You’ve most likely driven by a home and seen the tell-tale red sign with a phone number scrawled across that reads ‘for sale by owner’. In Minnesota, you can find amazing homes for sale by owner but it is important you understand the home buying process first before you attempt to buy a home without the assistance of a professional real estate agent. We recommend starting with the basics:
What’s a Minnesota FSBO?
Everyone loves acronyms (well, at least realtors do!), and FSBO (which, fun fact, is pronounced fizz-bow) is short for a MN home that is for sale by owner. These properties are not listed by an agent, and the seller is unrepresented. This can save sellers some serious cash by forgoing a listing agents’ commission. However, there are many circumstances in which going with a pro can save buyers, and even sellers, money when it comes to Minnesota for sale by owner homes.
Now on to how to buy an MN FSBO for yourself…
The Professionals:
Even when the seller forgoes professional representation, it’s a buyer’s best bet to employ the following people for their home purchase:
Inspector- having an inspector comb through the details of your potential home will help you avoid unpleasant surprises or issues that need to be addressed before closing
Escrow Agent- once your offer on a property has been accepted, you will need someone to hold your earnest money check in escrow. This is usually done by the listing company, however, as for sale by owner homes in Minnesota do not have one, you will want to have either your title company or an attorney hold the funds
Title Insurance Company- Many states require an attorney to be present at closing, and if not, they often require a title company. We recommend using a title company, where a closing specialist will ensure that your closing goes smoothly, while also coordinating any transfers of earnest money, wired loans, etc.
…and yes, a Buyers Agent– A buyers agent will use their professional experience and resources to act in your interest throughout the transaction. They will have access to databases with FSBOs all over the area, and can offer comparative market analyses. These will be major players when determining whether or not a property is priced fairly (because sellers often price their homes very optimistically, and generally base their list price on other listings in the area as opposed to a more accurate analysis).
At this point, it’s important to determine: How will the buyers agent get paid? There are multiple ways to go about this, but usually Minnesota FSBO seller’s will be asked to sign off on including a 3% buyers agent commission before the agent will show the property. The agent can also request that the buyers agent commission be applied as a 3% credit at closing, which the buyers then use to compensate the agent. Now, onto…
The Paperwork:
Whether you’re flying solo or with your own agent, be prepared to document and save every aspect of your purchasing process. If you’re financing your home purchase, we recommend that your first document be a letter of pre-approval or pre-certification (check out this article detailing the differences between theselink article here!). This will give you an edge when working towards an accepted offer and ultimately, a home purchase. Going forward, drafting an offer, purchase agreement, amendments and more will be vital, and made significantly easier with help from an agent. Come closing, you’ll most notably be working with major documents such as the deed to your new home!
The Decision:
Purchasing a for sale by owner home in Minnesota can be a positive experience, from spotting a home on the street to making an offer to walking out of closing with a deed in hand. Opting to include FSBOs in your home search can widen your pool of housing options, and when done correctly, can lead to your new home. For more tips on purchasing a FSBO, or for questions about hiring a buying agent, please contact our experts at The Antonov Group!
