Buying a home

Whether you’re buying your first home, moving up, downsizing, relocating or looking at options for aging in place, buying a home is one of the most important purchases you’ll ever make. Whether you’re a first time homebuyer or a seasoned veteran, it’s a time consuming and complicated business.

We’re here to help you through the exciting but daunting process…and make it as enjoyable an adventure as possible!

Common buyer questions

Do I need a Realtor? How much does it cost?

If you are like most buyers, you don’t need a Realtor to find homes for sale… they are available online and you can easily click, email, text or call to set up a showing. What you may not realize is that rather than setting up 10 different appointments to see 10 different properties with 10 different Realtors you can just contact one Realtor to show you all the properties you are interested in seeing, regardless of which company has listed the property or which agent is listed as the contact.

Most buyer Realtor fees are paid by the seller at closing, so working with one Realtor can save you a lot of time and hassle with little or no cost to you.

Also, the listing agent is contracted to represent the seller and is legally obligated to keep the seller’s best interests in mind. As a buyer, it makes sense to have your own agent legally contracted to watch out for you and keep your best interests in mind… and the seller pays for it!

Can you show and sell me homes listed by other Realtors?

Yes, unlike some parts of the country where Realtors can only show their own broker listings, the Twin Cities has broker reciprocity… which means real estate brokers grant permission to display and sell each other’s listings. That means MLS listings from all participating Twin Cities real estate companies are included in our online home search… and we can show and help you buy any of them, whether you find them here, on a sign or ad, on another website, or anywhere else!

What does a Realtor do besides show homes for sale?

Most people only buy a few homes in their lifetime, Realtors buy and sell homes all the time… they help guide you through the entire process. Some of the things Realtors do include…

  • Provide legal representation, with the same fiduciary responsibilities as a lawyer
  • Answer your questions and guide you through the process
  • Help you clarify your wants and needs in a property at this point in your life
  • Help you determine and match your priorities as you search for your home
  • Coordinate with your lender to match properties to your financial needs
  • Research and provide background information on properties of interest
  • Help you objectively view condition and livability of the property and neighborhood as it relates to you and your lifestyle
  • Provide a market analysis of comparable homes sold in the area in the last six months to assess price and value
  • Write and present a purchase agreement when you find the right property, again coordinating with your lender to structure the agreement to match your financial requirements
  • Negotiate the offer
  • Connect you with professionals for inspections and other needs
  • Monitor process from purchase agreement through closing

How much cash do I need?

Although 20% down is still the standard for not paying mortgage insurance, you may be surprised at how little cash you need to get a mortgage. Loans are available with as little as 3% down and down payment assistance programs are available with higher income limits than you may think. Bottom line is check with a lender before you start your home search in earnest. Depending on which loan program(s) you use, you may only need about $1,000 of your own money. In our Twin Cities market, you must be pre-approved before making an offer so getting financing pre-approval should be one of your first steps regardless of financing needs. Keep in mind that although your financing and closing costs are due at closing, you will also need some cash along the way… earnest money at time of offer (typically about 1-2% of purchase price that applies to total due at closing)… inspection costs at time of actual inspection after coming to an agreement (estimate $400-$700)… appraisal after inspection (estimate $400-$500)… and of course plan for expenses that go along with home ownership after you close on your new home.

How high does my credit score have to be?

More than half of buyers last year had credit scores of 600-749. Your score may indicate the kind of financing program for which you qualify. As you are probably aware, higher credit scores usually yield better lending terms. Again, talk with a lender to determine what makes most sense for you. You may be surprised to learn that paying cash for everything actually hurts your credit score! Your lender can help you make a plan to increase your credit score if needed to get the best terms.

Steps in Buying a Home

Whether you are buying your first home or your tenth you go through the same basic steps when buying a home.

1. Gathering information

Most people start the home buying process by gathering information online… often starts months or even years before moving on to the next step. Buyers are better prepared than ever, but so much information can also be confusing. Having a real estate professional working with you to sort through it all and guide you through the process is more important than ever. Nearly 90% of buyers work with a Realtor to purchase their home.

2. Selecting a Realtor – signing documentation
3. Selecting a Lender – getting pre-approved for financing

These two steps often happen pretty close to the same time. When you are ready to move forward you should have both…a Buyer’s Agent to represent you and help you find a home, and a lender to help you determine how much home you can afford and provide the financing pre-approval you need when you make an offer.

Buying a home is likely one of the biggest purchases you will ever make, and it is important to work with someone you feel comfortable with and can trust. That’s the reason so many people ask family and friends for recommendations. People are also using the Internet more and more in the selection process… getting to know something about different agents before meeting them in person. We have had new clients contact us saying they had been following our blog for some time, were ready to move forward and wanted us to represent them… they felt they already knew us!

4. Finding your home – identifying wants & needs, looking at homes

It is important to identify your wants, needs and priorities in a home as you start your search process to find the perfect home. How long it takes is different for everyone… it may be the first home you see or it may be the 40th. However long it takes, most people search with their heads but buy with their hearts. You will usually know when you have found the right home for you… you will just feel it is right and know it’s time to move on to the next step.

5. Making an offer – negotiating & submitting earnest money if coming to an agreement

Your written offer to purchase a property will include such things as how much you are offering to pay, how much earnest money you are submitting as a deposit to be held until closing, how you plan to finance your purchase, when you want to close and take possession, and what contingencies your offer may have. In a traditional transaction the seller usually responds to your offer within 24 hours and negotiations can involve multiple counter offers back and forth.

6. Inspection – usually completed within 10 day after coming to an agreement

If your offer is contingent upon an inspection, you will schedule an inspector of your choice within the specified time frame and pay for it at the time of the inspection. Buyers usually go through the house with the inspector, it’s a great learning experience. You can also include radon, sewer and fireplace inspections as part of your inspection process. After the inspection you can accept the property as is, request that the seller fix or give financial compensation for certain items, or cancel the purchase agreement and have your earnest money refunded. In foreclosures and short sales you are buying the property in ‘AS IS’ condition, which means you usually have only two options… move forward or cancel your purchase agreement.

7. Underwriting – final mortgage loan approval & preparing for closing

Many steps take place after coming to an agreement, including property appraisal, title work and final approval of your loan… all of which are managed by your lender. You are responsible for locking in your interest rate, securing property hazard insurance and arranging for certified funds or wire transfer of funds for closing.

8. Closing – usually 4-6 weeks after coming to an agreement

Your closing date is set as part of your purchase agreement. Shortly before closing you will do a final walkthrough of the property with your Realtor to assure it is in the condition agreed to in your purchase agreement.

Closing is when you bring your money, sign the papers assuming your mortgage (if any) and the title transfers to you… it’s when you get the keys to your new home! Traditionally present are the buyer, buyer’s agent, buyer’s closer, sometimes the lender, the seller, seller’s agent and seller’s closer.

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