How Can That Minneapolis Duplex Be Sold And Be On The MLS?

not soldOne of the most confusing things for many buyers looking for a Minneapolis duplex is how a property can appear to be available on whatever web site they’re using to search the Multiple Listing Service (MLS), yet when they ask me to set up a showing, I tell them it’s sold.

How can a duplex still be “for sale” but be sold?

Well, it comes down to where the buyer and seller are in the process of negotiating an offer.

In today’s market, there are two types of sellers; an individual or corporation who may sell the duplex without consulting an outside party, and a short sale, where the seller must also come to terms with the bank that holds their mortgage.

Regardless of the type of seller, when a buyer submits an offer on a property, she does so with certain contingencies. 

For example, a buyer will most likely make the purchase contingent on her ability to get a loan. If she can’t, she may cancel her purchase. 

Thanks to sellers requiring buyers to provide proof they can financially qualify to buy the property by submitting a pre-approval letter with their offer, most buyers are able to get a loan and the transactions goes forward.

However, a buyer may make the purchase contingent on a home inspection. During a limited window of time, she can hire a home inspector to come in and check things like the furnace, the roof, water pressure and electrical circuits, as well as ask to review copies of the leases.

If the inspector finds any items in need of repair or the lease information differs from information gleaned from the MLS, she can ask the seller to either make corrections or offer price concessions in exchange for the required maintenance. Of course, the seller may agree, refuse to make any changes or attempt to negotiate some sort of middle ground.

It is during this piece of the transaction that most duplex sales fall apart. And that’s why most seller’s agree to an inspection only if they are allowed to keep the property actively listed on the MLS. After all, they don’t have a “done deal” until the buyer’s inspection contingency is removed.

When I call to set up a showing on a property, the listing company will often say the duplex is “Sold subject to inspection”. While this doesn’t mean the transaction is set in stone, I myself and many agents I know are reluctant to show buyers these listings. (There’s nothing worse than having someone fall in love with a property that’s essentially, already sold.)

One of the more recent ways a property appears to be available on the MLS but is already sold is if it’s a short sale. These duplexes typically have an offer that’s been signed by the seller, but the sale can’t go forward until the seller’s lender or lenders agree to take less money than they’re owed.

As this is a lengthy process (two to three months), the listing stays active on the MLS. However, in the listing’s notes reserved for real estate agents, the seller’s agent typically states that an offer has been submitted to the bank and they are only accepting back-up offers.

Due to the inordinate amount of patience required by short sale buyers, it is not unusual for them to find another property to purchase before receiving a response from the lender. Therefore, it is in the seller’s best interest for the listing to remain active on the market with the hopes of receiving back-up offers in case the first is cancelled.

Again, if there is already more than one offer on a property, I am disinclined to show it. While my client has a fair and reasonable shot of her offer working its way to first position (I have one buyer who had the fifth offer and ended up getting the house), most buyers aren’t willing to wait that long.

So “sold” isn’t always SOLD. And there’s no way of knowing which kind of sold it is unless you’re working with a real estate agent.