully developed or has not appreciated (or has depreciated) in value
  6. The market is soft because there is too much builder (new home) inventory or too many existing homes on the market (buyer’s market)

12) What is Negative Equity?

Also known as being “upside down” negative equity is the difference between the value of an asset and the outstanding portion of the loan taken out to pay for the asset, when the latter exceeds the former. For example, if your car is worth $10,000 and you owe $15,000 on it, you would have a negative equity of $5,000. Negative equity can result from a decline in the value of an asset after it is purchased.

Some areas decline in value. In other areas, prices may remain flat so that the properties in that area do not appreciate. If a seller wants to sell within 2-3 years of purchasing their property, they may be in a situation where they have negative equity.

13) What if I owe what my home is worth?

Even if you owe exactly what your home is worth, you may still need to do a short sale in order to pay for the costs of the sale (Realtor fees, Title Policy and other seller closing costs).

14) What if I’m not behind on my payments?

Short sales work – even if you’ve never missed a payment. Yes, I know… short sales have gotten a stigma of being only available for folks who are in foreclosure. They just happen to be in a negative equity position and need the short sale in order to sell their home.

15) What if my home is already in foreclosure?

Your foreclosure sale will usually be suspended during the short sale process. That’s why it’s imperative that you contact me right away.

16) Will my lender send me a 1099 on the debt forgiven?

In 2007 the U.S. Congress passed the Mortgage Debt Forgiveness Relief Act and it is in effect until 2012. As a result of that act, borrowers no longer pay taxes on the debt forgiven on their primary residence. So if the property is your primary residence, then no, you should net receive a 1099 for the debt forgiven or have to pay any taxes on the forgive debt. For investment property, the lender does have the right to report to the IRS the amount they have ‘forgiven’ in a Short Sale transaction, the amount of the resulting tax will be far less than the debt forgiven. For example, we had one client who did get a 1099 for $30,000 forgiven. This resulted in additional taxes of $1,300 for that year. The resulting tax is far superior to paying the difference of the debt. Also, if the property is in foreclosure, the foreclosure would have a much more devastating affect on you than the amount of the 1099.

Steps to buying a home

1. Decide to buy.

Although there are many good reasons for you to buy a home, wealth building ranks among the top of the list. We call home ownership the best “accidental investment” most people ever make. But, we believe when it is done right, home ownership becomes an “intentional investment” that lays the foundation for a life of financial security and personal choice. There are solid financial reasons to support your decision to buy a home, and, among these, equity buildup, value appreciation, and tax benefits stand out.

Base your decision to buy on facts, not fears. If you are paying rent, you very likely can afford to buy. There is never a wrong time to buy the right home. All you need to do in the short run is find a good buy and make sure you have the financial ability to hold it for the long run. The lack of a substantial down payment doesn’t prevent you from making your first home purchase. A less-than-perfect credit score won’t necessarily stop you from buying a home. The best way to get closer to buying your ultimate dream home is to buy your first home now. Buying a home doesn’t have to be complicated – there are many professionals who will help you along the way


2. Hire your Realtor.

The typical real estate transaction involves at least two dozen separate individuals – insurance assessors, mortgage brokers and underwriters, inspectors, appraisers, escrow officers, buyer’s agents, seller’s agents, bankers, title researchers, and a number of other individuals whose actions and decisions have to be orchestrated in order to perform in harmony and get a home sale closed. It is the responsibility of your real estate agent to expertly coordinate all the professionals involved in your home purchase and to act as the advocate for you and your interests throughout.

Seven main roles of your real estate agent

1. Educates you about your market.
2. Analyzes your wants and needs.
3. Guides you to homes that fit your criteria.
4. Coordinates the work of other needed professionals.
5. Negotiates on your behalf.
6. Checks and double-checks paperwork and deadlines.
7. Solves any problems that may arise.

