Whether you’re planning to sell your house or buy a new one, the process can feel daunting. Real estate transactions are notoriously complicated, so it’s normal to have questions during every step of the selling or buying journey. Below are the 10 most common questions I get when working with Buyers and Sellers, here in the Twin Cities metro area:
1. What is the difference between Contingent and Pending on the MLS?
When a property is marked “Contingent”, it means there is still an active contingency, as part of the currently accepted offer. By far, the three most common contingencies are ‘Inspection’, ‘Sale of buyer’s property’ and ‘Financing.’ Once any/all of the contingencies have been fulfilled, THEN the property would move into a “Pending” status.
While a home is marked contingent, the owner may entertain back-up offers. Once the home is marked, Pending, the owner should not allow further showings and cannot entertain any back-up offers. Remember, the 1st and original offer will always take precedence over any back-up offers, as long as all contingencies are fulfilled.
2. As a buyer’s agent in Minnesota, how is your commission paid?
In the state of Minnesota, a Buyer’s Agent commission is generally paid by the homeowner or seller. Typically, the homeowner or seller will cover all Realtor commission/fees as part of listing the home on the MLS. This is a generally accepted nationwide standard.
The buyer and/or seller may by responsible for paying a Broker Admin. fee, which goes directly to the cooperating broker, to help cover administrative fees. This fee ranges from $350-700 per transaction and is simply paid at closing.
3. Can you help me sell my home AND buy a new home at the same time?
The short answer is yes! Often times, it will actually make the entire process that much easier because you have one person that is familiar with your timeline and real estate goals. You can also save some money by negotiating the listing commission on the sale of your home, since your agent will be getting a “double transaction”.
For more insider secrets on successfully selling your home, check out our complete Home Selling Guide!
4. Do I need to have a 20% down payment to buy a house?
No, you do not. There are home loans available for as little as 3.5% down payment. Ultimately, it comes down to how much you want your total monthly payment to be, in conjunction with the house you are buying. Check out our home mortgage calculator, below, to see how much your monthly payment would be!
Home Mortgage Calculator
5. So, how do I know home much home I can afford?
Home affordability is calculated by taking into account your monthly income, current monthly debts and your down payment. That said, the amount of home you can afford is ultimately up to you and what you are comfortable with spending on a monthly basis. A good rule of thumb is that your total mortgage should be no more than 28-30% of your pre-tax monthly income. Check out our home affordability calculator below!
Home Affordability Calculator
6. Should I pay for my buyer’s closing costs?
This is definitely something that is negotiable, especially in a strong “seller’s market”; where the seller has more negotiating leverage. Ultimately, paying some or all of the buyer’s closing costs might help them to offer you a higher sales price, which will result in more net ‘cash-in-you-pocket at closing’.
The buyer’s closing costs typically come in the form of a credit the buyer uses during closing. Additionally, if your house has been on the market for a while, offering to pay for a buyer’s closing costs can attract more offers and speed up the closing process.
For more insider secrets on successfully purchasing a home, check out our complete Home Buying Guide!
7. Do I really need a home inspection?
It is the buyer’s responsibility to get a home inspection, so as the seller, you don’t need to get one. An inspection usually ranges from $300–500, so that’s money you can keep in your pocket. In some cases, the homeowner may opt to have a pre-listing inspection done ahead of time.
A couple benefits to doing that would be to discover and repair any major problems prior to listing the home for sale, which would ultimately lead to a higher asking price AND you can encourage the buyer to waive the inspection contingency, meaning there will be fewer chances for your deal to fall through.
8. How long will it take to buy a home?
On average, it takes about 4-4.5 months to complete the entire process and close on your new home! That said, much of that time depends on your home search criteria vs. your budget and the neighborhoods where you will be looking. In an area where inventory it more limited, based on your budget and needs/wants, it may take longer to find your new home. Once you find a home and get an offer accepted, it will take about 30-45 days for closing.
Before closing, you’ll also need to:
- Order a home inspection
- Get an appraisal
- Conduct a title search
- Finalize mortgage details
- Review closing documents
9. Can I back out of buying a home?
Yes, but you may lose earnest money, which is a security deposit given to the seller upon signing a contract. Generally 1-2% of the purchase price is an acceptable amount for earnest money. You can also face legal consequences if you back out of the agreement for a reason not outlined in the purchase agreement. This document outlines important details, such as repairs the seller is responsible for and contingencies of the real estate deal. These are all great reasons to make sure you are working with a Buyer’s Agent when buying a home in Minnesota.
10. Do I really need a Buyer’s Agent?…Why not just work with the listing agent?
A buyer’s agent can help you find homes within your budget, schedule private showings to houses you like and negotiate with sellers. The Twin Cities has been in an aggressive seller’s market for several years now, so having a professional negotiator on your side is absolutely critical!
Top real estate agents also have in-depth knowledge about specific neighborhoods and can save you time and money by narrowing down your best possible options. Since realtors are plugged into the local market, they might even hear about potential properties before they’re officially listed on the MLS!
Check out some of our other Twin Cities, MN real estate blog posts…
- What’s behind rising home prices in Minnesota, and many parts of the U.S.?
- 10 Things To Bring With You When House Hunting
- 5 hot features home sellers frequently forget to mention…
- How to save money when you buy a home
- Moving to Minnesota? Here Are 9 Reasons Why You Should!
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