A low cost of living and no state income tax make South Dakota a great choice for homebuyers. Plus, with 15.4% of listings facing price drops and a growing number of homes for sale in South Dakota, it’s the best time to buy a house in the Mount Rushmore State.
With Houzeo, South Dakota’s best home buying website, managing your home search is simple. You can look through the latest listings, save your favorites, schedule showings, and submit offers, all at your fingertips.
👉 Download the Houzeo mobile app to simplify your South Dakota home search.
At a Glance:
- Get a mortgage pre-approval and set your budget to make competitive offers in South Dakota’s hot housing market.
- Assess long-term livability, schools, and amenities based on past market trends to pick the right neighborhood for you.
- Consider seasonal risks like extreme cold, blizzards, winter storms, hail, and tornadoes.
- Conduct a home inspection to look for termite damage, pest infestation, storm-related issues, and other possible defects.
- Account for additional expenses like HOA dues, flood insurance, property taxes in South Dakota, and closing costs in South Dakota.
7 Steps for Buying a Home in South Dakota ⛰️
Buying a house in South Dakota doesn’t have to be complicated. Whether you’re just starting your search or are already browsing homes for sale in Big Stone City or any other city in the Mount Rushmore State, these 7 simple steps will help you move forward with confidence:
Step 1: Decide Your Homebuying Purpose
Whether you’re looking for a getaway or seeking an investment, knowing why you’re buying real estate in South Dakota is essential. It sets your expectations and helps you make smarter choices. Here’s what you should keep in mind:
- Primary Residence vs. Investment: If you’re buying a primary residence, choose places that fit your lifestyle, whether it’s a city like Brookings or a suburb like Harrisburg. For investment, consider Rapid City, where growing job opportunities drive demand.
- Short-Term or Long-Term: If you plan to live in the house for only a few years, focus on neighborhoods with strong resale value. You can check out homes for sale in Creekside Estates or Pierre, where the housing market continues to grow.
- Space Requirements: If you’re looking for larger lots or big backyards, consider suburbs like Meadow Estates and Red Rock Meadows. But if you prefer something easier to manage, condos in Downtown Sioux Falls can be a smart option.
Calculate the cost of living in South Dakota to get a detailed breakdown of expenses like housing, utilities, transportation, and more. 🏡
Step 2: Explore Financing Options
Before making a purchase, it’s important to understand the financing options available to you to make an informed decision. Here’s what you need to do:
1. Prepare Financially
- Check Your Credit Score: Lenders will check your credit score to determine if you’re eligible for a loan. Aim for a score of at least 500 for an FHA loan and 620 for a conventional loan.
- Calculate Your Debt-to-Income (DTI) Ratio: Lenders often use your DTI ratio to assess how much home you can afford. Keep your DTI below 36%, particularly if you’re buying in pricier areas such as Keystone and South Shore.
- Set Your Budget: Ensure your budget includes property taxes, homeowners’ insurance, and potential flood or storm insurance. This is important, especially in high-risk areas such as Sioux Falls and Rapid City.
👉 Use a South Dakota mortgage calculator to estimate how much property you can afford in the Mount Rushmore State.
2. Explore Loans and Assistance Programs
Down payments in South Dakota usually range between 10% and 20%, but often vary based on the financing option you choose. You can also look for suitable Down Payment Assistance Programs (DPAs) to help you cover part or all of your down payment.
| Program | Description |
| FHA Loans | Require just 3.5% down and are ideal if you’re a first time home buyer in South Dakota. |
| VA & USDA Loans | Offer 0% down with lower interest rates. Perfect for veterans or those purchasing homes in rural areas. |
| First-Time Homebuyer Program | The program offers a fixed-rate, low-interest mortgage to individuals and families who have not owned a home in the last 3 years. |
| Down Payment Assistance (DPA) Program | The program provides 3% to 5% assistance for your down payment and closing costs with a second mortgage with 0% interest and no monthly payments. You’ll only need to repay the loan when you sell or pay off your home. |
| Governor’s House Program | The program offers financing for the difference between the borrower’s repayment ability and the home’s cost. Additionally, it also offers pre-built homes to eligible individuals. |
Step 3: Get Pre-Approved for a Mortgage
The South Dakota housing market is competitive, so get a mortgage pre-approval to show sellers you’re a serious buyer. In fact, 86% of sellers prefer buyers who are pre-approved. It also helps you negotiate better and reduces delays in the transaction.
Shop around to find the best South Dakota mortgage lenders—compare their programs, rates, and terms. Once you’ve narrowed down your options, get pre-approved by submitting documents like proof of income, credit history, bank statements, and your ID.
Step 4: Dive Into the South Dakota Market
Whether you’re looking for houses for sale in Lead or anywhere else in the Mount Rushmore State, here’s how to buy smart:
- Online Listings: If you’re wondering how to buy a house, starting with online listings is a good first step. Use platforms like Houzeo to search homes for sale by price, zip code, and more. You can also filter for must-haves like a backyard, waterfront view, etc.
- FSBO (For Sale By Owner) Homes: Explore FSBO listings, as they often offer more flexibility in price negotiations. This is because sellers aren’t paying 5% to 6% in agent fees.
Yankton is the nicest and cheapest place to buy a house in South Dakota. The number of homes for sale in Yankton is on the rise, thanks to its safe neighborhoods and job opportunities.
Step 5: Make a Competitive Offer
In South Dakota’s competitive housing market, homes tend to sell fast. Make sure you focus on real estate comps for a more accurate picture. Here’s a checklist to help you craft a strong offer:
- Seller’s Name and Address: Don’t forget the basics—include the seller’s legal name and property address.
