How to Buy a House in South Dakota: 8 Steps Real Estate Experts Recommend

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By Lindsay Stefan Updated May 1, 2024


8 Steps to Buying a House in South Dakota

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Now that the housing market is finally calming down after the pandemic[1], buyers are facing a new challenge: Soaring mortgage rates.[2]

In South Dakota, the average 30-year fixed mortgage rate is 6.96% — up from 2021's historic lows. This raises the average monthly mortgage payment to $1,585 (assuming a 20% down payment at the median home value).

But buying a home in South Dakota is still possible, even for first-time home buyers. Many markets are seeing frequent price drops and fewer offers, giving motivated buyers the upper hand in negotiating for the best price.

In this guide, you’ll learn how to buy a house in South Dakota with confidence no matter what the market brings. Learn why you can trust our advice.

Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great local realtor to guide you on your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.

Best of all, hiring a real estate agent comes at no extra cost to you — since the seller typically pays both their listing agent and your buyer's agent.

Ready to find a great local realtor, but not sure where to start? The best (and easiest!) option is to try a free agent matching service like Clever Real Estate. Answer a few simple questions about your home buying goals, and Clever will match you with hand-picked agents from Keller Williams, RE/MAX, and other top brokerages in your area. Find a top local agent and make your home buying dreams a reality today!

Step 1: Save for a down payment

🔑 Key takeaway:

Your down payment can be less than 20% of the purchase price — $59,812 for the typical home in South Dakota — but you'll have to purchase mortgage insurance and pay more interest over the life of your loan.

Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.

Typically, mortgage lenders in South Dakota want you to contribute 20% of the purchase price as a down payment. That would be $59,812 for a $299,062 home — the typical home value in South Dakota.

However, you have options to lower your down payment amount.

Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).

But making a down payment of less than 20% comes with some risks.

First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.

Second, you may have to purchase mortgage insurance.

Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.

Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.

VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.

South Dakota down payment assistance programs

Throughout the state of South Dakota, there are a number of down payment assistance (DPA) programs available to first-time and low-income homebuyers. These programs make buying a house more affordable by awarding a grant or a second mortgage to eligible participants.

Here are a couple DPA programs for South Dakota residents that you may qualify for:

SDHDA Fixed Rate Plus

The South Dakota Housing Development Authority’s Fixed Rate Plus program offers a loan of 3% or 5% of your first mortgage for a down payment or closing costs. The financial assistance comes as a 0% interest second mortgage that isn't due until the property is sold or the first mortgage is paid off.

Eligibility depends on the borrower's household income and home purchase price.

GROW South Dakota

GROW South Dakota offers a DPA program that can provide up to $10,500 to eligible homebuyers. The financial aid comes as a 0% deferred loan.

To qualify, the borrower's first mortgage lender must be approved by GROW South Dakota, and buyers have to take a homebuyer education course. Household income and home purchase price limits apply and vary by county.

HAPI Housing Assistance

Homes Are Possible, Inc. (HAPI) offers down payment and closing cost assistance for buyers in specific South Dakota counties. Buyers in Brown County may receive a loan of up to $4,000 that accrues no interest and can be repaid once the property is sold, refinanced, or transferred to a new owner. Buyers outside of Brown County can apply for Housing Opportunity Funds, which can provide forgivable grants of up to $4,000.

Household income and home purchase limits apply and vary by county. Borrowers must also be willing to complete a homebuyer education course.

U.S. Department of Housing and Urban Development

South Dakota's HUD page lists additional DPA programs and resources for homebuyers.

Step 2: Find a great real estate agent in South Dakota

🔑 Key takeaway:

Interview multiple agents to find one who knows your target neighborhoods, has experience in your price range, and communicates well.

Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in South Dakota.

Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. You should pay attention to a realtor's:

  • Years of experience
  • Number of transactions in the last year (the more the better!)
  • Experience in your price range
  • Overall review score
  • Individual reviews and complaints
👋 Find the best realtors near you!

