HOME SELLER’S
HANDBOOK
MINNESOTA ATTORNEY GENERAL
LORI SWANSON
FROM THE OFFICE OF
www.ag.state.mn.us
This brochure is intended to be used as a source for
general information and is not provided as legal advice.
The Home Seller’s Handbook is written and published by the
Minnesota Attorney General’s Ofce. This handbook is available in
alternate formats upon request.
The Minnesota Attorney General’s Ofce values diversity
and is an equal opportunity employer.
MINNESOTA ATTORNEY
GENERAL’S OFFICE
445 Minnesota Street
Suite 1400
St. Paul, MN 55101
651-296-3353
800-657-3787
TTY: 651-297-7206
TTY: 800-366-4812
www.ag.state.mn.us
OFFICE OF THE MINNESOTA
ATTORNEY GENERAL
This document is made available electronically by the Minnesota Legislative Reference Library
as part of an ongoing digital archiving project. http://www.leg.state.mn.us/lrl/lrl.asp
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HOME SELLER’S
HANDBOOK
Table of Contents
Selling Your Home? ...................................... 2
Yourself or an Agent? ...................................2
Pros and Cons of Being a FSBO (“For Sale By Owner”) .............3
Tips for FSBOs ..............................................................................3
Hiring a Real Estate Agent ............................................................4
What Listing Agreement Should You Sign? ..................................6
What Should Your Agent Do for You? ..........................................6
Have a Complaint About an Agent? ................................7
Keeping up Appearances .............................7
Easy Improvements to Increase Your Home’s Value .....................8
Hiring a Contractor ........................................................................9
Setting a Price ............................................10
Why Not Start High? ...................................................................10
Should You Offer Financing Help to a Buyer? ............................11
What if Your House Doesn’t Sell? ..............................................12
Accepting an Offer ...................................... 12
Reviewing the Offer ....................................................................13
Arbitration Agreements: to Sign or Not to Sign? ........................14
What Does Your Buyer Need From You?....................................15
Title Matters ...................................................................15
Truth-In-Housing Report ...............................................16
Seller’s Property Disclosure Statement .........................16
Well Disclosure Statement .............................................17
Sewage Treatment System Disclosure ...........................17
Lead-Based Paint Disclosure .........................................17
Radon Disclosure Statement ..........................................17
Closing on Your Home ................................ 18
When Should You Schedule the Closing? ...................................18
Do You Need a Closing Agent? ...................................................18
What Will You Pay to Close? ......................................................19
What Can Go Wrong? .................................................................20
What Can You Do? ......................................................................20
Sweep Up and Move On ............................21
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OFFICE OF THE MINNESOTA
ATTORNEY GENERAL
Selling Your Home?
There are many reasons for moving. Maybe you got that once in a lifetime
job offer or your family is growing and quickly running out of space. Maybe
you want to relocate to a new neighborhood or nd a house with a bigger
backyard.
Whatever the reasons that inuence you to sell your home, you have some
important decisions to make. People often feel overwhelmed not only
by the complexity of selling their home to a new owner, but by
the surge of emotions they feel leaving their home. This guide
offers some sound advice, as well as important information about selling
your home in Minnesota.
By following the Klines and Ellen Bower as they sell their homes, you’ll
have the opportunity to learn from their success—and their mistakes!
Meet the Klines
Jim and Cindy Kline knew it was time to move when they began tripping over
Jim’s endless stacks of books, Cindy’s tasseled lampshade collection, their
growing family of pets, and each other!
Meet Ellen Bower
Ellen Bower decided to move when she got a phone call: “Ms. Bower? This
is Tom Jackson at the Environmental Protection Agency in Washington. Can
you be here by September 4th? We want you to be our new national mosquito
expert.”
Yourself or an Agent?
Your rst big decision is whether to sell your home yourself
or use a real estate agent. Some sellers feel more comfortable
relying on the expertise of a real estate agent, while others want
to avoid paying a commission.
The Klines have heard that real estate agent commissions can be as high as
seven percent of the home’s sale price and they aren’t excited about paying
that much to sell their house. They are thinking about selling their home
themselves. Agent-free selling is what people in the real estate industry call
“FSBO” (pronounced “sbo,” which stands for “for sale by owner”).
If you’re not under any time constraints, you might want to give selling your
own home a try. If your home does not sell, you can always hire a real estate
agent later.
People often feel
overwhelmed not only
by the complexity of
selling their home to a
new owner, but by the
surge of emotions they
feel leaving their home.
Your rst big decision
is whether to sell your
home yourself or use a
real estate agent.
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HOME SELLER’S
HANDBOOK
Pros and Cons of Being a FSBO
(“For Sale By Owner”)
The number one reason to sell your home without an agent’s help is to avoid
paying a real estate commission. In Minnesota, real estate commissions run
as high as seven percent of the home’s sale price, although you can likely
negotiate a lower rate.
Time and expertise are also major factors in determining whether
or not to sell your own home. Do you have a minimum of one hour
per day to spend on advertising, screening buyers, and showing your home?
FSBOs need the exibility to schedule showings at convenient times for
buyers. If your home isn’t shown, it won’t sell.
Business savvy also helps. When negotiating the sale, will you be able to
keep your cool if a buyer wants to knock a couple of thousand off the price
because the home is “obviously going to need a complete redecorating job?”
