Archive for June, 2010

What A Market Recovery Will Never Reimburse You For

said on June 11th, 2010 categorized under: Selling A Duplex

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Time is MoneyThe other day a familiar duplex came on the market.

For the second summer in a row.

It’s a well-maintained property in a sought-after pocket of Minneapolis. As those kinds of properties are somewhat rare, I was happy to see it on the market again; this time at a price that makes more sense.

The irony is, a client of mine wrote an offer on this property last summer; at a number within negotiating distance of the price it’s listed at now.

The trouble is, my buyer bought a different duplex last summer.

And this year, that lovely duplex will likely generate an offer not too different from the one my clients wrote one year ago.

So, what’s the seller out?

A year of property taxes, insurance, maintenance expenses, water bills and the time and effort spent managing the property; all spent during a year they wanted to be done owning a duplex.

A year of lost time and effort to achieve exactly the same result.

I can’t think of a better way to illustrate the importance of pricing a property correctly the first time it hits the market.

After all, no amount of market recovery will ever reimburse you for lost time.

Why Mortgage Brokers Don’t Smoke Cheap Cigars

said on June 10th, 2010 categorized under: Financing

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Smoking Loan sharkThe other day I had clients with a huge down payment and spectacular credit scores suddenly find themselves unable to get a loan from a traditional bank on a slightly unusual home they wanted to purchase.

When I suggested they contact a mortgage broker I knew who could help them, they panicked.

They said they didn’t want to overpay and didn’t want to get taken. They had great credit and shouldn’t have to go to a mortage broker to get a loan.

That’s when I realized perhaps they were confusing a mortage broker with a loan shark.

A mortgage broker is not a high interest, hard money lender who wears a fedora, smokes a cigar and meets borrowers in a lonely, dark alley.

A mortage broker is simply someone who works with several different banks and lenders, which allows her to compare interest rates and prices for her clients, as well as find them alternate sources of financing if oneparticular institution is resistant to lending on the property.

One mortgage broker may offer loans from reputable institutions like U.S. Bank, Citimortgage, Chase and Bank of America. She may also have relationships with other, smaller investors (banks), who are more willing to lend on unusual properties.

In my client’s case, the underwriter at the traditional bank they initially consulted for financing chose to interpret guidelines issued by Fannie Mae and Freddie Mac more restrictively than they were written. As a result, the bank’s loan officer, being an employee of that institution, couldn’t help them any further. She had one choice only, and the answer was no.

The mortage broker, on the other hand, was able to consult several equally prominent lending institutions and quickly find my clients a loan.

Comments Off on You Tell Me How The Minneapolis Duplex Market Is

what can i do?Sometimes I wish I was a statistician. Or an economist. Or, even a psychic.

If I were any of those things, perhaps I could come up with a better answer to the question, “What’s the real estate market like?”

Because sometimes I’m not sure how to answer other than to say, “Dunno”, which is Minnesotan for “don’t know”.

For the week ending May 29, 2010, pended Minneapolis duplex sales were down 3.8 percent from the pace they set over the same stretch last year.

Uh-oh, right?

Well, hold on. The average off-market price for those properties was $164,276, and 40 percent of them were owned by traditional sellers.

Last year’s average sold price for the same week was just $93,454, with only 7.7 percent did not involve financial institutions in the negotiations.

Of the new listings for the last week in May, 54.7 percent were listed by traditional sellers. Not only was the number of listings up year-over-year by 15 percent, but traditional sellers also gained an additional 14 percent of the market share.

So is it good? Bad? Dunno.

Things are more clear over in the single family home market. Well, sort of.

The number of purchase agreements signed for the week was down 34.6 percent below the previous year. This was the fourth week in a row (and the fourth since the tax credit), in which this happened.

New listings were down 5.9 percent for the week from the mark they set last year.

However, those listings that received purchase agreements were also spending less days on the market than they had last year, and receiving 2.8 percent more of the original list price; at 94.1 percent.

Maybe we’ll know more next week. Maybe not.

Minneapolis Named Best Place To Buy

said on June 7th, 2010 categorized under: Buying A Duplex, Twin Cities Real Est

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minneapolisLast week the web site ranked Minneapolis/St Paul number one on its list of America’s Top Ten Cities To Buy Vs. Rent.

To come up with their rankings, Trulia took the average list price of properties on the MLS and divided it by the average rent on a 2 bedroom apartment, duplex, condo or townhouse in the largest 50 markets in the country.

In other words, according to Trulia’s co-founder and CEO Pete Flint, “Home sellers in hard hit areas are forced to lower their prices to compete with all the foreclosures on the market. As a result, these unattainable markets are so affordable it makes better financial sense to buy than rent.”

With the expiration of the first time and repeat buyer tax credits at the end of April, there is much less competition for the good properties in the market.

Call me. It’s a great time to buy.

Minnesota Tenants Get Trashed

said on June 3rd, 2010 categorized under: Tenants

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garbage canOne man’s junk is another man’s treasure.

According to the state of Minnesota anyway.

I was reminded of this last night when I a unit tenants had recently vacated.

It was a mess. Everywhere my clients and I looked there were pieces of broken furniture, abandoned clothing, framed posters on the walls…

All of which needs to be stored and taken care of by the owner, for the next 60 days.

Of course, that would involve cleaning up the duplex, boxing and packing the departed tenant’s belongings, and moving them to a storage unit. Or moving them to the garage. Or, I suppose, leaving them right where they are, which, I assure you, would not entice anyone to rent the place.

While it’s a pain, and the likelihood of recouping damages is remote, the landlord does have a claim against the tenant for the costs she incurs in boxing, moving and storing the property. Of course, recouping that may involve legal fees.

There is some good news. As a result of the passage of the “Tenants Bill of Rights”, after August 1, 2010, the number of days a landlord has to store abandoned property will drop to 28 days.

What’s more, regardless of the length of time, the duplex owner may sell the abandoned belongings once the required storage time has expired.

The owner must make a reasonable effort to notify the tenant of the pending sale at least 14 days before it occurs.  Notification must be in writing; either by personal service or certified mail.

Who knows? After all, there might be the Antiques Roadshow treasure buried in the trash.

Twin Cities Duplex Market Has Faces And Puppies

said on June 1st, 2010 categorized under: Twin Cities Real Est

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Grass and skySometimes, the weekly duplex market report feels a little like looking at cloud formations.

There may or may not be faces in the clouds; depends on who you ask and their point of view.

Are there faces in the duplex market? Puppies? Or just random shapes?

Well, for the week ending May 22, pending Twin Cities duplex sales saw a year-over-year drop of 26.3 percent. Of those listed properties that received purchase agreements, 25 percent were placed on the market by traditional sellers. On average, these properties pended at $125,965.

For the same week in 2009, just 6 percent of the pended properties were sold by traditional sellers. The average price of all of those sold properties was $105,054.

The third week in May, 2010, also saw a 15.6 percent week-over-week increase in new inventory. While this years formation of new listings consisted of just over 51 percent traditional sellers, just 30.5 percent of last year’s new offerings didn’t involve lenders in any negotiations.

So what’s happening in the market?

I’ll get back to you after I lay in the grass and ponder it for a while.

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