Eight important questions to ask your agent

Qualifications are important. However, finding a solid, professional agent means getting beyond the resume, and into what makes an agent effective. Use the following questions as your starting point in hiring your licensed, professional real estate agent:

1. Why did you become a real estate agent?
2. Why should I work with you?
3. What do you do better than other real estate agents?
4. What process will you use to help me find the right home for my particular wants and needs?
5. What are the most common things that go wrong in a transaction and how would you handle them?
6. What are some mistakes that you think people make when buying their first home?
7. What other professionals do you suggest we work with and what are their credentials?
8. Can you provide me with references or testimonials from past clients?


3. Secure financing.

While you may find the thought of home ownership thrilling, the thought of taking on a mortgage may be downright chilling. Many first-time buyers start out confused about the process or nervous about making such a large financial commitment.

From start to finish, you will follow a six-step, easy-to-understand process to securing the financing for your first home.

Six steps to Financing a Home

1. Choose a loan officer (or mortgage specialist).
2. Make a loan application and get preapproved.
3. Determine what you want to pay and select a loan option.
4. Submit to the lender an accepted purchase offer contract.
5. Get an appraisal and title commitment.
6. Obtain funding at closing.


4. Find your home.

You may think that shopping for homes starts with jumping in the car and driving all over town. And it’s true that hopping in the car to go look is probably the most exciting part of the home-buying process. However, driving around is fun for only so long – if weeks go by without finding what you’re looking for, the fun can fade pretty fast. That’s why we say that looking for your home begins with carefully assessing your values, wants, and needs, both for the short and long terms.

Questions to ask yourself

What do I want my home to be close to?
How much space do I need and why?
Which is more critical: location or size?
Would I be interested in a fixer-upper?
How important is home value appreciation?
Is neighborhood stability and priority?
Would I be interested in a condo?
Would I be interested in new home construction?
What features and amenities do I want? Which do I really need?


5. Make an offer.

When searching for your dream home, you were just that – a dreamer. Now that you’re writing an offer, you need to be a businessperson. You need to approach this process with a cool head and a realistic perspective of your market. The three basic components of an offer are price, terms, and contingencies (or “conditions” in Canada).

Price – the right price to offer must fairly reflect the true market value of the home you want to buy. Your agent’s market research will guide this decision.
Terms – the other financial and timing factors that will be included in the offer.
Terms fall under six basic categories in a real estate offer:
Schedule – a schedule of events that has to happen before closing.
Conveyances – the items that stay with the house when the sellers leave.
Commission – the real estate commission or fee, for both the agent who works with the seller and the agents who works with the buyer.
Closing costs – it’s standard for buyers to pay their closing costs, but if you want to roll the costs into the loan, you need to write that into the contract.
Home warranty – this covers repairs or replacement of appliances and major systems. You may ask the seller to pay for this.
Earnest money – this protects the sellers from the possibility of your unexpectedly pulling of the deal and makes a statement about the seriousness of your offer.


6. Perform due diligence.

Unlike most major purchases, once you buy a home, you can’t return it if something breaks or doesn’t quite work like it’s supposed to. That’s why home owner’s insurance and property inspections are so important.

A home owner’s insurance policy protects you in two ways:
1. Against loss or damage to the property itself
2. liability in case someone sustains an injury while on your property

The property inspection show expose the secret issues a home might hide so you know exactly what you’re getting into before you sign your closing papers.

Your major concern is structural damage.

Don’t sweat the small stuff. Things that are easily fixed can be overlooked.

If you have a big problem show up in your inspection report, you should bring in a specialist. If the worst-case scenario turns out to be true, you might want to walk away from the purchase.


7. Close.

The final stage of the home buying process is the lender’s confirmation of the home’s value and legal statue, and your continued credit-worthiness. This entails a survey, appraisal, title search, and a final check of your credit and finance. Your agent will keep you posted on how each if progressing, but your work is pretty much done.

You just have a few preclosing responsibilities:

1. Stay in control of your finances.
2. Return all phone calls and paperwork promptly.
3. Communicate with your agent at least once a week.
4. Several days before closing, confirm with your agent that all your documentation is in place and in order.
5. Obtain certified funds for closing.
6. Conduct a final walk-through.