Agents are used to negotiating and can be objective about the value of your
home. Can you say the same about yourself?
And, as a FSBO, you will have to pay a fee if you want to have access to the
Multiple Listing Service (“MLS”) used by real estate agents to locate homes
for buyers. This computerized service lists homes for sale and homes that
have sold by neighborhood, price and features. However, you may be able to
list your home on the Internet with a variety of sites. Some Internet sites may
charge a fee for a listing, while other sites may be available at no cost.
Tips for FSBOs
If you’re still unsure about whether or not to sell your own home, nd
out more by talking to several people who have tried to sell their homes
themselves, look on the Internet, and get a book from the library or
bookstore. Sometimes, school districts offer adult education classes
on selling your own home.
Additional Tips:
• Keep your home clean and ready to show at all times.
• Price your home according to what similar homes have sold for in your
area—not by how much cash you need from the sale of your home and
how much you paid for improvements.
• Consider selecting an agent in advance to list your home if you can’t sell
it in a few weeks. Get the agent’s advice about pricing and repairs.
Time and expertise
are major factors in
determining whether
or not to sell your
own home.
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OFFICE OF THE MINNESOTA
ATTORNEY GENERAL
• Hire professionals to help you along the way. These can include
a closing agent and/or a real estate attorney. You will also need a home
inspector if an inspection is required by your city.
• Keep a notebook with potential buyers’ names, addresses, and phone
numbers so you can follow up with them.
• Don’t stop advertising your home when you receive a bid. A buyer’s
offer may not survive the negotiating process.
• Prepare and make copies of a fact sheet about your home to hand out to
potential buyers. Have a blank purchase agreement for interested buyers
to take with them.
• If you’re having trouble selling your home, consider offering a sales
commission to a buyer’s agent. Determine what commission will entice
local agents. By offering a sales commission, you’ll still save what you
would have paid a listing agent to advertise your home.
• If you want help advertising your home, consider hiring a company that
specializes in FSBOs. They will also assist you with legal documents and
the terms of the sale. Look for them online or in the real estate section of
your Yellow Pages, or get a referral from another FSBO.
The Klines have decided to become FSBOs. Jim and Cindy think they can
split the responsibilities that go with selling their own home. They hope to
put the money they would have spent on an agent into a new house. Their
next home will have an extra room for a home ofce, and enough space for
their dogs, Mo and Curly. The Klines have placed ads for their home in the
newspaper and in a local real estate publication that is free to the public.
They also designed a yard sign and yers with snapshots of their home for
bulletin boards at local businesses.
Hiring a Real Estate Agent
Ellen Bower is in a frenzy! Since she heard she got the mosquito job in
Washington D.C. she has own out there twice to nd a home, has gone to
three going-away parties, and has been tying up loose ends at her current
job. In her “spare” time, she’s been painting and cleaning her house to get
it ready for sale. With all she has to do, selling her home herself is out of the
question. She needs to hire a real estate agent with the time, experience, and
connections to get the job done quickly.
If you’re thinking of hiring an agent, interview several different agents.
Talk with friends and family about agents they’ve used. Find an agent
If you are selling
your own home, hire
professionals to help
you along the way.
5
HOME SELLER’S
HANDBOOK
who will work on your terms. Make sure what you’re asking is
realistic, however. Here are some things to discuss with prospective
agents:
• Have you sold homes in my neighborhood in the last year?
If the answer is yes, ask for the names, addresses, and current phone
numbers of the sellers, as well as the sales prices of the homes. If the
agent hasn’t sold homes in your area, nd one who has. They’ll have
a better feel for the market in your area. And, if the agent won’t give
references, be skeptical. Don’t accept excuses about why he or she
can’t give you the information.
• I’m not willing to pay the commission that you’re asking.
Many agents will give you the impression that their commission is not
negotiable. However, their fees are always negotiable. Make sure you
negotiate how much you are going to pay your listing agent and how
much you are going to pay the buyer’s agent. Listing agreements may
allow a listing agent to keep the entire commission even if there is not
a buyer’s agent involved.
Ellen Bower hopes to negotiate a lower commission because she lives
in a popular development. Other homes on her street have sold quickly,
so she thinks her home will be easy to sell. (Of course, this is what most
people think!)
• Are you willing to put your sales strategy in writing? To make
sure you get the services you’re paying for, ask interested agents for their
sales strategy before you hire one. When you agree to list your home
with an agent, you could be forced to pay the commission even if you
don’t get the service promised. So when you nd an agent you like, ask
to make the commission contingent on the agent sticking to his or her
sales strategy. Any understandings you have with the agent must be in
writing and included in the listing agreement.
• What will you tell potential buyers when they ask whether the
price is negotiable? Make sure the agent will convey the information
you want to be conveyed to buyers.
A nal note about agents: Your real estate agent is obligated to get you
the best possible price for your home as quickly as possible. Ask your agent
to send you copies of your MLS sheet and any other marketing materials
for your home. Also ask the agent to call at least twice a week to update
you about potential buyers. Make sure your agent knows you are going to
hold him or her accountable for getting the job done!
Find an agent who
will work on your
terms. Make sure
what you’re asking is
realistic, however.
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OFFICE OF THE MINNESOTA
ATTORNEY GENERAL
What Listing Agreement Should You Sign?
