Selling a home in Minnesota
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If you’re thinking about selling your home in Minnesota, you’ll be pleased with the latest data from Minnesota Realtors: The median sale price at the midway point of 2022 was nearly $340,000 — a 7.9 percent increase over the past 12 months. In fact, the average Minnesota homeowner still paying a mortgage has gained $28,000 in equity in the past 12 months, according to data from CoreLogic.
Cashing in on that increase in value isn’t the same across the entire state. While homes in the Twin Cities have been spending just 22 days on the market and selling for around 1.7 percent more than their asking price, it’s a different story for sellers in the rural northwest part of the state, where the typical home spent 67 days on the market and sold for 4 percent less than list price.
Read on for the most important things you need to know about selling your Minnesota house.
Are you ready to sell?
Should you sell your house now, or are you better off waiting? First, you’ll need to think about your personal circumstances. If you’re trying to sell your house while buying another, make sure you have a game plan in place if the process isn’t perfect. For example, if you get a great offer but you can’t find a new home you love, will you be able to deal with moving to a short-term rental until you do? In addition, consider the current conditions of the economy. It is a good time to sell a house in Minnesota, but there are signals that it may get more challenging as the housing market cools off.
And if you’re moving out of the state entirely, be sure to do your research on the total cost of living wherever you want to call home. For example, if you’re thinking about fleeing the Midwest winters for the Florida sun, Bankrate’s cost of living calculator delivers some good news: It’s actually around 3 percent cheaper to live in Tampa than it is to live in the Twin Cities.
Preparing to sell
You might be personally prepared to sell your home, but is the actual property ready? Ask yourself these three questions to figure out how much you should spend to get it ready to list.
1. Is it worth upgrading your home before you sell?
Probably not. Most real estate experts caution against making any major investments in remodeling projects right before selling your home. Why? Because most projects won’t actually recoup their full cost. Plus, the current market includes a labor shortage and supply-chain challenges that are driving up home-improvement prices. So, rather than ripping out your kitchen or bathroom and starting over, you’re likely better off thinking about cheap ways to boost your home’s value instead.
2. What should you repair before you sell?
Try to imagine that you are a buyer who has never seen your home before. Are there any issues that might immediately turn you off? If the paint is chipping, the carpet is ripped or the walls include scribbles from your little ones, it’s wise to address these problems. However, you don’t have to make everything completely perfect. Make sure you understand what not to fix, too.
3. Should you stage your home?
Staging your home can pave the way to a faster sale. According to statistics from the Real Estate Staging Association (RESA), staged homes sold nine days faster than typical listings in 2021. So, if you really want to speed up your sale, this is a service you should consider. The cost of staging your home varies, as decluttering and organizing is much cheaper than outfitting your entire downstairs with rental furniture, for example. But you may wind up selling it for even more than you expect: 73 percent of staged properties sold for more than their list price in 2021, according to RESA.
When is the best time to sell a house in Minnesota?
There’s plenty to love about the summertime in Minnesota, like spending time on one of the state’s many lakes and putting your winter parka in the back of the closet. If you’re selling your house, the Minnesota summer looks even better. Redfin data from the past two years shows that homes spend the shortest amount of time on the market in June. That’s great news, too. Ask any real estate agent, and they’ll tell you that the best time to sell a house is whenever it won’t sit for too long waiting on a buyer.
Find a local Minnesota real estate agent
Speaking of real estate agents, you should find one to help with your sales strategy. You might be tempted to try to sell your house on your own to avoid paying Realtor fees, but the reality is that an agent’s commission will likely be well worth the price. The latest figures from the National Association of Realtors show that FSBO (For Sale By Owner) listings sold for an average of $260,000 while agent-assisted sales went for $318,000. It’s not just about money, either. Having the right real estate agent saves you loads of time, since they will take care of crafting your listing, hosting open houses, coordinating showings and handling negotiations with prospective buyers.
Price your home competitively
While headlines about skyrocketing home prices may have you dreaming of dollar signs, pricing your home to sell in Minnesota must be rooted in real life. First, you can get an estimate of how much your house is worth with free online tools that use algorithms to come up with an idea of your property value. However, those algorithms aren’t the most accurate way to determine fair market value. Ask your real estate agent to walk you through comps in the area to get a sense of what buyers have been willing to pay for nearby homes that share many of your home’s characteristics. As you determine the best asking price, focus on a number that will turn the heads of home-hunters in the hopes of leading to what every seller wants: multiple offers.
Documents and disclosures in Minnesota
In addition to sharing an asking price with buyers, you need to share your knowledge of any defects with the home that could impact the use and enjoyment of the property. Minnesota sellers are required to complete a property disclosure form, unless the buyer opts for a third-party home inspection report or waives the need for disclosures entirely. One important note: If the buyer prefers an inspection report, you must review it and notify the buyer of any contradictory information. For example, if a home inspector finds no evidence of past water damage, but you know there was a leak three years ago, you’ll need to disclose that fact.