On closing day, with the guidance of a settlement agent and your agent, you’ll sign documents that do the following:

1. Finalize your mortgage.
2. Pay the seller.
3. Pay your closing costs.
4. Transfer the title from the seller to you.
5. Make arrangements to legally record the transaction as a public record.

As long as you have clear expectations and follow directions, closing should be a momentous conclusion to your home-searching process and commencement of your home-owning experience.


8. Protect your investment.

Throughout the course of your home-buying experience, you’ve probably spent a lot of time with your real estate agent and you’ve gotten to know each other fairly well. There’s no reason to throw all that trust and rapport out the window just because the deal has closed. In fact, your agent wants you to keep in touch.

Even after you close on your house, you agent can still help you:

  • Handle your first tax return as a home owner.
  • Find contractors to help with home maintenance or remodeling.
  • Help your friends find homes.
  • Keep track of your home’s current market value.
  • Attention to you home’s maintenance needs is essential to protecting the long-term value of your investment.
  • Home maintenance falls into two categories:
  • Keeping it clean: Perform routine maintenance on your home’s systems, depending on their age and style.
  • Keeping an eye on it: Watch for signs of leaks, damage, and wear. Fixing small problems early can save you big money later.

Inspections

Here you will learn about Home Inspections for both the buyer and seller here in MN.  We recommend to all buyers to have the home inspected by a professional third party to give the buyer “peace of mind” in the decision they have made.


Seller Home Inspections: 

There are two different of inspections that a seller can provide for a potential buyer. One is a city inspection, also called a Truth in Sale Home Inspection or “TISH”. The other is a third party private inspection for the buyer at the seller’s expense. Let’s look at both options.


City Inspections

City Inspections are required in some cities in MN but not all cities. The city inspections were put into place to insure that homes meet certain standards for potential buyers moving into the area. These minimum requirements include but are not limited to electrical codes, plumbing codes, safety codes, etc. The cities that have the Truth in Housing Inspection all have their own requirements. For example, in St. Paul, all homes that are sold must have a hard wired smoke detector installed on every level.

Inspectors must be licensed for Truth in Sale Inspections – not all inspectors can perform them. 

Keep in mind that a city inspection does not meet the standards of My First Home MN and should never be considered a Private Inspection.


Seller Private Inspections

Seller Private Inspections are third party inspections that allow the seller to get the home into its best possible condition according to a third party inspector. The inspector will not and does not represent the buyer, so it is in the buyers best interest to have their own inspection completed. However, homes that are inspected by the seller will typically have less issue and can sell for more money.

If the sellers Private Inspector notices that the furnace may need to be serviced; the seller may service the furnace. The buyer than would not have to do that. Furthermore, if the sellers Private Inspector notices the landscaping is sloping negatively toward the home, they may go ahead and fix the issue before the buyer has their own inspection done.

There is NO requirement in MN for a seller to have their own private home inspector.


A Buyers Home Inspection

A buyer home inspection is a critical piece of the puzzle when purchasing a home. In MN the buyer has the legal right to have the home inspected by a third party that isn’t attached to the outcome of the transaction. That is, they are not emotionally attached, they have no financial commitment in the home. They simply give the buyer the facts and findings if the inspection.

A buyers home inspection is visual. A good inspector will poke their head into the attic cavity, they will climb the roof, they will peak down chimneys, etc; but the inspection will be only visual, they will not intrude on the property.

Living in MN there are a few items that arise on most buyer’s home inspections:

  • Grading around the home slopes towards the foundation
  • Window seepage around the windows due to improper care
  • Furnace / Air haven’t been serviced recently
  • Chimney Mortar may need some repair to prevent water seepage
  • GFCI Outlets need to be operable near the water sources

There are many other items that will arise on an inspection report. These tend to be common in most homes in MN and shouldn’t be considered deal breakers.


Deal Breakers

Deal Breakers are items that you as the buyer are unwilling to live with unless the seller is willing to make some accommodations to the purchase agreement. If there are Deal Breakers found during the inspection period, the buyer has a few choices:

Walk away from the transaction and receive their earnest money back

  • Begin to negotiate terms regarding the Deal Breakers
  • Do nothing