If you choose to sell your home with the help of a real estate agent, you’ll
have to decide between an exclusive or nonexclusive listing agreement.
An exclusive listing agreement provides that the listing agent earns a
commission out of the sale price when your house sells within the time
period specied. Chances are good that lots of agents will be showing your
home if it’s listed in the MLS. An agent who successfully brings a buyer to
you shares the commission with your listing agent. Your listing agent can sell
your home without the help of another agent, too. In that case he or she may
get to keep the entire commission. The drawback to an exclusive listing is
that you will pay your listing agent a commission even if you end up nding
the buyer yourself.
Few agents like to admit it, but you can also choose to sign a nonexclusive
or open listing agreement that allows you to list your home with several
real estate agencies. Under this agreement, whoever sells the home gets
the commission. If that person turns out to be you, you don’t have to pay
a commission. A nonexclusive agreement can create healthy competition
between agents. But it turns off many real estate agents. The best situation
for using this agreement is if you have a very saleable property.
No matter which type of listing agreement you choose,
remember that the listing agreement is a legally binding contract
that is enforceable in court. Be sure to read the agreement
thoroughly and make certain that you understand all the terms
and provisions. If you do not understand something, ask the agent to
explain. You should strongly consider having your attorney review the listing
agreement with you. The terms of the listing agreement could create future
liability. For example, some listing agreement call for the seller to indemnify
the agent and brokerage for errors made by the agent or brokerage.
What Should Your Agent Do for You?
Your listing agent has several responsibilities:
• Conducting a marketing strategy and market analysis to help you set a
fair price for your home.
• Advertising your home. This includes placing newspaper ads, Internet
ads, providing a lawn sign, and listing your home with the MLS.
• Negotiating the terms of the sale with buyers, including contingencies
and counteroffers.
The listing agreement is
a legally binding contract
so be sure to read the
agreement thoroughly
and make certain that
you understand all the
terms and provisions.
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HOME SELLER’S
HANDBOOK
• Reviewing and lling out contracts. In complex selling situations (for
example, if the property is part of a contested estate in probate, or if
you’re a separated or divorced couple selling the home) you may want
to hire an attorney experienced in real estate matters.
• See the transaction through to the closing.
Have a Complaint About an Agent?
If you have a complaint about your real estate agent’s conduct,
contact the Minnesota Department of Commerce at 651-539-1500.
The department licenses and regulates real estate agents and investigates
complaints. The Minnesota Association of REALTORS® (“MNAR”) also
takes complaints and arbitrates disputes and can be reached at 952-935-8313
or 800-862-6097.
Keeping Up Appearances
Ellen Bower’s dinner parties have left their mark on her beige dining room
carpet. At the Klines, Mo and Curly have scratched the door each morning
when it’s time to go outside. To Ellen Bower and the Klines, these little
imperfections are just part of the nostalgia of their homes. To potential
buyers, however, they might be reason to look elsewhere.
When looking at your home, put yourself in a buyer’s shoes.
Inexpensive improvements can go a long way toward attracting
buyers. Cleaning the carpet or applying a new coat of paint won’t cost
much and could substantially raise the value of your home. But be cautious
about more expensive improvements. Adding a rst oor bathroom or
updating your kitchen might raise the value of your home, but luxuries like
swimming pools and saunas might not. Some amenities may turn off buyers
who don’t want the hassle of upkeep and the possibility of increased real
estate taxes.
When the Klines were ready to sell their house they spent $500 on quick
and easy improvements. They started by organizing Jim’s books and renting
storage space for all of Cindy’s lampshades. Then they hired a landscaper
to plant some owers and replace dead patches on the lawn. A few large red
geraniums and some colorful petunias made a huge difference in the “curb
appeal” of the home. Next, they painted the doors, including the one that Mo
and Curly scratched. Finally, they hired professional cleaners to scrub their
house from top to bottom and shampoo their carpet. When they were done,
the house looked so nice that Jim said to Cindy, “Why do we want to sell?”
Inexpensive
improvements can
go a long way toward
attracting buyers.
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OFFICE OF THE MINNESOTA
ATTORNEY GENERAL
Easy Improvements to Increase
Your Home’s Value
• You never get another chance to make a rst impression:
Paint or stain your front door; add polish to brass xtures such as address
numbers and door knobs; trim the bushes; plant colorful owers; and lay
down a new welcome mat.
• Cut the clutter: Have a garage sale to get rid of junk; straighten the
cupboards and closets; and get rid of piles of papers or newspapers that
you just haven’t had time to read.
• Clean and shine: Make sure your home is spotless and fresh-smelling.
You may want to hire a professional carpet cleaner and air out any smoke
or pet odors.
• Paint: Your taste may be unique. Tone down wall colors and wallpaper
prints by painting or papering rooms in neutral colors like beige and
white. These appeal to a greater number of people. Spackle is cheap.
Fill holes and cracks rst.
• Fix leaky roofs and other moisture problems: Water stains on
the basement walls or bedroom ceilings can raise red ags for potential
buyers. If you cannot afford to x water damage, explain the problem to
buyers… you will be liable for any problems you know about but don’t
disclose.
• Get the bugs out: Exterminate any pests such as ants or rodents.
One rodent can send a potential buyer running.
• Pay special attention to the bathrooms: A bathroom must be
sparkling. Replace any vanities, soap dishes, wall coverings, or carpets
that aren’t “hotel clean.”
