Archive for February, 2010
Comments Off on Watch Out For The Minneapolis Duplex Hiding Under The Bed
Remember when you were a kid and you were absolutely certain when the lights went off in your room, a monster would crawl out from under your bed? Or, in similar darkness, every doll on your shelf turned into Chucky?
Many of today’s Minneapolis duplex buyers seem to be thinking the same way.
They’re absolutely certain they’re going to lose their jobs and shortly thereafter, their property. Or, worse yet, overpay.
Several have insisted I turn the lights on.
In some circles, fear is an acronym for False Evidence Appearing Real. And it was certainly true of those childhood fears.
It’s also true of duplex-buying fears.
I realize we’re living in economic uncertainty; a time in which caution is a well-advised strategy. However, if you adhere to your goals when you purchase a property, in all likelihood you don’t have to worry.
Most owner occupant duplex buyers have a goal of their portion of the house payment being little more than they’re already paying in rent. In this market we’re able to accomplish that almost all of the time.
What’s ironic is while everyone worries how they’ll make their house payment if they lose their job, they never seem to worry about paying the rent.
When I ask whether they plan to move in with their parents if they lose their job, they recoil in horror. I ask whether they would go to the ends of the earth to not move in with mom and dad, and the answer is always a resounding yes. So if the mortgage is the same amount as rent, what’s the difference?
More importantly, if the property cash flows with two tenants paying rent, moving home to mom and dad’s might actually prove profitable.
Fear of over paying in a property is the monster in the closet. Unless someone is paying cash for a property, the transaction with require some form of financing. Every bank requires an appraisal be conducted before it will give someone a loan. And in today’s market, no appraiser is willing to overstate a property’s value.
Simply put, the bank won’t lend you more money than a property’s worth. You can count on it.
Just like when you turn the lights on, the monsters all go away.
Comments Off on Don’t Count On Reduced Property Taxes When You Buy A Foreclosed Duplex
If you want to get a muddy answer, call your local property tax assesor and ask what the city or county’s policy is on resetting the market value on a foreclosed property after you’ve purchased it.
Some time ago I heard Dakota County, for example, would not reduce a foreclosed property’s market value to the amount it sold for.
That seemed incredible to me. After all, if something has a tax assesed market value of $300,000, but sells for $150,000, hasn’t the market established that it’s only worth $150,000?
Apparently not. Well, sort of not.
Dakota County is working off of property values from two years ago. This year’s sales, for example, will be logged into their computer program. Whatever standard it arrives at is applied to all the properties in the county, calculated, and new values determined.
The following year the county then sends out a notice to property owners informing them of what their property taxes will be in the year that follows.
So, sales in 2008 were tallied, and new totals sent out in 2009. These totals informed property owners what they would be paying in 2010; giving them much of 2009 to argue against the county’s case.
In other words, if the real estate market is bad this year, we should see overall reduced market values for tax purposes, which will result in lower property taxes in 2012.
According to the assessor’s office in the city of Minneapolis, their model calculates market values on “open market arm’s length transactions”. A property is valued on whatever the comps are and, as the city realizes most foreclosures and short sales are sold at deep discounts, those transactions are largely excluded from the valuation process.
So, taxable market value is largely based on what properties offered by traditional sellers sold for. Of course, these properties are down in value too, but not nearly to the extent of those involving banks in the transactions.
Buying a foreclosed duplex may or may not result in lower property taxes down the road. And it’s important to not project any sort of savings as part of the income property analysis worksheet you do prior to writing an offer.
Clear as mud?
Comments Off on Minneapolis Duplex Market Sick of Winter
Winter doesn’t seem to be quite done with the Twin Cities housing market, as it appeared to slip on the ice for the week ending February 13.
Pending single family home sales were down 2.7 percent from last year, while new listings scrambled to their feet, with 4.9 percent more of them than a year ago.
There was, however, a patch of pavement visible, with the current number of available homes down 12.4 percent from a year ago.
In the duplex sector, traditional sellers continued to gain a little traction, contributing 46 percent of the week’s new listings. They comprised just 25 percent of the new listings for the week in 2009.
However, they also saw just 11 percent of the pended transactions for a week. This represents a modest 2 percent gain over 2009.
