Archive for October, 2012
Comments Off on Duplex Sellers Shift Gears
There was a shift in the Minneapolis duplex market the week ending October 20, 2012.
A lot more new inventory came on the market during the week than did one year ago.
There were 31 newly listed duplexes, triplexes and four unit buildings that came on the market. This is more than double the 14 that did one year ago. Of these new listings, 67.7 percent were made available for purchase by traditional selelrs. Just 42.9 percent of last year’s sellers had equity in their properties.
Pending duplex sales saw a virtual dead heat year-over-year, with 14 transactions taking place in each. Of those sellers who accepted offers this year, 28.6 percent have equity; up slightly from last year’s 21.4 percent.
While the market share of traditional sellers wasn’t so great as to suggest it would be the case, the sold price for the week in 2011 of $100,277, is significantly below this year’s average off market list price of $187,123.
The single family home market also continued a shift of its own, with new listings down .6 percent, pending sales up 33.3 percent, for a combined decrease in inventory of 28.5 percent.
With declining inventory and increasing sales, it’s a great time to be a Minneapolis duplex seller.
Comments Off on Does Your Duplex Fantasy Match Reality?
I may be stating the obvious, but if you’re looking to buy a duplex in Minneapolis, it’s important you have realistic expectations.
And often, those expectations should be set in accordance with type of duplex inventory available in the areas you’re considering investing in.
For example, Twin Cities Craftsman-era duplexes, which are typically a short bus ride from the city’s core, were usually built between 1912 and 1929. They were built because with the mechanization of the industrial revolution, fewer people were needed to work on farms, and more were needed to work in manufacturing and services– which were found in the city.
So farm kids moved into town to get a job. And, in 1923 they didn’t have as many wardrobe choices as we do today. So give up any notions you might have about finding walk-in closets.
Of course, people changed with time, as did fashion and architecture. If you need a place with more than one bathroom and bigger bedrooms, for example, duplexes form the post World War II housing boom of the 1940s and1950s is the era they started to appear.
The trouble for most buyers is, most of the land closest to the city’s core already had buildings on it at that time. So, you’ll find these bigger duplexes with more contemporary amenities a little further out from downtown.
Sure, there’s the exception to every rule, but by en large, this is the case.
Know too that with fuel prices being what they are, you aren’t alone in wanting to live close to work to save on both gas and hours in the car.
As a result, there are a lot of people who want to buy that inexpensive duplex two blocks from one of the lakes. Increased demand always equals higher prices or, in this market, all cash transactions.
There are plenty of great duplex buys in Minneapolis; provided your fantasy of what that looks like matches reality.
Stay open to your options.
Comments Off on How To Make Your Payments And Still Qualify For A Duplex Short Sale
Starting November 1, underwater duplex owners who are not behind on their mortgages may qualify for a short sale if their loan is with Fannie Mae or Freddie Mac.
Prior to this change in policy, only duplex sellers who had missed mortgage payments could qualify.
Remember, while you may make your payments out to a lender like Wells Fargo or Citimortgage, they may only be the servicer for the loan. Loan servicers are a bit like property managers, except they collect money and pay bills for investors who are ultimately, who you really owe the money to.
To be eligible, duplex owners will still need to demonstrate a hardship in order to qualify for a short sale. Those hardships may now also include unemployment of the death of a spouse.
The downside of this otherwise good news is, as of now, the short sale would report to the credit bureau as if the duplex seller had been behind on mortgage payments. This could drop a duplex owners credit score anywhere from 150 to 175 points.
Officials at the Federal Housing Finance Agency (FHFA), which oversees Fannie and Freddie, acknowledge there’s a problem with this. FHFA initiated discussions with the three national credit bureaus to come up with a possible solution.
To find out if your loan is with Fannie Mae or Freddie Mac, click here.
Comments Off on Minneapolis Duplex Sales Get Better
The Minneapolis duplex market appears to be healing.
Now I didn’t say “healed”, or “cured”, but things DO seem to be improving.
For example, for the week ending October 13, there was actually one less Minneapolis or St Paul duplex seller who accepted an offer (29) than there was during the same week last year (30).
This year’s duplex sellers were the winners, however, with an average off-market final list price of $197,983. Last year’s sellers realized an average sold price of $107,739.
Of course, as is usually the case, higher prices are often the result of traditional sellers dominating the market, and this week was no exception, with equity sellers contributing 65.5 percent of the transactions. Last year, just 30 percent of the sales were the result of traditional sellers.