• Make small repairs: Little things are the mark of quality. Tighten
loose knobs; x leaky faucets; oil squeaky door hinges; and replace
any dirty furnace lters, drain catches, and torn screens.
When showing your
house, remember that
you never get another
chance to make a
rst impression.
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HOME SELLER’S
HANDBOOK
Hiring a Contractor
Hiring a contractor to repair or enhance your home before you
sell? Keep these tips in mind:
• Decide whether to hire a specialized or general contractor based on the
work you want completed. Before agreeing to hire a contractor, get three
bids or at the very least two estimates so you can compare costs for the
work you want completed.
• You may want to ask a contractor for references. Don’t be bashful about
asking a contractor for this information. Follow up by contacting those
references to nd out about previous jobs the contractor has completed
and the level of customer satisfaction.
• The State of Minnesota requires most home improvement contractors
to be licensed through the Minnesota Department of Labor and Industry.
Contact the department to verify that the contractor is legitimate. If
you hire a contractor, make sure the contractor has all the
necessary permits and insurance before any work is started.
• Before construction begins, have the contractor provide you with a
written contract. The contract should outline the terms for payment and
should provide information regarding the work schedule or any other
agreement made between you and the contractor.
• Document the progress of the work performed and be sure to keep any
invoices, permits, or documents related to the work in a le. If you
experience a problem with the contractor and the work performed, these
records will be important.
• If you need assistance in resolving an issue with your home improvement
contractor, the Minnesota Attorney General’s Ofce has prepared a
consumer handbook entitled Home Building and Remodeling. To order
this free publication or if you have questions you may contact us at the
following:
MinnesotaAttorneyGeneral’sOfce
445 Minnesota Street, Suite 1400, St. Paul, MN 55101
651-296-3353 or 800-657-3787
TTY: 651-297-7206 or TTY: 800-366-4812
www.ag.state.mn.us
If you hire a
contractor, make sure
the contractor has all
the necessary permits
and insurance before
any work is started.
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OFFICE OF THE MINNESOTA
ATTORNEY GENERAL
Setting a Price
Pricing your home is part art and part science. As marketing experts say,
“Your house is worth what someone else will pay.”
So what will someone pay for your home? Usually a buyer will offer to pay
roughly what similar homes have recently sold for in your neighborhood.
As a general rule, location is the biggest factor in pricing a home.
Features such as size, number of bedrooms and bathrooms,
replaces, porches, and the general condition of your home
are also important. You can nd the price of homes similar to yours in
different ways:
• Multiple Listing Service (“MLS”): Real estate agencies subscribe
to this constantly updated computerized service that lists homes for sale
and homes that have sold. It shows homes by price, neighborhood, and
detailed features. Because no two homes are exactly alike, a real estate
agent is likely to compare your home with many different other homes
when determining a price.
• Newspaper: While newspapers don’t give a detailed description of
homes that have sold, they do report addresses and prices. Keep track of
the average selling price of homes in your area. Back issues of papers are
available at local libraries.
• Internet: Many companies are using the Internet for listings, so don’t
forget to surf for prices.
• Real Estate Publications: Usually free in newsstands, these yers
also have listings organized by location.
$ Pricing Tip $: What you paid originally for your home and the cost of
improvements is irrelevant. When you price your home, only the current
market value matters! If the market has slumped since you bought your
house, you may owe more on your mortgage loan than you could currently
sell your house for.
Why Not Start High?
It seems sensible to price your home higher than the amount you’d be willing
to take. Buyers usually offer less than your asking price. However, pricing
your home too high can scare off potential buyers.
As a general rule,
location is the
biggest factor in
pricing a home but
other features are
also important.
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HOME SELLER’S
HANDBOOK
In a tight housing market—one with lots of buyers and few sellers—you can
ask more than you might in an average market or depressed market. But be
prepared to drop your price if the buyers aren’t biting.
What could you lose by starting high? First, it may take months to nd a
buyer willing to pay your price (assuming such a buyer exists). Real estate
agents might not spend as much time showing homes that they think are
over-priced. Second, you miss out on attracting a larger pool of potential
buyers. The more buyers, the better the chance they’ll engage in a bidding
war for your home. When two or more buyers are competing for a house,
they might even bid more than the asking price! Even if you do receive
a high bid on your home, keep in mind that if an independent
appraiser nds that the house isn’t worth the bid price, the buyer
will have difculty getting a loan for the purchase price.
The Klines spent $10,000 last year updating their master bedroom and
bathroom (new wall paper, plush carpeting, and new tile). They’d like to
recover their investment but they know that adding $10,000 to the asking
price makes their house more expensive than any other sold recently in their
neighborhood. However, they think in the current housing market, they just
might get their asking price. Stay tuned to see what offers they get!
Ellen Bower has decided to price her home lower than others in the
neighborhood. A similar home in her development is for sale at $177,000.
She paid less than $160,000 for her home ve years ago and now has priced
it at $172,000. Property values have risen in the area, but neither she nor
her real estate agent think the market supports the high price her neighbors
are asking. By undercutting their price, Ellen thinks potential buyers will be
more attracted to her house!
Should You Offer Financing Help to a Buyer?
Remember the early ‘80s when interest rates were as high as 17 percent?
It was a tough market for sellers. They often offered to help buyers nance
a home. While some still may do so, such nancing is less common today.
