3 minute read
Q&A
Can a seller keep a buyer’s earnest money?
Great question and many tangents would be needed to really do this justice. The short answer is that it is certainly possible. Earnest money funds are typically non-refundable after all the buyer’s offer contingencies are satisfied. If the buyer doesn’t close per the offer terms, it’s possible they’re in breach and could lose their earnest funds. However, in MN in order to cancel a purchase agreement, both parties need to sign the cancellation document. Within that document it states where the earnest money goes. So if it’s supposed to go to the seller but the buyer refuses to sign, you have potential for issues. There’s a statutory process that would need to play out and that can take months. So in the end, even though the seller may have the right to do so, actually getting the funds may be difficult. See what I mean.. tangents can fly on this question!
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How long will this current real estate market frenzy last?
Well this is certainly the # 1 question we get as realtors and dedicated 4 pages of this magazine on the topic. Nobody knows for certain but the factors to watch are still the basics.. supply vs. demand. I think the market imbalance will ease up a bit in 2022 and we’ll see appreciation slowing down and to normal levels. I think it’ll take 2-3 years to start to see inventory counts up around more balanced levels. Remember that it’s still a crazy huge seller’s market if it takes 30-60 days to sell a home. That’s still a HUGE seller’s market but think of how strange that will feel when we get there.
Mortgage Insurance – should I put more money down to avoid it?
Any buyer that’s worked with us has heard this before.. It depends. You have to buy into a financial theory and stick with it… and to each their own on what that could be. Here’s mine: money is cheap to borrow it, so I’m a fan of borrowing it. To avoid mortgage insurance, you have to put 20% down or more. If you’re buying a $500,000 home.. putting $50,000 vs. $100,000 can be significant! That’s an extra $50k out of pocket. What’s not significant is the mortgage insurance payments these days. Chat with your lender to confirm but the MI payment on that would be $125 (appx) per month. Not too bad and that allows extra funds for the move and all that comes with it!!
Why is my tax value different than my actual value?
Good question! The tax assessment comes from your county. Each county has a different method of calculating value and designed for the purposes of tax collection. That’s completely irrelevant when it comes to market value. Market value would be described simply by what a buyer is willing to pay. You know my soapbox. The more buyers there are for the home the more it could be worth. I say “could” because those buyers need to know it’s for sale too. That’s where we come in!
How long does it take to buy a home?
Typically a buyer will ask for a closing date 30- 45 days out from the date of the offer. At times you see offers with shorter or longer time frames depending on what both parties are looking for. Cash offers can close fairly quickly but still need some time for title work to be completed… on the short side about 10-14 days. As for a buyer just starting their search, we recommend getting out on showings with us no shorter than 3 months prior to when you want to buy and close on a sale.
