Tristan Emond
Broker Associate
Prudential Kahler REALTORS®
2401 West Main
Rapid City, SD 57702
605-391-7086
[email protected]
www.rapidhomesonline.com
How to Buy a Home in Rapid City, SD
Local tips, tricks, and what’s under the hood
from a local real estate professional
Before we get cracking open the hood and looking inside, let’s remember one thing: Real Estate is LOCAL. You’ve been hearing about the great housing depression for months now. Maybe years. You’ve heard about properties selling at 50% less than original value. Or maybe more. But somehow Rapid City has avoided a huge part of that depression. Things have been slower, but we still work with actual sellers. I would estimate fewer than 20% of properties sold have been bank owned homes. According to the website www.forecastchart.com, you can see how Rapid City’s annual home appreciation rates have been above zero. While other parts of the country are seeing declining values, our market has kept its head above the water.
Further, stats have shown the list price to sell price percentage in Rapid City and surrounding communities hanging in the 94 to 96 percent range – meaning they are going to get pretty close to what they are asking…provided they are priced appropriately.
I said all that to say this: If you come from out of town expecting to offer 20% less than asking price on a property and figure the seller will jump up and down while handing you the keys, it just ain’t going to happen. Yes, there are deals to be had. But the majority of properties don’t fall into that category in Rapid City.
That being said, let’s move on to the local nuts and bolts:
Local Tip #1: Ask a LOCAL Lender.
Those pop up ads blasting great rates might catch your eye, but the advantages of finding someone local to handle your deal are huge:
1. They know the local deals. South Dakota has a number of programs to help buyers get into homes, especially first time homebuyers.
2. I know many of them personally. Most are in the business to help you get into a home, not say what you want to hear to make a loan.
3. I know where they work. They are part of the community. If there are any problems, I can do more than just sit on the phone waiting for a return call to my 19th voice mail.
Local Tip #2: Knowing what to expect
Rapid City has a variety of homes for everyone. Most, however, are ranch styles with basements, split levels, or 3 levels in the most popular price range: $140,000 to $180,000. As you move up in price, you’ll see more second stories. There is a big need for sprawling one-level homes that are either handicap accessible or more suited for the elderly.
Don’t get me wrong, there are plenty of high-end custom homes as well. And with the Black Hills in our backyard, some have great views of trees and canyons, excellent locations and all the amenities you could ever want – and not too far from town. Again, for a price.
Local Tip #3: Know Your Websites
• www.bhmls.com The Black Hills Association of REALTORS® website showing all properties on the MLS
• www.realtor.com Obviously. This website pulls data directly from our local MLS as well, so it will contain all properties as well.
• Any real estate brokerage or agent website will probably have a full listing of properties as well. Please check out mine: www.rapidhomesonline.com
• What about for sale by owners? Check out the major website they will be on: www.owners.com. Or try the local paper: www.rapidcityjournal.com
• Foreclosure websites: Some of these show properties that have been foreclosed on, but not on the market yet. The bank is working with their asset manager and local real estate agent and may not be immediately available to view.
• Be cautious of trulia.com and zillow.com. The websites have the properties sent to them as well, through “syndicationâ€, but I have seen properties pop up as active after they have been taken off the market.
Local Tip #4: Find an Agent
Although you will be able to find a lot of data online about a specific property, your local real estate agent can offer you more information that is not passed to all websites. Room sizes, tax information, and special agent to agent remarks are a few. Other MLSs across the country have chosen to present more data to the public. Ours does not.
Real Estate 101
Find Yourself a Buyer’s Agent You Feel Comfortable With
Sure you can call whichever sign is in the yard. They will be happy to meet you. But they work for the seller. If you say something to them about where you are at financially, and then later choose to put an offer on the home, they will not hesitate to use that information against you for the benefit of their seller. See the article I have written: Putting your interests first. It goes into details about why you should have an agent representing you. It also goes into more specific detail about South Dakota real estate law and the forms that SD requires to be signed so YOU are protected.
Local Tip #5: How your real estate agent delivers your offer.
In some areas, the agent representing the buyer brings the offer to the seller and presents it directly to the seller. Although that can be done here in Rapid City upon request, it is not common. Generally, the buyer’s agent presents the offer to the seller’s agent. Your agent is trained to say the right things to get your deal accepted.
Local Tip #6: The Home Inspection.
A general home inspection is highly recommended. Choose an inspector that is both licensed and bonded, for your own protection. A home inspection will cost $350 to $400. (Of course, if you hire specialized inspectors to look at the roof, heating/cooling systems, etc., those will be additional out-of-pocket expenses) Some companies will give you a discount if you pay right away. Many will allow the costs to be referred to closing. Plan to be present when your inspector looks at the home. Ask questions. Find out how things work. Your inspector will send you a written report a few days after the inspection.
NOTE: A home inspection is not normally used to negotiate the price. If there are issues with the home, you can ask the seller to repair them, plan on fixing any issues after closing, or walk away, assuming the inspection is done in the time frame allowed by the contract.
Local Tip #7: Lending on Foreclosures
Foreclosures can be a good deal. You will see them advertised at a too good to be true price. But unless you have cash or conventional financing (in-house financing from a local bank), these homes may not be financeable with FHA or VA. In Rapid City, many have structural or deferred maintenance issues. The bank sells the home “as-is†and will not do repairs to a home to get it sold. So the peeling paint, broken windows, and missing railings that need to be repaired prior to a FHA or VA loan will not be touched. They will not approve the loan. Talk with your real estate agent or lender before putting an offer on a great deal of a foreclosed home if you need to finance through one of these avenues, or ask about programs that allow you to finance some repairs made, such as FHA’s 203K program.
Local Tip #8: Closing costs you can expect to pay (or ask the seller to pay for you)
To close the deal, your lender will charge you “closing costs.†Note that your real estate agent is paid by the seller, so his services to you are free. Here is a breakdown of what you can expect to see as closing costs:
• Origination fee (paid to banker or mortgage broker)
• Appraisal fee
• Flood certification
• Credit report fee
• Other fees your lender needs to complete the loan
• Interest on your loan from closing date until the 1st of the next month
• Title company fee
• A portion of the title insurance fee (to make sure property clean of title defects)
• Recording fees
• Taxes and Insurance escrows (for your lender to have a cushion before these are due)
You can expect to pay about 3% of your purchase price on closing costs. BUT…
Local Tip #9: Real Estate Taxes
In South Dakota, taxes are paid in arrears. Which means for the current year, we are always paying taxes due from the previous year. On a home sale, this works out for the buyer because you get a credit for the amount of unpaid taxes while the seller has lived in the home. It’s a bit difficult to explain without powerpoint presentations and charts and easels, but the seller must pay for all the unpaid taxes up to the day of closing. This, in essence, gets deducted from the amount of closing costs.
Local Tip #10: Closing and Title Companies
Closings normally take place at title companies. There are 2 in Rapid City, and others scattered the other towns around the Black Hills. They are awesome and handle so many things that takes away much stress.
At closing, buyer and seller have their separate closings. It will be you, the closing agent, your real estate agent, and usually your lender sitting in a private room.
All you need to bring is your picture ID and your signing hand. The title company will take care of all the monies, pay everyone that needs paying, and guide you through the process. Sign, laugh, joke, hand over any cashiers checks due to the lender (from any down payments or closing fees the seller did not pay), and then grab your keys and…
GO HOME! ☺
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