Inventory continued to be tight, which, combined with historically low interest rates, may explain the spike in values. There were just 22 new listings in the most recent data, with a whopping 86.4 percent of them brought to the market by sellers who did not need permission from a banker to sell.
Last year at the same time, there were 39 new listings. Traditional sellers were responsible for just 56.4 percent of these, with banks contributing the balance.
Inventory in the single family home market, however, improved slightly, with new listings up 7.3 percent for the week. Of course, these listings dissipated quickly, with pending sales up 26.7 percent over the year before.
In all, there is a 4.1 month supply of inventory on the market. The market is considered balanced when there is a six month supply. Anything over that and it’s a buyer’s market, less than six months supply creates a sellers market.
I am not ready to pronounce the Minneapolis duplex market cured. But it is well on its way to better health.
Comments Off on Interest Rates Make Minneapolis Duplex Sellers Jump
I have good news that has many prospective Minneapolis duplex sellers jumping for joy.
No, settle down. Prices aren’t back to their 2006 levels.
But — interest rates may not only help them get there, but help you sell your duplex be appealing to a buyer right now.
Take, for example, two prospective sellers I’ve been working with since last winter.
They have been in their duplex almost a decade.
In that time, their family grew. Now they now find themselves cramped and longing for a single family house with a yard. In other words, they don’t have to move, but they sure would like it if they could.
Last spring, the Twin Cities duplex market didn’t substantiate the price they needed to still have enough money left for a down payment on a home. This was due largely to interest rates for investor borrowers being above six percent; and at that mark, the property just didn’t make financial sense.
Since then, interest rates have dropped approximately two percent. That doesn’t sound like a lot until you realize one percent in interest is equal to one percent of the amount you owe on your loan; per year. So, if you owe the lender $250,000, one percent of that annually is $2500.
In the case of my duplex sellers, this drop in interest rates means their duplex went from making little, if any, financial sense, to being one of the best deals not yet on the market.
And that will help them finally get the elbow room they so desperately need.
Call me if you’re thinking about selling your Minneapolis duplex. I may be able to give you the same happy news.
said on October 18th, 2012 categorized under: Legislation
Comments Off on Will You Pay Sales Tax On Your Minneapolis Duplex?
The other day a client told me she was worried if she didn’t buy a duplex before the end of the year, she’d have to pay a 3.8 percent “sales tax”.
Of course, she was referring to the provision passed by Congress as part of health care legislation last year.
To be frank, there’s a lot of misinformation around this tax, so let’s clear it up.
If you’re single and earn less than $200,000 a year from all of your revenue streams (including rental income), or married and combined you earn less than $250,000, you’ll never pay this tax.
If you sell your principal residence, you will still receive the benefit of the $250,000 capital gain exclusion if you’re single, and $500,000 if you’re a married couple.
If you make more than that on your residence, you would be taxed on any gain above the excluded amounts, but only if you earn more than the described income thresholds.
If you’re one of the lucky few who earns more than $200,000-$250,000, your investment income from rents could be subject to the tax. However, the rental income you report is net rental income. In other words, you’d only be taxed on the income you report to the IRS, which is calculated after you pay expenses, and take deductions for depreciation and interest.
In other words, if you qualify, it really shouldn’t be that much on a small multi-family property.
It’s also important to note this tax applies to all investment income, not just real estate.
If you’re a Minneapolis duplex buyer or seller, however, in all probability, you don’t need to worry about it.
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If you’ve been waiting for Minneapolis and St Paul duplex values to skyrocket before putting yours on the market, your time may have arrived.
After all, the average list price a duplex left the market at the week ending October 6, 2012 was $195,511.
During the same week in 2011 the average sold price was $94,722.
Granted, comparing two very small windows of time to one another doesn’t a market shift make, but the data is telling.
Last year, there were just 9 duplex owners who accepted purchase agreements on their properties. Only one third had equity in their properties.
This year, 28 Minneapolis duplex sellers accepted offers. Nearly half (46.4 percent) were traditional sellers who will take checks away from closing.
New inventory continued to be down slightly, with 29 new listings coming on during the week, compared with last year’s 30. However, 44.8 percent of this year’s belong to traditional sellers. Just 36.6 percent did last year.
The single family home market, on the other hand, saw 2.8 percent more listings this year than last, pending sales leap 33.5 percent, with overall inventory down 28.6 percent.