When interest rates are lower, buyers can get good nancing
terms from traditional lenders.
If you have a hard-to-sell property, however, you might consider a seller-
nanced mortgage or a contract for deed. With a contract for deed, the buyer
would pay you the monthly payments, not a lender. You essentially would
be the “lender.” The danger is that you would still be required to make the
mortgage payments if the buyer doesn’t. In addition, your mortgage may
prohibit you from making this type of arrangement with a buyer.
When interest rates are
lower, buyers can get
good nancing terms
from traditional lenders.
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OFFICE OF THE MINNESOTA
ATTORNEY GENERAL
You can also offer to let a buyer assume a loan, if your loan is assumable.
This is a good strategy for attracting buyers who may be able to afford your
home, but can’t qualify for a loan through a lender because of a poor credit
record or short job history. But again, you may continue to be liable for the
mortgage payments. You should strongly consider obtaining legal
and nancial advice before entering into any nancial assistance
arrangement.
What if Your House Doesn’t Sell?
Your house isn’t selling. Where did you go wrong? It might not be anything
you did. Instead, there could be a number of contributing factors. Maybe it
is the time of the year. House sales tend to pick up in the spring and summer
months. Or perhaps you need to do something to spark new interest in your
home. Try one of these:
• Lower the price. Maybe you’re asking too much. Review the
information on pricing your home at the beginning of this chapter.
• Raise the real estate commission. By raising the commission, you
might catch the attention of real estate agents and increase buyer trafc.
• Offer a homeowner’s warranty. You might want to consider offering
buyers a homeowner’s warranty if your major appliances, electrical
or heating system, or central air conditioning unit are older models. If
anything goes wrong with these appliances, the cost of repairs will be
covered by the one-year warranty you purchase. You can nd out more
about a homeowner’s warranty through a real estate agent or on the
Internet.
Accepting An Offer
It’s the moment that you’ve been waiting for. You have a purchase offer on
your home! Should you accept it? Deciding whether to accept an offer and
setting the terms of the sale are often the hardest parts of the selling process.
But they’re also the most exciting. You may accept the offer, reject it,
or make a counteroffer by changing some of the terms. Keep in
mind that the buyer is trying to get the lowest price possible.
A buyer will submit a purchase agreement. With it, the buyer should include
some earnest money—part of the down payment—which is refundable if you
reject the offer. The purchase agreement will include the price offered, how
the buyer will pay for the home (loan, down payment, and earnest money),
and the date the purchase is to be completed.
You should strongly
consider obtaining legal
and nancial advice
before entering into any
nancial assistance
arrangement.
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HOME SELLER’S
HANDBOOK
Reviewing the Offer
If you receive an offer, review the following to decide whether or
not to accept it:
• The bid price. Is it within three to ve percent of your asking price? If
so, most real estate agents will tell you it’s a good offer and urge you to
consider accepting it—unless you have a hot prospect you think will bid
higher.
• Ability to pay. A buyer or real estate agent should present you with a
lender qualication letter that shows the buyer is qualied to pay for the
home.
• Contingencies. Is a buyer making an offer contingent on selling his
or her home, the results of an inspection, or something in your house
being xed? It’s up to you to decide if the buyer is asking too much.
Weigh the contingencies against the bid price.
As a seller, you many want to add contingencies, too.
Here are a couple to consider:
• Loan approval. Purchase agreements can be made contingent
on the buyer being approved for a loan within a specied period of
time, usually 30 days or less. If you are going to help nance the
home, put the exact terms of your contract in writing, too.
• Property. Both the buyer and seller benet from putting
all agreements about the property in writing. For example,
if the buyer will buy the property only if the roof is repaired or
the washer and dryer come with the home, include this in the
agreement. Be sure to include in the purchase agreement the
maximum price you’ve agreed to pay for repairs.
After having their home on the market for a month, the Klines hadn’t received
any offers. Maybe they overestimated the market value of their spiffy master
bed and bath. Once they dropped the price closer to what other homes in the
neighborhood were selling for, they had better luck. The new listing price
of $185,000 drew more interested buyers. Gloria Slivers offered the Klines
$183,000 contingent on selling her home. The Klines decided to accept the
offer “on contingency.” Their purchase agreement spells out that they can
continue to market their home while Gloria tries to sell her house. If an offer
better than $183,000 or a non-contingent offer comes along, the Klines must
go to Gloria and give her the opportunity to remove her contingency.
Both the buyer and seller
benet from putting all
agreements about the
property in writing.
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OFFICE OF THE MINNESOTA
ATTORNEY GENERAL
Sellers Cannot Discriminate Against Buyers
The Civil Rights Act prohibits you from rejecting an offer based on race,
color, religion, gender, or national origin. The Fair Housing Amendments Act
adds that you cannot discriminate due to disability (mental or physical) or
familial status (families with children under age 18). The Minnesota Human
Rights Act also prohibits discrimination due to creed, marital status, status
with regard to public assistance, and sexual orientation.
Arbitration Agreements: to Sign or Not to Sign?
If you decide to accept a bid on your home, you may be asked to sign an
arbitration agreement with your buyer. You don’t have to sign it, and will
want to consider the pros and cons carefully.