Finding a great real estate agent shouldn't be complicated. Let Clever Real Estate do the hard part and match you with experienced local realtors who are experts in your market.

Enter your zip code below to compare top agents from trusted brands like Keller Williams, Berkshire Hathaway, and Coldwell Banker, then choose the best fit for you. It's 100% free, and there's no obligation.

Step 3: Get preapproved for a mortgage

🔑 Key takeaway:

Once you're preapproved for a mortgage, it's imperative that your financial situation doesn't change. If your credit drops, it can derail the process and keep you from closing on your house.

Here are some easy ways to ensure your credit doesn't change after you receive your preapproval letter:

  • Avoid opening new credit accounts
  • Don't close any accounts that have been open for a long time
  • Make all of your credit card payments on time

» LEARN MORE: What factors do mortgage lenders consider?

A mortgage preapproval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.

Most sellers in South Dakota will require preapproval before showing you their home.

You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your South Dakota home.

Step 4: Choose the right location

🔑 Key takeaway:

Search for neighborhoods where:

  • Home prices are within your price range
  • Home values are on the rise
  • The local amenities support your lifestyle

Currently, the typical home value in South Dakota is $299,062, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!

Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years.

To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Sioux Falls:

Home value appreciation in Sioux Falls

Neighborhood 2015 Current Appreciation
Augustana $113,780 $222,387 48.8%
Pettigrew Heights $106,899 $205,456 48.0%
North End West $98,208 $194,343 49.5%
Show more

Step 5: Start house hunting in South Dakota

🔑 Key takeaway:

South Dakota’s market is strong. Listing prices have shot up since last year, and inventory has dropped significantly — so you may have a challenging time looking for the perfect home. If you’re set on buying, be willing to review your priorities and adjust your expectations. Check out the listings that your real estate agent suggests, even if it might not be what you initially wanted. They might surprise you at what’s available and help you find a deal worth taking.

Searching for homes in South Dakota is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.

Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."

Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.

Look at current housing inventory

The timing of your house hunt in South Dakota can have a big impact on your number of options. For example, in South Dakota, September has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.

On the other hand, March gives you the fewest choices in South Dakota. Historically, there are 44.6% fewer homes for sale than during South Dakota's peak season.

Housing inventory in South Dakota by season

Step 6: Make an offer

🔑 Key takeaway:

The demand in South Dakota has cooled, probably because of increasing listing prices. With lower competition in the market, you have time to mull over the offer you’re writing — but don’t wait for forever. Work out the figure with your agent, as they know how aggressive to be without giving away your entire budget.

Once you find a South Dakota house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.

Currently, in South Dakota, homes stay on the market for 58 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.

Historically, South Dakota homes sell fastest in June, where the average property is only on the market for 45 days. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.

On the other hand, if you buy in January, you have a bit more time to search. Homes typically stay on the market 21 days longer than South Dakota's annual average.

Average time homes spend on market in South Dakota

» LEARN MORE: What should an offer include?

Step 7: Inspections and appraisals

Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.

🔑 Key takeaway:

  • Inspections: A licensed professional checks the house for any unseen, unexpected, or potential issues.
  • Appraisals: An appraiser hired by your lender examines the house to determine how much it's worth.

Home inspections in South Dakota

Having your South Dakota home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.

Your inspector should check out the following parts of the property:

  • Roof
  • Foundation
  • Electrical system
  • HVAC system
  • Plumbing

If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.

South Dakota-specific inspections

South Dakota law requires sellers to disclose known problems with a property to potential buyers. However, it can be easy to overlook a few major issues that could result in expensive repairs later. Homebuyers are strongly advised to take extra precautions and conduct more tests than the general home inspection alone.

Before closing, consider having the following inspections done:

  • Radon testing: If the seller hasn't performed a radon test within the past year, it's in your best interest to order a test as soon as possible. Radon is one of the leading causes of lung cancer, and it can enter a home without any noticeable signs. You can order a free radon test kit from the South Dakota Department of Agriculture and Natural Resources here.
  • Pest inspection: Termites and other pests can cause a lot of damage to a home and pose health risks to anyone living in the property. Even if you're not required to have a professional pest inspection done, it's a good idea to make sure you won't be sharing a home with any unwanted critters.


Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.

Step 8: Close on your new home!

🔑 Key takeaway:

Before you close on your new home, you and your agent will do a final walkthrough of the property to ensure that it's still in the expected condition.

Before you can become the new owner of your South Dakota home, you'll need to meet at the title company on closing day. Here, you'll complete some paperwork and settle your closing costs.

There will be several documents to review and sign, including:

  • Your final loan application
  • The deed
  • The mortgage promissory note
  • The disclosure statements

It takes most homebuyers about an hour to read through and complete all the paperwork. These documents are required for a clean title transfer, so take your time to ensure that all of the information is correct.

After you’re done signing the legal documents, you'll pay your closing costs to the title company. The company will take care of distributing the correct amounts to every individual you owe.

As a homebuyer, your closing costs can be divided into the four following categories:

  • Lender fees: Fees that your mortgage lender charges for originating and underwriting your loan. Appraisal fees, survey fees, and other expenses related to your loan may also be included here.
  • Title and escrow charges: Fees that the title company charges for facilitating the closing process and conducting the title search.
  • Prepaid costs: Ongoing costs of owning a home, like property taxes and homeowners insurance. Most mortgage lenders require buyers to pay for expenses like these up front.
  • Other closing costs: Miscellaneous expenses that vary for each buyer. A few common costs for buyers include natural disaster certification fees, pest inspection fees, and real estate attorney fees.

Buyers in South Dakota typically pay 3–5% of the purchase price in closing costs. For a $299,100 home — the typical home value in South Dakota — that's between $8,973 and $14,955!

⚡Make your home-buying dreams a reality!

Ready to make your home-buying dreams a reality? The first step is to find a top local realtor who's an expert negotiator with proven experience in your market.

Enter your zip code below to compare the best agents from trusted brands like Keller Williams, Berkshire Hathaway, and Coldwell Banker, then choose the best fit for you. It's 100% free and there's no obligation.

Frequently asked questions

Do I need a real estate attorney in South Dakota?

In South Dakota it's required for a real estate attorney to be part of every home sale. While your agent can make recommendations, remember you get to make the final decision. Interview lawyers before hiring them to make sure they have the experience you need.

What are the steps to buy a house in South Dakota?

  1. Save for down payment
  2. Get pre-approved for a mortgage
  3. Choose your preferred South Dakota neighborhoods
  4. Partner with the right real estate agent in South Dakota
  5. Go house hunting
  6. Make a strong offer
  7. Inspections and appraisals
  8. Do a final walkthrough and close

Does South Dakota have a first time home buyer program?

Yes, South Dakota's First-Time Homebuyer Program offers a low-interest, fixed-rate mortgage to eligible buyers. Qualified participants cannot exceed their county's income limits, and their home purchase price must not exceed $300,000.

Why trust us?

Clever Real Estate is a free agent-matching service that has helped more than 82,000 people buy and sell homes. We partner with over 2,700 top-performing agents nationwide at national brokers including Keller Williams, RE/MAX, Century 21, and more. We also help buyers save money with cash back after closing.

We’ve earned buyers’ trust with a rating of 4.9 out of 5 stars on Trustpilot and over 1,800 customer reviews.

Our team of industry-leading researchers are committed to making homeownership more accessible by educating buyers through guides like this one. We've spent thousands of hours analyzing publicly available data, surveying consumers, and interviewing industry experts. Our research has been featured in The New York Times, Business Insider, Inman, Housing Wire, and many more.

Learn more about Clever.

Article Sources

[1] Federal Reserve – "Housing Market Tightness During COVID-19: Increased Demand or Reduced Supply?". Updated July 08, 2021. Accessed October 11, 2022.
[2] Consumer Protection Financial Bureau – "The Fed is raising interest rates. What does that mean for borrowers and savers?". Updated March 17, 2022. Accessed October 11, 2022.

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