In the state of Minnesota, a buyer does not pay for the commission of their real estate agent. The seller of the home pays a full commission that is split between the seller’s agent and the agent that brings in a buyer. However, you may have a “brokers administration” fee that will you will pay at closing to cover your agent’s paperwork and processing fees. This fee can range anywhere from $200-$800, depending on the agent’s brokerage.

A brokerage is a company that manages real estate transactions and provides real estate services. In really simplified terms, a brokerage is the “boss” of an independent realtor. The brokerage holds a realtor’s license and makes sure they stay compliant with the state of Minnesota. A few examples of brokerages in Minnesota are: eXp Realty, Edina Realty, ReMax Results, Keller Williams, etc. 

On average, the buying process from start to finish takes about 3-4 months. 

The first step of buying a home is connecting with a realtor. This will typically take 3-7 days depending on the number of agents you plan to interview. Next is the pre-approval process with a mortgage lender. This can take anywhere from 3-5 days. Then you start the home search. Some buyers find their dream home in the first showing/tour, others it may take a few weeks or even a couple of months.

After your offer is accepted on a home, it will take between 30-45 days to get to closing. This time is needed to complete a home inspection, complete the necessary steps for the loan, clear out title work, etc. 

The major costs that are tied to the process of buying a home are your 1) down payment and 2) closing costs.

It’s a common misconception that you need 20% down to buy a home. In fact, you can purchase with as little as 3% down for a conventional loan! I would advise that you play around with an online mortgage calculator to see how the numbers change with a variation in percentage down and what impact it makes on a monthly payment. 

You will also have to pay closing costs. This is typically 3-5% of the purchase price of the home.

Real estate is an investment and physical asset that does have the ability to lose value over time. There are several factors that contribute to the severity of depreciation and a handful of them are controllable. 

One factor that can lead to home depreciation is economic market conditions. Typically these types of changes in the market are uncontrollable but short lived. For example, the housing market crash that occurred in 2008-2012 made a significant impact on what homes where able to sell for. However, home prices did bounce back up over time. Since the crash, mortgage lending and real estate practices have more guidelines and restrictions in place making it more difficult to qualify for a home, but also reduces the chances of a people defaulting on their payments. On average, homes APPRECIATE at 3-4% annually, making real estate a strong method of investment. 

Other factors that contribute to the depreciation of a home are care and maintenance. If you let a physical asset deteriorate, it will lose its value. Single family homes may need a roof replacement or a new furnace or new windows during your time ownership. It is best to plan for these types of repairs and maintenance by setting aside a small savings account. There are also more frequent maintenance items that will increase the life span of your homes, such as replacing air filters in the furnace monthly. 

Taking care of your home is a controllable factor and can help you protect your investment long term.