City of Crystal Abandons Point-of-Sale Inspection

Following in the footsteps of Brooklyn Park just a few years ago, the City of Crystal has officially decided to do away with their Point-of-Sale inspection.  The program, which has been in place since 1992, was repealed by the Crystal City Council earlier this week.

Along with repealing the ordinance, the City issued details about how current and future transactions will be handled.  The official repeal of the Point-of -Sale inspection will go into effect on September 26th.  Any property transaction closing on or after September 26th will no longer be subject to the existing Point-of-Sale inspection.  Properties currently under contract but closing prior to September 26th will still be subject to the rules of the existing ordinance.

The City of Crystal is offering a full refund to homeowners who have already paid for the inspection but have not had the actual inspection take place.  If the inspection has already happened but the closing is after September 26th, the seller will still have to bear the cost of the inspection.

Including the repeals that have taken place in Brooklyn Park and Crystal, there are still 12 cities that have some kind of point-of-sale ordinance on the books.  A few of the cities still requiring inspections include Minneapolis, St. Paul, Richfield, Bloomington, and Golden Valley.  For more detailed information on what each particular city requires at the time of sale, please visit http://www.mplsrealtor.com/laws-regulations/.

It will be interesting to see what unfolds on this front in the next few years.  Both the Minneapolis and St. Paul Associations of REALTORs strongly oppose Point-of-Sale inspections, citing the "the costs, duplication of efforts, limited scope, and waiver of city liability that comes with city-mandated Point of Sale inspections."  As recently as a couple months ago, the City of Eden Prairie was considering a Point-of-Sale mandate, but ultimately turned it down.

For any questions or more details, please feel free to call (763-213-4617) or email (josh.pelto@remax.net) me!

How Much Earnest Money Should I Offer?

This is a really common question I'm asked - "How much earnest money should we include with our offer?". Since I hear this often, I figured it'd be a great subject for a blog post!

Like (essentially) everything in the Purchase Agreement, the amount of earnest money is negotiable!  However, REALTORs frequently use a rule of thumb for earnest money - roughly 1% of the purchase price.  For example, if the home you are offering on is priced at $280,000, I normally instruct my clients that something in the $2,500 - $3,000 range is an acceptable amount of earnest money.

There are some important caveats to this rule of thumb, however.  For example, when offering on a foreclosed home the seller may require a certain amount.  I've seen foreclosures require 2% of the purchase price for earnest money - in the $280,000 example above, the bank would require $5,600 for earnest money.

Another caveat is that in a multiple offer situation, raising the earnest money might make your offer look stronger than the other competing offers.  Of course sellers ultimately care the most about the sales price over the rest of the details, but it's a simple way to increase the strength of an offer!