September saw the median single family home price rise 12.6 percent to $174,500, with sellers receiving 94.8 percent of their asking price.
We’re still a long way from the values of 2005 duplexes, but we seem to be well on our way to a more optimistic future.
Comments Off on Minneapolis Duplex Sales Headed For The Super Bowl
Like the Vikings, the Minneapolis duplex market seems to have risen from the ashes since last season.
Take, for example, the total market domination by traditional sellers. You remember those folks. They’re the ones who actually have equity in their duplexes.
Of the actively listed multifamily properties that pended the week ending September 29, 63.2 percent were being sold by traditional sellers. Last year, just 38 percent of the duplex owners weren’t banks and didn’t need to consult with one to get permission to sell.
While new inventory for the week was down 13.5 percent from last year, 62.5 percent of the duplexes that went up for sale are owned by equity sellers. Last year, less than half of the sellers (48.7 percent) had equity in their property.
Traditional sellers combined with reduced inventory are just as effective as Percy Harvin in creating value. To that end, this year’s highest listed duplex that left the market as a sale was located in Uptown and last listed at $529,900. Last year’s highest seller was a St Paul listing that closed at a price of $450,000.
This year’s lowest list price for a pending sale was $45,000. It sounds cheap until compated to the lowest sold price for the week last year of $30,000.
In September, the single family home market saw median prices increas 12.3 percent to $174,000.
The week saw new listings increase 6.2 percent, with pending sales up 15.5 percent.
It is premature to celebrate, however. Let’s give it some time and see if the Vikings, and the housing market are for real.
Comments Off on Why A Minneapolis Duplex Short Sale Takes So Long
By now, you’ve probably heard all the horror stories about buying or selling a Minneapolis duplex that’s a short sale.
Most likely, all of those stories included references to the extreme length of time they take to close.
And if you’re anything like me, you’ve wondered what the banks are doing that’s taking so long.
Last week, I received an excellent outline that answered exactly that question. It came from the local firm, Christensen Law, which negotiates short sales on behalf of duplex sellers.
I thought it was worth sharing.
Step 1: Weeks 1 – 4 – Lender Package Review
The lender reviews a package submitted to them by the person representing the seller. This package includes the purchase agreement, financial documentation explaining the seller’s financial situation, and a hardship letter from the seller, stating why they are no longer able to own the property.
Step 2: Weeks 4-5 – Package Assigned to a Negotiator
The file is assigned to a negotiator after the lender has reviewed all the documents. The file then goes through another level of review.
Step 3: Weeks 6-8 – Broker’s Price Opinion (BPO) Ordered
The listing agent is contacted by the lender to arrange a time for someone representing the bank to gain access to the duplex in order to give them a price opinion. It usually takes 5-10 days for the BPO to be returned to the lender.
Step 4: Weeks 9-10 – Lender Review of BPO
While the lender is reviewing the BPO, they may request more documentation from the seller, or create a counteroffer.
Step 5: Weeks 11 – 16 – Final Approval
The file is submitted to the investor for final approval. The investor, in this instance, is the party who the seller actually owes the money to. For example, while the seller may be making payments to Wells Fargo, they may simply be collecting the money on behalf of Fannie Mae. When approval is obtained, the title company prepares the final HUD statement, which is submitted to the lender for approval. Once approval is received, the title company schedules the closing.
Comments Off on Why President Obama Loves Your Minneapolis Duplex
The White House cares about your southwest Minneapolis duplex.
OK, so maybe not your duplex, specifically. But they do seem to care about public transportation in Uptown, St Louis Park, Hopkins and Eden Prairie.
Earlier in the week the Obama administrations stated they would expedite the permit-approval process for the 15-mile Southwest Light Rail transit live slated to run between Minneapolis and Eden Prairie.
The expedition is part of the new “We Can’t Wait” program, which aims to expedite infrastructure approvals by processing them more efficiently.
The project’s proposed route connects with the existing Hiawatha and University lines in downtown Minneapolis, and run in a southwest direction toward Eden Prairie between Cedar Lake and Lake of the Isles, along Excelsior Blvd to 17th Avenue in Hopkins, where it will turn south toward a southwest station just west of the Highway 212 and 494 junction.
This should prove to be a boon to property owners along the line, as tenants and home buyers increasingly seek green neighborhoods and efficiencies in fuel consumption expenses.