What you should know about buying a home in Minnesota

Open door with keys, key in keyhole

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  12. 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.
  13. 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.

Is the seller required to make repairs following an inspection?


It depends. Some Twin Cities communities require an inspection, commonly referred to as TISH (Truth-in-Sale-of-Housing) inspections, when selling a home. Some require that certain repairs be made. But not every community requires an inspection at all, and for some communities that do require the inspection the report is simply informational. This inspection is the responsibility of the seller. We will explain what is required in the community where you are buying.

For buyer inspections the simple answer is no, a seller has no obligation to fix any issues found at a buyer’s inspection. A buyer’s inspection is a private inspection paid for by the buyer for the buyer’s information. There is no requirement that the seller fix anything simply because of a buyer’s inspection. In fact, the inspection contingency addendum specifically states… THE PROPERTY, IF NOT NEW, CANNOT BE EXPECTED TO BE IN NEW CONDITION. ROUTINE MAINTENANCE ITEMS ARE NOT PART OF THIS ADDENDUM.

That said, there may be things that come up in a buyer’s inspection that also come up as required fixes in a city time of sale inspection (required in these cities)… and buyers will frequently ask for something following the inspection. Most often the items sellers will agree to address are those that are a health or safety hazard, or things that are not working properly… often things they were unaware of themselves or they would have already fixed them.

Most buyers make their offer to purchase a property contingent upon a complete home inspection…for good reason. If you are like most people, buying a home is the biggest single investment you will ever make. It makes sense to protect that investment by having a qualified, professional inspector take an in-depth, unbiased look at your new home before you buy.

A professional buyer’s home inspection will:

  • Evaluate the structure, construction and mechanical systems
  • Identify items that need to be repaired or replaced… either now or to plan for in the future
  • Provide an education on home ownership for first-time home buyers… what I often consider to be the biggest benefit of a buyer’s home inspection

Not all inspectors and inspections are the same… here is a link to a sample report and list of what is included in a buyer’s inspection by Structure Tech Home Inspections, who we consider to be among the best in the business.

The inspection contingency period is usually completed within 10 days of coming to an agreement on a property. Plan on about 2-4 hours for a complete inspection. If you include a radon test, ask to have it set to be picked up at your regular inspection. You may also choose to add a sewer line scope and/or professional fireplace inspection as part of your general inspection.

After reviewing the report you have three options: (1) accept everything as is and proceed to closing; (2) ask the seller to fix specific things prior to closing or give a price allowance for you to have them fixed after closing through either a contribution to buyer closing costs or a price reduction; or (3) cancel the purchase and have your earnest money refunded.

The seller can choose how to respond by either (1) agreeing to do everything the buyer asks; (2) negotiating requested repairs and/or compensation; or (3) refusing to do anything and cancelling the agreement, refunding earnest money to the buyer.

With so many buyers making quick decisions on properties in our highly competitive market there seem to be more cancellations after the buyer’s inspection than ever this year… an even bigger reason to make your offer subject to inspection if you are buying.

Of course the flip side to that is… if you are certain there is nothing that an inspection would reveal that would make you change your mind about purchasing a particular home and there are multiple offers, making your offer not subject to inspection could make your offer more attractive… but this is not something to be considered lightly… make sure you understand the risks involved.

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