The average off market price for the week was $115,060 compared to 2009’s average sold price of $91,660.
New listings stayed about the same, with 52 new listings coming on in 2010 as compared to 53 last year. In all, in the metro area there are currently 604 duplexes, triplexes and fourplexes actively listed on the MLS.
Let’s hope a spring thaw is just around the corner.
said on February 22nd, 2010 categorized under: Legal Stuff
Comments Off on Don’t Cheat On Your Minneapolis Duplex Agent
One of my buyers cheated on me last week.
He called another agent about a property the agent had listed.
After he told me he’d see only me!
It could cause me not to get paid.
See, in real estate there’s something called “procuring cause”. And it belongs to the agent who caused the buyer to purchase the duplex.
If my client called and asked me to help him see or write an offer on the property, I could have to split my commission with the listing agent. Why? Because that Realtor could argue that he was the one who was responsible for the purchase; having provided my client with the information that caused him to write an offer.
The same could be true if you asked another agent to show you a property, walked through an open house and spoke with the agent, or even called on a newspaper ad.
It doesn’t matter how long I’ve been working with that buyer, how many duplexes I’ve shown him, nothing. And I’d have to split my check because of that one phone call.
Of course, I do practice safe real estate and have a Exclusive Right to Represent Buyer contract in place. However, even that may not protect me entirely.
So my buyer and I had a talk; one in which I reminded him to always disclose to other agent that he’s working with another Realtor.
As part of our understanding, he can’t ask another agent to show him a property, call listing agents for information, and must always tell open house agents he’s working with me.
He understood. And since he’s a good guy, I forgave him.
Comments Off on Buyers Nod Yes In Minneapolis Duplex Market
Back in the day, oh, say, in around 2005-2006, well-maintained properties that were properly priced were selling at a rapid pace, and with multiple offers.
It was almost like an auction, with bidders scrambling to out-strategize and out-maneuver one another.
And while we all know the market has changed since then, there have been some buyers making subtle nods of their heads in recent weeks.
With today’s release of MAR’s Weekly Activity Report came news that the monthly supply of inventory is now at just 5.5 months. While this number still slightly favors sellers, it’s important to remember that a balanced market, where buyers and sellers are on equal footing, occurs when there is a 5 month supply.
For the week ending February 6, MAR reported new listings of single family homes were up 3.8 percent from one year ago. So too were pending sales, with 4.7 percent more properties receiving purchase agreements than in 2009.
While duplex sales for the week were down 3 percent from last year, there was decidedly less inventory for buyers to choose from. The week showcased 23 percent fewer new listings than came on the market the first week of February last year. Of the 2010 new offerings, 10.8 percent were listed by traditional sellers, compared with just 5.3 percent last year.
The average off market price for the week was $121,536. This is up considerably from last year’s $98,528.
Tightening inventory brings increased competition for listings. And while it’s not scientific, I can share that three of my buyers have been involved in multiple offer situations in the last 10 days.
As long as inventory remains tight, expect that trend to continue.
said on February 15th, 2010 categorized under: Tax Credits
Comments Off on Clock Ticking On Minneapolis Duplex Tax Credit
With all the snow on the ground, April 30 seems ages away.
But really, it’s only 74 days away.
Less than three months to find your first duplex or house before the $8000 first time home buyer tax credit expires. Less than three months for repeat buyers to qualify for the $6500 credit.
Yes, it still sounds like a lot of time. Except for the fact that many of the first time buyers I’ve worked with have taken four to six months to define exactly what it is they’re looking for in a property and then find one that matches both their budgets and criteria.
Remember, purchase agreements must be signed no later than April 30, 2010, to qualify for the credit. New owners must take title no later than June 30.
If you’re wondering whether you qualify, just remember; a first time home buyer is defined as anyone who has not owned a home in the last three years.
A repeat buyer must have lived in their homes consecutively for five of the previous eight years.
For either, income limits are $125,000 for single buyers and $225,000 on a joint tax return.
Of course, in either instance, the maximum home price is $800,000.
said on February 11th, 2010 categorized under: Financing
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Last week Fannie Mae announced it is offering a 3.5 percent incentive for buyers who purchase and close on a property they own between January 28 and April 30, 2010.