- Price and Terms: Offer a price based on Fair Market Value (FMV) and comparable sales. In high-demand areas like Sioux Falls and Harrisburg, you might need to offer above the asking price to stand out.
- Down Payment: In South Dakota, down payments usually range from 3% to 20%. In competitive markets like Mountain Plains and Pine Lakes Addition, a larger down payment can strengthen your offer.
- Earnest Money: Boost your earnest money deposit to show you’re serious, especially in hotspots like Custer and Rapid Valley, where homes can go fast.
- Contingencies: Include protections like home inspection, financing, tornado, and flood protection. These can safeguard you from damage caused by extreme weather events or structural problems common in homes.
- Concessions: Request the seller to cover some closing costs. In South Dakota, it’s common to negotiate repairs after the inspection, such as roof issues, HVAC problems, or plumbing leaks.
- Deadline for Seller’s Response: Set a 24- to 72-hour response deadline to encourage a prompt reply. This helps prevent delays and keeps you on track for South Dakota’s average 44-day closing timeline.
- Closing Costs: Expect closing costs around 2% to 5% of the home’s price. This includes title insurance, property taxes, and lender fees.
Step 6: Conduct Inspections and Appraisals
A standard home inspection in South Dakota should cover:
- Exterior: Examine doors, trim, windows, and siding for any damage or wear. Additionally, check the drainage systems, such as gutters, and proper grading to ensure everything works smoothly.
- Plumbing: Check for leaks, corrosion, and water pressure issues, especially in South Dakota homes built before the 1980s. These houses may have outdated pipes that are prone to damage from freezing temperatures during the winter season.
- HVAC System: Make sure the heating and cooling systems are properly checked and can handle South Dakota’s cold winters and warm summers. It is essential for year-round comfort.
- Electrical System: Verify everything is up to code and can withstand storm and flood-related power surges, especially during snowstorms, blizzards, and floods, which are common in this area.
- Roof and Attic Condition: Carefully assess for damage or age-related wear. It’s crucial in this tornado and heavy snow-prone area. Check if the attic has adequate insulation, proper ventilation, and if there are any signs of water damage or leaks.
- Termite or Pest Infestation: Termites, bed bugs, rodents, and various spiders are common here. So it’s important to inspect for them early and address any major pest control needs during final negotiations with the seller.
- Hidden Problems: Careful inspection of mold growth, faulty electrical wiring, and foundation issues is crucial before buying a house. Although walls and floors hide potential damage, an inspector can identify signs of prior issues, such as foundation movement.
- Foundation and Structure: Look for cracks, moisture, or settlement issues, particularly in flood-prone or sandy-soil areas.
Additionally, due to a high risk of tornadoes and winter storms, a wind mitigation inspection is necessary before buying a house in South Dakota. For condos over 30 years old and taller than two stories, consider a Milestone Inspection for structural safety.
Once the inspection is complete, your lender will order a home appraisal to confirm the property’s market value. This step ensures the loan amount aligns with what the home is actually worth. It can impact final loan approval, especially if the appraisal comes in low.
Step 7: Close on Your South Dakota Home
You’re almost there! Closing typically takes 30–45 days, from signing the contract to getting the keys in your hand. Here’s what you can expect:
- Final Walkthrough: Make sure all repairs have been completed, and the home is in the agreed-upon condition.
- Buyer Closing Costs: Expect to pay 2%–5% of the home price. This includes title fees and lender charges, plus prepaid taxes and insurance.
Once you sign on the dotted line and transfer funds to the escrow account, congratulations, you’re officially a homeowner. Grab those keys and cue your happy dance! 🎉
What Should You Do After Closing?
Welcome home! Now it’s time to handle a few must-dos to protect your investment:
- File for Homestead Exemption: If it’s your primary residence, apply for South Dakota’s Homestead property tax exemption. You can get up to a 100% exemption on up to 1 acre of land in urban areas and up to 160 acres of land in rural areas.
- Set Up Utilities: Arrange water, electricity, internet, and trash services through the South Dakota Public Utilities Commission (PUC). Also, don’t forget pest control, due to its natural landscape, rodents, bed bugs, and termites are a persistent issue here.
- Get Insurance: Homeowners insurance is required if you’re financing. Flood and tornado insurance may also be needed in FEMA-designated high-risk zones. The insurance rates are higher in the high-risk areas, such as Sioux Falls and Spearfish.
- Home Maintenance Plan: Schedule AC tune-ups at least twice a year, clear gutters regularly, and inspect roofs for storm damage or algae buildup. Consider wind mitigation upgrades to reduce insurance costs.
How to Buy a House in South Dakota Without a Realtor?
Start by researching neighborhoods and browsing listings on trusted sites like Houzeo. Then, schedule showings directly with sellers or their agents. You can also hire a real estate attorney to review contracts and handle legal details.
Next, get pre-approved for a mortgage, make an offer, schedule inspections, and negotiate repairs. With the necessary due diligence, you can buy a house without a Realtor.
Should You Buy a House in South Dakota?
Absolutely! South Dakota offers incredible opportunities for homeowners, whether you’re buying for investment, residence, or vacation. Moreover, with more homes being sold below the list price, now’s the best time to buy a house in South Dakota.
Whether you’re drawn to Rapid City’s growing job market or Custer’s natural landscape, South Dakota has it all. There’s a spot to match every lifestyle and budget. So if you’re on the hunt, check out our list of the best places to live in South Dakota!
