If you must buy a home in the Twin Cities of Minnesota, be prepared. It's a competitive market out there for home buyers!
Residential Seller Property Disclosures in MN
Minnesota single family residential home sellers are required to disclose property defects. If they have hired a REALTOR, the will complete a long form helping them to know what to disclose. Some sellers can't or don't want to disclose information about a property because they inherited it or maybe they have been renting it out for a while and are not aware of things a tenant may have done to the property. In this case, they would complete a Seller's Disclosure Alternative.
There are some disclosures that can not be waived in Minnesota, like radon levels. Also, some municipalities in the Twin Cities have inspections that are required at the time of sale to help with disclosures but these are generally not comprehensive reports that you could received from hiring private inspection companies.
A potential buyer should do their due diligence on a home whether a seller discloses what they know, or not. Where there is a Seller's Disclosure Alternative where the seller doesn't disclose anything, a potential home buyer should be even more careful. I always recommend an inspection (see my article on Inspections). This is a way to have a 3rd party professional inspector take a close look at the home to see what they can find. With a full inspection, this can help determine how much risk a buyer is willing to take on with a non-disclosure situation. Buyers should also spend time in the neighborhood and questions any neighbors they encounter about their knowledge of the property.
A Seller's Disclosure Alternative, it usually means less information, a bit more risk for the buyer, which translates into a slightly lower price (due to the slightly higher risk) when it's a buyer's market. I've helped several people buy homes with a Seller's Disclosure Alternative, and it shouldn't be a huge turn-off. Just be aware of it and do your due diligence extra carefully and hire skilled inspectors.
When should a buyer waive their right to inspections?
My answer is NEVER. However... I've been told we should never say never. When a housing market has limited inventory and a lot of motivated home buyers like we have in 2021 here in the Twin Cities, the competition gets fierce and buyers start taking risks to win in bidding wars.
Once contingency that a buyer can waive to make their offer more attractive to a seller is the inspection contingency. This can (and should) be a little nerve racking for buyers that don't have extensive information on a property that may be the biggest purchase of their life.
Before you waive the inspection, decide your risk tolerance. Ask yourself lots of questions. Some examples include:
1) What documentation is available? Are there full disclosures? Previous inspection reports? City reports?
2) Have you owned a problem home before that gives you experience? How much do you know about home construction?
3) Do you have the financial ability to handle unknown problems that could arise after you move in?
The Bottom Line: Information is power in decision making. Less information is higher risk. You need to be aware of the level of risk you are willing to take in your home purchase. If you are highly risk adverse, a hot seller's market will be hard for you to obtain a home with the confidence you need.
Still planning to make a purchase? Call me so I can guide you through the market and be your trusted advisor.
Readers of this articles also read:
Radon in MN Real Estate Transactions
For Your Protection Get a Home Inspection – Twin Cities
HUD document 4150.2 PROPERTY ANALYSIS