In addition, if your property is part of a homeowners association, be prepared to hand over a range of documents about bylaws, board meetings and any upcoming special assessments that a buyer will want to consider.
Need to sell your home fast?
No time to waste? If you’re in a rush to sell, here are a few ways to sell your home quick:
- Sell to an iBuyer: The process of iBuying is fairly simple: Submit your address online, and a company will give you an initial offer almost instantly — usually within 24 hours. It’s fast, but you’ll likely sacrifice some money in exchange for the time. Additionally, iBuyers might not be active in your town. Opendoor, one of the biggest names in the iBuying game, is currently buying Minnesota properties only in the Twin Cities area. There are also some flexible iBuying options in Minnesota, including Edina Realty’s partnership with QuickBuy.
- Sell for cash: If your house needs a decent amount of work, you might be wondering what buyer will want to deal with those costs. There are plenty of companies that buy houses for cash that may see your property as an investment opportunity. They’ll likely expect a bargain, though, as they’ll be aiming to make it a rental or fix-and-flip opportunity.
- Sell as-is: If you don’t want to deal with requests for concessions, think about adding an “as-is” label to your listing. All that back-and-forth bargaining about repairs can hold up a deal, but the as-is description tells buyers upfront that you aren’t going to budge.
After accepting an offer, you’ll have to wait for a number of steps to be completed before you get to closing. Most of those fall on the buyer’s shoulders as they work to get formal approval for their mortgage. As the closing date approaches, your biggest job is getting the property ready to impress during the final walk-through. Then, it’s all about the money. You’ll need to budget for your moving costs, but that expense isn’t the only line item you need to be prepared to pay.
Cost of selling a home in Minnesota
How much does it cost to sell a house? It depends on a number of factors, but one expense that doesn’t have much wiggle room is your responsibility to pay the real estate commission fees. In most deals, that means 3 percent of the sale price to your own agent and 3 percent to the buyer’s agent. So, on a $300,000 sale, you’ll hand over $18,000. After that, the seller’s costs in Minnesota vary. Here’s a rundown of some common expenses to consider.
- Title insurance: While sellers often pay for the new owner’s title insurance policy in Minnesota, there is no standard that dictates who is responsible for this expense. Like most pieces of a real estate transaction, the cost is negotiable. If you can get the buyer to agree to pay for it, you can reduce your closing cost bill.
- Transfer taxes: As a seller, you are responsible for a deed tax in Minnesota (often called a real estate transfer tax in other states). This tax is 0.33 percent of the value of the property being recorded. So, for example, a seller would pay a $990 deed tax on a $300,000 sale. If you are transferring a deed in Hennepin or Ramsey County, it’s important to note that the bill would be slightly higher: In these areas there is an additional 0.0001 percent tax, known as the environmental response fund rate (another $30 in this example).
- Attorney fees: As a seller, you are not required to hire a real estate attorney in Minnesota. But it’s wise to hire a legal expert anyway, to help oversee the deal. Real estate contracts can be confusing, and you can be liable for potential fraud claims for up to two years if the buyer believes you were dishonest in your disclosure form. An experienced real estate lawyer can help protect your interests.
- Concessions: If your buyer’s home inspection uncovers some issues in need of repairs, be prepared to deal with a request for concessions. This is normal, but you don’t have to say yes. If you do agree to them, you’ll have to hand over a portion of your profits to cover some of the buyer’s closing costs.
Take the first step
Ready to get the home-selling process started? It’s time to set up some interviews with a few different local real estate agents. Ask them plenty of questions to find out how they will approach your business, and choose the one who you feel most comfortable with.
If you want to avoid paying a real estate agent’s commission fee, you can do all the work of selling a home on your own. These listings are known as For Sale By Owner (or FSBO). But be aware that it is a lot of work: You’ll craft a listing, pay for an online service to help you make sure your property appears in the MLS (a database of all area homes for sale), coordinate showings and negotiate with buyers. Keep in mind that even if you don’t hire your own Realtor, as the seller you will still be responsible for paying the buyer’s agent’s commission.
Everything that you know about that “could adversely and significantly affect” a buyer’s ability to use and enjoy the property. Minnesota’s disclosure form includes a mandatory open-ended section where you can list anything that falls under this category. The remainder of the form is technically optional and includes a wide range of specific questions about everything from the age of the shingles to knowledge of noise problems that impact the home. There are two exceptions to the legal disclosure requirement: If the buyer opts to receive a home inspection report instead, or if the buyer waives the need to complete it, you don’t have to complete the form.
You can be held liable for two years from the closing date. So, if a buyer believes you lied about disclosures or you failed to share all your knowledge about defects in the home, they have a right to pursue action in civil court for damages in that two-year timeframe.