Fannie Mae owned properties can be found both on the MLS and at Homepath.com.
Buyers Homepath properties may receive up to 3.5 percent of the final sales price for:
- Closing costs
- The purchase of new Whirlpool appliances by Fannie Mae or
- A mix of the two at the buyer’s discretion, up to the maximum of 3.5 percent
In order to be eligible for the incentive, offers must be accepted after January 28 and close before May 1, 2010. Investors aren’t eligible for the bonus.
Comments Off on Minneapolis Duplex Market Goes Zen
MAAR issued its Weekly Market Activity Report this morning and by all appearances, housing transactions for the week ending January 30, 2010, remained in their meditative state.
Pending single family home sales were down just slightly from the same week in 2009, while the number of signed purchase agreements rose just 0.7 percent.
The number of new single family home listings didn’t make any real perceptible moves either, dropping 3.7 percent year over year.
The duplex and small multi-family market showed a few signs of movement, but most were slight. For example, of the properties this year that received purchase agreements, 95 percent involve a lender in the negotiations. This is down .5 percent from last year.
The average pended price of properties for the week in 2010 was $98,395, compared with last year’s average sale price of $93,118.
New listings for the week trailed last year by 12.3 percent. The good news is 40.35 percent of the week’s new inventory was offered by traditional sellers, compared with just 26 percent for last year.
Let’s hope the tranquility doesn’t last.
2 Comments »
Are you having trouble finding the right duplex?
I’ve got some bad news. It’s about to get worse.
As we officially kick off the spring housing market, more buyers and investors are going to jump into the market. Many will be trying to beat the April 30 tax deadline for the $8000 and $6500 tax credits.
That means you’ll have more competition.
And if you’re working with an agent who don’t specialize in multi family properties, the odds are stacked against you.
The single most important reason to work with a specialist is what we have in our pockets.
I’m not talking about lint, or quarters, but what are called “pocket listings”. What are those? Well, we work with sellers too. At any given moment, we know a number of them who are either in the process of putting their duplex on the market, or who haven’t quite yet decided to sell.
Most are willing to show potential buyers their property; even if they haven’t quite made up their minds. And when we run into a buyer looking for a duplex that seems to match a non-MLS duplex we’ve seen, we can make showing arrangements.
Don’t forget, however, that when it comes to MLS listings, we also know the inventory.
On average, I show more than 30 duplexes a month. While many of the properties simply are not fits for any of my clients, some are. (Ironically, they’re frequently the ones with few or no MLS photos.) When I find them, I call.
Established duplex specialists also offer their buyers the advantage of having seen countless properties the last time they were on the market. We don’t remember the bad ones, but the good ones are clear memories.
A good example of this happened over the weekend. A property I’d frequently shown as a short sale reappeared on the MLS as a bank owned property.
The pipes were frozen and both boilers blown. Having seen it in the past, however, I knew the rest of the building was in great shape.
My clients footsteps were the first in the snow on the listing’s sidewalk.
If you’re looking, give me a call and ask what’s in my pocket.
Comments Off on I Sell St Paul Duplexes Too
I lost out on a duplex listing the other day because I “don’t specialize in St Paul”.
This made me chuckle.
The seller had the impression that because of the frequent appearance of the word “Minneapolis” in my blog headlines, I don’t know St Paul.
I explained to him I do this because according to Google Ad Words, far more people search the Internet for the term “Minneapolis duplex” than they do “St Paul duplex”.
I am, after all, in business. Part of my job as a business owner is to make sure I’m found where people are looking for the type of services I provide.
So, my headlines say “Minneapolis”, even though I list, show and sell St Paul properties just as often; simply because of the popularity of the search term.
The seller, in this case, hired an agent who specialized in his neighborhood. On some level, this is a concept I absolutely understand when it comes to single family homes. After all, there are thousands and thousands of single family homes, and most MLS districts have neighborhoods with wildly different personalities within their boundaries.
Duplexes, however, are another story.
See, there just aren’t as many of them out there.
As a result, duplex buyers I work with tend to cover 5, 10, or even as many as 15-20 MLS districts in their search.
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