Archive for March, 2013

Minneapolis Equity Duplex Sellers Take Charge

said on March 29th, 2013 categorized under: Twin Cities Real Est

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equity duplex sellers take chargeWhat a difference one year in the Minneapolis and St Paul duplex market makes.

Last year, in the second week in March, banks still dominated the duplex sales and new listings. This year, they’re in the minority.

For the week ending March 16, 2013, there were just 12 duplex owners who accepted offers on their duplexes, triplexes and four unit apartment buildings. Of these, 67 percent were equity sellers.

It’s important to note that while there appears to be little sales activity, it isn’t due to lower demand. To the contrary. Many are receiving multiple offers as duplex buyers struggle to find investment opportunities in a market with so little inventory.

This is well illustrated by the average list price these 12 properties left the market at: $197,292.

During the same week one year ago, just 42.9 percent of the 14 duplexes that sold belonged to traditional sellers. With banks controlling the majority of those transactions, the average sold price was just $116,236.

Distressed sales also contributed most of the new listings for the week last year, with just 46.7 percent of the 30 new listings coming from equity duplex sellers. This year, on the other hand, traditional sellers contributed 73.9 percent of the 23 new listings; meaning they are once again becoming a dominant force in the market.

While prices haven’t, nor are they likely to reach 2005 levels any time soon, if you’ve been thinking of selling your duplex, buyer demand is strong and prices are better than they’ve been in years.

Where Have All The Duplex Sellers Gone?

said on March 25th, 2013 categorized under: Selling A Duplex

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duplex wowWow. I just did a Minneapolis and St Paul MLS search for duplexes, triplexes and four unit apartment buildings for sale in the metro area that are not sold subject to either bank approval or inspection.

There were just 175.

Talk about a shortage!

Properties are receiving multiple offers (even if they are short sales which will require buyers to wait for months), and unprecedented numbers of showings.

One recent listing of mine received four offers within two hours of being on the market. Another got 6 within a day. Yet another had 36 showings in the first week it was on the market alone!

It’s a great time to sell your Minneapolis or St Paul duplex, I can’t imagine a market like this will come along again any time soon.

Does A Higher Down Payment Change The Name Of A Duplex Loan?

said on March 18th, 2013 categorized under: Financing


duplex financingDoes the amount of your down payment alone determine the type of  financing you use to buy a duplex?

Yes and no.

Traditionally, buyers who intend to owner occupy a duplex and have saved a small down payment use FHA financing.  These loans require a minimum down payment of 3.5 percent and also have a lower minimum credit score threshold.

In exchange for these compromises in lending standards, FHA insures the loan for the lender; at a cost to the borrower.

To qualify for a conventional loan, on the other hand, an owner occupant typically must have at least 20 percent to put down on the purchase, and a higher credit score. As a result of having more “skin in the game” in the form of that higher down payment, the borrower typically isn’t required to carry mortgage insurance.

Over the weekend, I encountered a first time home buyer who had some confusion about this. His belief was that if he put more than 3.5 percent down on an FHA loan– 10 percent, for example, it would become conventional financing.  Where he was confused is that a higher down payment may or may not require him to carry FHA mortgage insurance – but not turn an FHA loan into a conventional loan.

Remember, if you are an owner occupant, you can use FHA financing to purchase a duplex, triplex or fourplex as your principal residence. It’s a great way to to become an investor, and to leverage your money for its highest possible return.

Minneapolis Duplex Buyers Can’t Find A Thing

said on March 12th, 2013 categorized under: Twin Cities Real Est

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Supply And Demand Analysis ConceptThe Minneapolis and St Paul duplex shortage continues.

For the week ending, March 2, 2013, there were 17 new duplex, triplex and four unit buildings newly listed for sale. Of these, nearly 53 percent were offered by traditional sellers.

Last year during the same week, there were 22 new duplex listings. While a drop of five new properties for sale doesn’t seem like much, it’s important to remember that represents a drop of 22.7 percent. Just 41 percent of those new listings were listed by sellers who were not in a distressed situation.

Oddly, of the 16 Minneapolis and St Paul duplex, triplex and fourplex sellers who accepted offers during the week this year, just 31.25 percent were had equity in their investment properties. The balance of the properties sold were either in a negative equity position or bank-owned.

For the week in 2012, just half of the 18 duplex sellers who accepted offers had to consult with a bank before selling.

