How to Buy a House in Minnesota
- 1. Hire a real estate attorney. Find a MN attorney who is familiar with how to negotiate Realtor fee agreements, residential real estate transactions, title insurance and who is not afraid to call attention to Realtor malfeasance. Here is a list of attorneys who volunteer on the Real Property Law Section of the Minnesota Bar Association (click here) – some may not be in private practice. Many real estate attorneys rely upon Realtor referrals. Ask your attorney if they have any Realtor clients or if they routinely receive referrals from your agent.2. Interview 2 or 3 loan officers and get pre-qualified for a mortgage. Make your final selection only when you are ready to lock in your rate and can compare current fees.3. Hire a highly qualified Realtor from a small firm and negotiate their fee agreement. Stay away from all large real estate firms as their agreements are unconscionable and unfair. You can avoid dual agency, pocket listings, steering, extra fees and other bad practices that routinely occur with large firms. Ask your agent if they or their broker have any marketing agreements with title firms, lenders or any other arrangements that might concern you.* Buyers – Hire an Exlusive Buyer Agent or a Single Agent from small firms. Click here for a list of Minnesota EBA’s.* Sellers – Hire only a small firm to avoid dual agency. Never agree to open houses, pocket listings, dual agency, payment of extra fees, in-house title or mortgage companies. Always make sure your Realtor’s marketing plan automatically includes Zillow, Trulia, Realtor.com and other free online marketing services. Negotiate both parts of the commission and make the buyer broker’s share also payable to “do it yourself” home buyers so that your broker does not confiscate this.
4. Do It Yourself Buyers – BEWARE. If you allow the listing broker’s firm to show you a house that you found, you will likely forfeit any savings and the listing broker will pocket a double fee. Instead, hire a buyer broker on an hourly rate, set up your own showings (tell the listing agent your agent can’t make it) and then only use the buyer broker to help you as needed. Use an attorney to draft the purchase agreement and have the buyer broker rebate the commission to you. Always provide your lender plenty of notice about this arrangement.
5. Use an attorney to draft the purchase agreement and use the Minnesota Bar Association Purchase Agreement. Attorneys are trained how to draft contracts, Realtors are not.
6. Use a title company that is independent of affiliations (click here for a partial list) to insure and close your transaction. Compare and shop title companies based on price (there is a big difference in fees in Minnesota), service and type of title policy issued. Use an attorney to help you get the best coverage and review your documents prior to closing. Most title fees have rate calculators on their website. Ask them if they have any affiliations with real estate firms, builders or lenders.
7. After closing make sure that all liens have been paid off, that all documents have been recorded and that you have received your owner’s title insurance policy (if you purchased one – they are optional).