What you should know about buying a home in Minnesota
Even if you have bought and sold many homes in the past, each state has its differences. Of course brokerages also have their differences, but here are some key things to know about buying a home in Minnesota.
- Minnesota has broker reciprocity. This means Realtors can show and sell homes listed by other Realtors and real estate companies, and Realtors and their clients have access to all listings in the MLS regardless of who is the listing agent.
- Seller pays commission to buyer’s agent on behalf of buyer. The amount the seller is paying the buyer’s agent is included in each MLS listing, and means buyers rarely pay any direct agent commission. However, be aware what your contract states your agent will be paid… sometimes the amount the seller is paying isn’t enough to cover it and you will have to make up the difference.
- Minnesota has dual agency. This means that the same brokerage can have a fiduciary representation agreement with both buyer and seller in a transaction, but cannot advocate for one party over the other and cannot disclose anything confidential regarding price, terms or motivation. Buyer and seller must agree this arrangement is ok with them.
- Attorneys are rarely involved in Minnesota closings. Realtors have a fiduciary relationship with clients and handle transaction details and negotiations. Title companies handle the closing of the sale.
- You must have financing pre-approval or verification of funds for cash purchase before you make an offer on a property. In our market, financing approval is addressed before, rather than after an offer. You should have a pre-approval letter which means your income, credit score and down payment funds have been verified… rather than a pre-qualification letter, which basically means it ‘looks good’ that you will qualify but it hasn’t been verified.
- Most Minnesota homes have basements. In Minnesota, most buyers love having basements… great for storage and extra living space. But basements can be cool and damp so pay attention to how they are heated and what steps have been taken to prevent moisture intrusion.
- Home Warranty is addressed in the Minnesota real estate purchase agreement. This means you will make a decision while writing your offer as to whether your new home will be covered by a home warranty… and if so, who will pay for it.
- Arbitration is part of every Minnesota purchase agreement. You will have the option to decide ahead of time to accept or reject arbitration by a real estate arbitrator as a way to resolve any potential disputes that may arise after closing as an option instead of litigation.
- Most homes are sold subject to inspection, usually completed within 10 days. Several communities in the metro area, including Minneapolis and St. Paul, require homes to be inspected by a licensed evaluator before they are offered for sale. This inspection is ordered and paid for by the seller. In addition, most buyers order and pay for their own private inspection. After the inspection you can choose to simply proceed to closing, ask the seller to make some repairs or make a price adjustment to cover the cost of repairs, or cancel the agreement and have your earnest money refunded.
- According to the Minnesota Department of Health, 2 in 5 Minnesota homes have radon levels that pose a significant health risk. For this reason, most homeowners include radon testing in their home inspection.
- You can buy a home contingent upon the successful closing of another home. This means you don’t have to wait until after you close on your current home to get under contract for a new home. You could conceivably close on both homes within days of each other, possibly even the same day.
- There is usually no waiting to get the keys to your new home. Sellers usually get their proceeds and buyers usually get the keys to their new home right at the closing table so you can move into your new home right away.
- Homestead your primary residence by December 1 for tax credit. If this will be your primary residence homesteading could give you a tax credit… amount varies based on the price of your home. Homestead filing doesn’t cost anything and is done only once for as long as you own the property, recorded once a year with filing deadline of December 1.