So what is arbitration? In simple terms, it’s a system for resolving
disputes among buyers, sellers, and agents concerning the material facts
of the property without going to court. Disputes are sometimes simple
misunderstandings (the buyer thought the washer and dryer came with the
house, but the sellers didn’t). Problems can also be more complex. If you
can’t agree on a solution with the buyer or agent, you’ll have to go to court
or hire an arbitrator. If you sign an arbitration agreement, however,
you may give up your right to use the court system to resolve
the dispute. In addition, some arbitration agreements may
shorten the period of time for you to le a claim and may limit
the remedies available.
The arbitration envisioned in the typical arbitration agreement is a system
that was developed by the National Center for Dispute Settlement (“NCDS”)
and the Minnesota Association of REALTORS® (“MNAR”) to deal with
real estate disputes. Their arbitrators have backgrounds in law, real estate,
architecture, engineering, construction, or other related elds. An arbitrator
will hear disputes between buyers, sellers, and real estate agents. Arbitration
is usually held at the home site.
The buyer may be unwilling to sign the agreement, however, because of the
administrative fees required for arbitration under the NCDS/MNAR system.
The cost of arbitration may exceed $3,750, depending on the amount of the
claim, number of parties involved, or the choice of a single arbitrator or a
three-member panel. A schedule of fees as well as additional information
is available on the National Center for Dispute Settlement website at
www.ncdsusa.org.
If you sign an
arbitration agreement,
however, you may
give up your right to
use the court system
to resolve the dispute.
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HOME SELLER’S
HANDBOOK
If you don’t sign an arbitration agreement, many smaller disputes can be
resolved quickly and inexpensively in Conciliation or “Small Claims” Court.
Judges in Conciliation Court can decide claims up to $15,000. To have your
case heard costs about $70 to $80. You may also appeal the Conciliation
Courts decision, however, it is extremely difcult to appeal the decision of an
arbitrator and arbitrators aren’t bound by legal rules.
What Does Your Buyer Need From You?
Did you think you could just sign on the dotted line, take the money, and run?
Selling your home isn’t quite that easy. You may need to scrounge through
your le cabinet for the abstract or owner’s duplicate certicate of title.
Before signing an agreement to sell or transfer your property, state law
requires you to make, in good faith, a general disclosure about anything
that may adversely affect the use or enjoyment of your property in writing.
Make sure that all disclosures about the physical condition of the
property have also been made.
After you get the necessary papers to your buyer, the buyer and the lender
will then have your home appraised, the title examined, and the loan
approved. If these tasks aren’t completed by the closing date, your purchase
agreement may be null and void unless the parties mutually agree to extend
the agreement. You should be aware that in Minnesota there is a statutory
procedure for canceling a purchase agreement if the purchase agreement
does not terminate according to its terms.
Title Matters
In Minnesota, real estate records are kept in the county where the property
is located in either the Ofce of the County Recorder for abstract property
or in the Ofce of the Registrar of Titles for Torrens or registered property.
Abstract property records trace back to the U.S. Government Survey in the
mid-19th century. An owner of abstract property may have an abstract of
title, which is a compilation of all entries in the index regarding the property.
Torrens or registered property is a system that relies upon a certicate of title
maintained in the Ofce of the Registrar of Titles for each piece of registered
property.
If you own abstract property, the purchase agreement will usually require you
to furnish the buyer or the buyer’s title company with your abstract of title.
The purchase agreement may, however, permit you to provide a commitment
for title insurance instead of an abstract of title. If you own Torrens or
registered property, all that you need to do usually is furnish the buyer with
the number of your certicate of title.
Make sure that all
disclosures about
the physical condition
of the property have
been made.
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OFFICE OF THE MINNESOTA
ATTORNEY GENERAL
To sell your home, title problems must be cleared up. If any problems
appear in the title records, you’ll need to hire a closer or real
estate attorney to take care of them. Here are common problems you
may need to address:
• Unpaid mortgage loan: An abstract sometimes shows the existence
of a mortgage by a former owner. If the mortgage was paid off, but the
lender didn’t provide a release or the former owner failed to record the
release, a new release will need to be obtained and recorded.
• Lien by spouse: If you are divorced or in the process of getting
divorced, your spouse or ex- spouse may put a lien on your property.
Perhaps you owe him or her part of the equity from the house sale, or
perhaps you owe other payments, such as child support. You should
check with his or her lawyer to clarify the terms for releasing the lien.
Truth-In-Housing Report
Some Minnesota cities require a seller to provide the buyer with a Truth-
In-Housing Report, which may also be called a code compliance report.
Check with your city to see if you must provide such a report. If so, you must
have an inspector check your home for obvious defects. These can include
problems with plumbing, heating or cooling systems; dampness in the
basement; or an unstable foundation. You must disclose the results of these
inspections.
Seller’s Property Disclosure Statement
Real estate agents can provide you with this form for reporting the condition
of your home. This disclosure supplements statements about the condition of
your home made in the purchase agreement.
In most arms-length transactions, you must disclose any information you
have about the property that could signicantly affect the buyer’s use of the
property, unless the buyer waives this disclosure in writing. Your disclosure
must be in writing and can be provided to the buyer or the buyer’s real
estate agent. A buyer can le a lawsuit against a seller for damages caused
by violation of this law within two years of the closing date. A seller is not
liable to the buyer, however, if the seller did not know about the problem.
Additionally, the seller and its agents have statutory, contractual, and tort
duties which may provide a longer period of time to bring a claim.
