Home Buyer's Guide and Tools
BUYERS It’s a terrific time to buy a home in the Minneapolis/St.Paul area right now and whether you’ve been thinking about purchasing your first home or upgrading, rates are still close to historic lows and there are many down payment assistance programs available that you might be able to take advantage of.
Step 1: Pre-Approval. Meet with a reputable lender and get pre-approved for a mortgage. Your lender will help you determine your monthly housing budget and you’ll probably find that you’ll qualify to borrow more than you actually want to pay each month. If you’re buying a single family home, there will be four components to your monthly payment and be sure you understand these before you leave your lender’s office; Principle, Interest, Taxes and Insurance (PITI). If you’re buying a condo or townhouse (or a property that is part of an association), you’ll need to factor in Association Dues to your monthly payment.
Step 2: Hire a Realtor®. Meet with at least one knowledgeable Real Estate agent to discuss your housing needs and come up with a plan that makes sense for you. During this meeting be sure to ask the agent for references and how he/she gets paid. Find out how their typical buyer process and how much time they have to show you homes. If you work nights, are they available to show you homes during the day? Will the agent send his assistant or will he be showing you homes? Once you’ve found an agent who feels like a good fit with what you need you’ll be ready to start the search.
Step 3: Agency & Right to Represent. The Realtor® that you select will ask you to sign two documents before you start your search; ‘Agency Relationships’ and ‘Exclusive Right to Represent Buyer’. Both are required by the Minnesota Department of Commerce and are designed to protect you, the buyer. Your Realtor® will explain both documents in detail but in brief, ‘Agency Relationships’ spells out the 4 different types of Agents recognized in Minnesota and their responsibility to you. ‘Exclusive Right to Represent’ spells out the terms of your working relationship with your Agent. Much like hiring an electrician, you’ll need to sign on the dotted line before the work can begin.
Step 4: Find the House. Ask your Realtor® to set you up to automatically receive listings as they hit the market. Based on a specific set of criteria that you’ve determined together, you can get emails daily, weekly, monthly or instantly. It’s a great way to start getting educated about the market and what your money will actually buy. Next, go out and look for homes with your agent.
Step 5: Thinking About an Offer. Once you’ve found the house you want to go after, walk through it with a different set of eyes. Make a list of all possible problems, immediate repairs or upgrades and longer term capital improvements. In other words, arm yourself with as much data and information as possible before you write an offer. Ask your agent to run a CMA (Competitive Market Analysis) to help determine what type of offer makes economic sense to purchase the house. This analysis will tell you what other similar homes have sold for in the area, average dollar per square foot prices and many other data points. Remember – there is no one right purchase price for a home. Ask yourself ‘what’s the house worth to me’ versus what the CMA says.
Step 6: Writing an Offer. Here is where an experienced Realtor® can really shine, add value to the process, save you money and reduce your risk. Your agent’s job is to protect your Earnest Money so be sure you understand what you’re signing and plan to discuss things like Seller Paid Closing Costs, Inspection Contingencies and Property Assessments.
Step 7: Offer Acceptance & Inspections. Once you and the Seller have full agreement on the terms of purchase and all signatures are complete, you’ll want to conduct your inspections. Most buyers limit their inspection to a single complete house inspection (about $350 to $400). But depending on the age of the house, you may also want to consider a sewer line inspection ($150 to $200) or a chimney scope (about $250). And, if you suspect some other specific problem with the house now would be the time to get experts out to take a look. If, for example, you suspect the furnace is quite old and may have a cracked heat exchanger, you may consider having an HVAC contractor out to inspect the unit. Assuming you are not buying brand new construction, remember, this is a ‘used’ home. It will not be perfect so do your homework and go in with your eyes wide open. The inspection process should only be used to uncover unknown, scary or dangerous items. It should not be used to further negotiate down the purchase price, unless something unknown is discovered during an inspection.
Step 8: Full Steam Ahead. Now that you’re past the inspection period, it’s full steam ahead and all of different players start to work towards closing date. Your main job at this point is to work with you lender to make sure he/she has all of the documents that the underwriter will require to get your loan fully approved. Your agent will either hook you up with a Title Company, or you can hire your own, but either way much of the work to be done now is behind the scene with your closer and your lender. Now you’re on your way to getting the keys to your new home!
- Search Homes Right Now: Use the search tool to browse the wide variety of single-family homes, duplexes and condominiums on the local real estate market.
- Register on Home Finder and let your dream home come to you. Here is where you can also create saved searches, collect your favorites and sign up for instant email alerts when new homes that fit your criteria come on the market.
- Use the Mortgage Calculator to figure out what your mortgage payments will be on the home you want.
- Connect to a Professional: Contact us anytime you need to know more about the area or any property that interests you. When you're ready to take the next step toward purchasing a home, we're here to help.