In the single family home market, on the other hand, there was a slight trend reversal, with new listings increasing .9 percent. Meanwhile, pending sales continued rising; up 12 percent since the same stretch last year. In all, inventory is down 31 percent.

Less competition always means higher prices. In other words, it’s a great time to sell.

Duplex Sellers Look For Ghosts

said on March 11th, 2013 categorized under: Selling A Duplex

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haunted duplexesWhen selling a duplex, owners and the Realtors representing them are required to disclosure to potential buyers any “material facts” which may adversely impact their use and enjoyment of the property.

For example, if the roof leaks on Thursdays, the seller or the duplex is right on the path of a proposed new highway off ramp, the seller and or the agent is required to say something (unless both the buyer and seller agree to waive the requirement to do so).

So are deaths and ghosts material facts?

It depends on where you live.

In Minnesota, for example, sellers are required to disclose the existence of cemeteries or buried human remains on a property. This, of course, would be extremely uncommon in the city.

However, Minnesota duplex sellers are not required to disclose if a murder, suicide or death took place in the property.

In California, on the other hand, duplex are not required to disclose any death that happened more than three years prior, but are required to whether a death has occurred in the last three years if the buyer asks.

As a seller it’s important to know that disclosing a death, murder, suicide or a perceived haunting may increase market time by up to 50 percent and decrease value by as much as 35 percent.

However, in some instances, disclosing the presence of a ghost may enhance the appeal of a property in some buyers eyes.

I personally have been faced with the decision whether or not to disclose a death on a property. Within 24 hours of buying my first investment property, one of the tenants committed suicide. And while I was not required to disclose this information when I sold the property years later, I believed it was the right thing to do.

And the buyer wasn’t bothered a bit. After all, once any duplex or house gets to be a certain age, it’s more likely someon someone died there of natural causes.

There’s simply no one left alive to ask.

Minneapolis Duplex Sellers Take A Snow Day

said on March 5th, 2013 categorized under: Twin Cities Real Est

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minneapolis duplexes for saleIt may be a snow day in the Minneapolis, but whether duplex buyers are looking at properties in snow shoes or arriving via sled dog, they are still buying them as if it’s officially spring.

For the week ending February 23, 2013, there were 26 Minneapolis and St Paul duplex, triplex and fourplex owners who received and accepted purchase agreements. Of these, 53.9 percent were not in distress, and did not need a bank’s permission to sell.

These duplexes left the market at an average final list price of $165,060. Of course, the average sold price will be slightly less, and yet, this still represents a significant year-over-year gain.

During the same week in 2012, there were 22 owners who accepted purchase agreements. Of these, 31.8 percent had equity in their properties. These 22 multifamily properties sold for an average of $129,986.

Sellers weren’t as ambitious, however, and seemed to stay home from the market for the week. Just 19 of them put their duplexes on the market. Of these, 52.6 percent were traditional, equity sellers. This represents a drop of 36.7 percent in the amount of new inventory compared to the same week in 2012. Of those 30 listings, 40 percent were offered by traditional sellers.

The single family home market saw similar enthusiasm from winter buyers, with pending sales for the week increasing 3.1 percent. Home sellers showed similar reluctance to venture out, with the number of new listings for the week down 6.1 percent, dropping the total amount of inventory on the market 30.9 percent from one year ago.

With many Minneapolis and St Paul duplex sellers having to shovel multiple offers off of their properties, it remains a great time to sell.

Why You Should Consult Your GPS For Duplex Escrow

said on March 4th, 2013 categorized under: What Does That Mean?

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duplex in escrowOne of the most confusing terms for first time duplex buyers is the word “escrow”.

There are at least two meanings for the word in real estate, and, oddly, which definition applies seems to depend largley upon where you live.

In California, for example, a duplex is “in escrow” when the buyer and seller have come to terms on a purchase. The seller has a neutral third party (like a title company) hold the deed to the duplex, which will be given to the buyer upon completion of the sale.

Generally speaking, “in escrow” in this case refers to the period of time between an accepted purchase agreement and closing, during which the title company and the lender draft all the required paperwork and verify the title to the property is clean.

In Minnesota, however, “escrow” is a term more often used to refer to a mortgage lender’s requirement that the borrower pay 1/12th of the required property taxes and hazard insurance into an account maintained by the lender. The lender will then pay those fees on behalf of the borrower when they become due.

This process helps protect the lender from loss due to unpaid property taxes or loss due to a catastrophic event.

In other words, if you want to know how to use the word, you need to check a map!