Lender’s Home Inspection
If a buyer will be nancing the purchase of your home with a loan, the lender
may require that the home be inspected before the lender will lend the money
to the buyer. If the home fails the inspection, the lender may refuse to make
If any problems
appear in the title
records, you’ll need
to hire a closer or
real estate attorney
to take care of them.
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HOME SELLER’S
HANDBOOK
the loan or may require that the items on the inspection report be corrected
before the closing can occur.
Well Disclosure Statement
According to Minnesota law, you must disclose information about any wells
on your property before the purchase agreement is signed. This includes the
location of wells and whether the wells are in use or sealed. You must also
submit a well disclosure statement with your deed, or include a statement in
the deed that there are no wells or the status of the wells is unchanged since
the last statement was led.
Sewage Treatment System Disclosure
Prior to signing the purchase agreement, you must disclose any underground
sewage treatment system on the property. You must describe any system’s
location and disclose whether, to your knowledge, it is compliant with
applicable law. If a seller fails to disclose a system he or she knows about,
the seller can be liable for the cost to bring the system into compliance and
for attorneys fees.
Lead-Based Paint Disclosure
If your home was built before 1978, you must provide the buyer with
any information on lead-based paint hazards from risk assessments or
inspections in your possession and notify the buyer of any known lead-based
paint hazards. You may obtain a pamphlet entitled “Protect Your Family
From Lead In Your Home” which contains information on identifying and
controlling lead-based paint hazards from the United States Environmental
Protection Agency’s website at www.epa.gov.
Radon Disclosure Statement
Before signing a purchase agreement to sell or transfer residential real
property, you must disclosure in writing to the buyer any knowledge you
have of radon concentrations in the dwelling. The disclosure shall include:
1. Whether a radon test or tests have occurred on the property;
2. The most current records and reports pertaining to radon concentration
within the dwelling;
3. A description of any radon concentrations, mitigation, or remediation;
4. Information regarding the radon mitigation system, including system
descriptions and documentation, if such system has been installed in
the dwelling; and
5. A radon warning statement.
You must also provide a copy of the Minnesota Department of Heath
publication entitled “Radon in Real Estate Transactions.”
In most arms-length
transactions, you must
disclose any information
you have about wells,
sewage treatment
systems, lead-based
paint, and radon among
other things.
18
OFFICE OF THE MINNESOTA
ATTORNEY GENERAL
Be prepared! Closing time is often panic time. All the paperwork
to sell your home must be done by the closing date. If you can’t
close the sale on time, you may have to cancel the movers, unpack your
boxes, and possibly even pay for two homes at once.
Ellen Bower’s home has been attracting swarms of potential buyers. The
location is attractive and so is the price. By the end of the second week on
the market she had two bids. One of them was $3,000 below her asking
price with no contingencies. Because the house will apparently sell with
little effort by her real estate agent, Ellen will ask the agent to accept a
lower commission, which makes the $169,000 bid more attractive. The agent
agreed to do so, and she will keep the other bidders’ names and numbers just
in case the rst buyer doesn’t qualify for nancing.
Closing on Your Home
The closing is the day you and your buyer (as well as real estate agents and
the closers and/or attorneys involved in the home sale) get together to make
sure all the terms of the purchase agreement have been met. For the buyer,
closing means signing stacks and stacks of papers. For the seller, it means
signing and delivering a deed to your property and signing a few other
papers, such as the Settlement Statement or Closing Disclosure required
by federal and state law, which lists all the closing costs. For both parties,
it also involves a lot of money!
When Should You Schedule the Closing?
When you sign the purchase agreement with the buyer, you’ll agree on a
closing date. Make sure the date is a minimum of six weeks from the time
you make the purchase agreement to allow both parties time to follow up on
their end of the purchase agreement. That way you and the buyer will have
plenty of time to get all the paperwork in order. Most closings are scheduled
at the end of the month to avoid having the buyer pay additional interest on
the loan. Don’t close on the last day of the month, instead allow yourself
a few extra days in case there is a problem. Although the closing date is
negotiable, it is often dictated by the type of loan the buyer obtains.
Do You Need a Closing Agent?
In some communities, sellers aren’t represented at closing by a closing agent.
In other communities, they are. This is a simple matter of traditional industry
practice in different areas. You may need to hire either a closing agent or a
real estate attorney to prepare your deed and a few other closing documents.
Be prepared! All
the paperwork to
sell your home
must be done by
the closing date.
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HOME SELLER’S
HANDBOOK
If so, shop around for one with a good reputation and a reasonable price. Ask
friends who they used, or ask a real estate agent or a real estate attorney to
recommend a closing agent. Keep in mind that you have no obligation to use
the closing agent recommended.
Some listing agreements will have you designate, at the time of listing, a
closing agent. You can, however, indicate that you will decide on a closing
agent at a later time.
If you don’t have title problems to clear up, you may be able to rely on the
buyer’s closer to oversee the entire closing process.
What Will You Pay to Close?
“Wait a minute. You mean I have to pay closing fees when I’m selling my
home?” Yes, it’s true. While buyers cover most of the closing costs, you owe
some too.
Check your Settlement Statement or Closing Disclosure for a list
of all fees you owe. Check the math, too. Mistakes can cost you
money. Request that the closer furnish this list of costs to you
before the closing. The following is a list of closing costs that sellers in
Minnesota typically pay:
• Real estate commission: Any sales commissions you’ve agreed to
pay real estate agents.
• Abstract or title search: The cost to update your abstract and check
the title.
• Recording fees: The cost to le the deed and other proper documents
with the county satisfying your mortgage and clearing up any other title
problems.
• Real estate taxes and assessments: You may owe property taxes,
or if you’ve already paid them for all or part of the year, your buyer may
need to reimburse you.
• State deed tax: In every county in Minnesota you must pay a state
deed tax. You should check with the county in which the deed will be
recorded to determine the applicable tax.
• Conservation fee: Some metropolitan counties collect a deed transfer
fee which is used, in part, to fund the Minnesota Conservation Fund.
• Closing fee: What you pay a closing agent, if you hire one.
Check your Settlement
Statement or Closing
Disclosure for a list of all
fees you owe. Check the
math, too. Mistakes can
cost you money.
20
OFFICE OF THE MINNESOTA
ATTORNEY GENERAL
What Can Go Wrong?
Unfortunately, a few things can delay the closing. These include:
• The buyer’s loan isn’t approved.
• The appraised value of the home is lower than the price your buyer
agreed to pay.
What Can You Do?
Besides crossing your ngers, here are some suggestions:
• Be prepared to negotiate. If an inspection turns up problems, will
you be willing to kick in some money for repairs? If the appraisal is low,
will you lower your price? You should know about these problems before
the actual closing date, so you can resolve them in advance.
• Keep buyers in the wings. Don’t lose the phone numbers of potential
buyers after you have signed the purchase agreement. If your sale doesn’t
go through, get on the phone (or have your real estate agent call) and ask
other potential buyers for bids.
After Gloria Slivers made her bid on the Kline home, Jim and Cindy
continued to court potential buyers. One day a man named Michael Moss
stopped by without an appointment. The Klines let him tour the home
anyway. They’re glad they did because he bid on the house the next day!
He offered $185,000—$2,000 more than Gloria. The Klines exercised the
right they reserved under the purchase agreement and asked Gloria to
remove the contingency that she sell her home. Since she hadn’t sold it
and was unwilling to lift the contingency, the Klines were able to accept
Michael’s offer!
Congratulations! If you’ve been following this guide step-by-step,
you now have sold your home. Take a break to celebrate. Then
clear up a few nagging details.
Don’t lose the phone
numbers of potential
buyers after you have
signed the purchase
agreement. If your sale
doesn’t go through,
ask other potential
buyers for bids.
21
HOME SELLER’S
HANDBOOK
Sweep Up and Move On
• Expect the unexpected—With the neighbors stopping by to say good-
bye, the cat accidentally escaping through an open door, and with all that
stuff to haul down from the attic, it will probably take twice as long as
you planned for packing.
• Find a reputable moving company by asking friends and co-workers for
recommendations. Make sure the company is bonded and insured. Or
consider asking friends to be your moving company!
• Schedule nal meter readings and billing dates with utility companies.
• Don’t cancel your homeowner’s insurance policy until after the closing.
If the home is signicantly damaged before the closing, the buyer may
elect to cancel the purchase agreement.
• Vacuum, sweep, dust, polish, and mow or shovel. Cleaning up your
empty home is the most important thing you’ll do to welcome the new
owners.
Whew! Now you can nally think about settling into your new home. A
move is an exciting change. The Klines (including Mo and Curly) will have
more space, and Ellen Bower will take her career to a new level. Wherever
your move takes you, we wish you all the best!
Expect the unexpected,
it will probably take twice
as long as you planned
for packing.
- Car Handbook
- Home Building and
Remodeling
- Conciliation Court
- Credit Handbook
- Guarding Your Privacy: Tips
to Prevent Identity Theft
- Home Buyer’s Handbook
- Home Seller’s Handbook
- Landlords and Tenants:
Rights and Responsibilities
- Managing Your Health Care
- Manufactured Home Parks
Handbook
- Minnesota’s Car Laws
- Phone Handbook
- Probate and Planning: A Guide
to Planning for the Future
- Seniors’ Legal Rights
- Veterans and Service Members
- Other Consumer Bulletins
Consumer Questions or Complaints
The Minnesota Attorney General’s Ofce answers questions regarding numerous consumer issues. The Attorney
General’s Ofce also provides assistance in resolving disputes between Minnesota consumers and businesses and
uses information from consumers to enforce the state’s civil laws. We welcome your calls!
Additional Publications
Additional consumer publications are available from the Minnesota Attorney General’s Ofce.
Contact us to receive copies or preview the publications on our website at www.ag.state.mn.us.
If you have a consumer complaint,
you may contact the Attorney
General’s Ofce in writing:
Minnesota Attorney General’s Ofce
445 Minnesota Street, Suite 1400
St. Paul, MN 55101
You can also receive direct assistance
from a consumer specialist by calling:
651-296-3353 or 800-657-3787
TTY: 651-297-7206 or TTY: 800-366-4812
(TTY numbers are for callers using
teletypewriter devices.)
MINNESOTA ATTORNEY GENERAL’S OFFICE
445 Minnesota Street, Suite 1400, St. Paul, MN 55101
651-296-3353 • 800-657-3787 • TTY: 651-297-7206 • 800-366-4812
www.ag.state.mn.us
