Archive for May, 2014
Comments Off on Duplex Sellers In A Photo Finish
If the Minneapolis and St. Paul duplex markets were a horse race, the first weeks of May in 2013 and 2014 would be neck and neck headed for the wire.
For the week that ended May 10, 18 Twin Cities duplex, triplex and fourplex sellers accepted offers on their properties. While this is one less than a year ago, the average final list price was $265,167. This is up dramatically from last year’s average sold price of $179,619.
This pricing disparity can’t be attributed to the presence of distressed properties, as just this year just 4 properties involved a bank in the negotiations, compared to 5 last year.
If duplex buyers had bet on increased inventory, it looks like it was a long shot. There were 38 new listings for the first full week of May, down one from last year. What’s different, however, is of those 38, 89.5 percent have equity in their properties. Last year, just 35.9 percent of the sellers could say the same.
Meanwhile, the number of New Listings in the single family home market surged ahead of last year by 6.5 percent. Pending sales faced a tougher race, up just .1 percent over last year. The good news for home buyers is overall Inventory increased 3.5 percent. This may provide a few more choices for frustrated shoppers.
Let’s hope the return of spring makes everyone a winner.
Comments Off on Duplex Market Rewriting History
History dictates that when traditional duplex sellers dominate the marketplace, prices go up. And when foreclosures and short sales are plentiful, prices decline.
At least, that’s how it’s been in the past.
The spring Minneapolis and St. Paul duplex market, however, is rewriting history.
For the week ending May 3, 2014, there were 24 Twin Cities duplex, triplex, and fourplex owners who accepted offers on their properties. The vast majority, at 87.5 percent, have equity in their properties and will leave closing with a check in their pocket. And yet, the average final list price on these properties was just $159,569.
During the same week last year, there were 27 small multifamily property owners who accepted offers. Just 51.9 percent did not involve negotiating with a bank in order to sell. However, this was not reflected in the average sales price of $212,104.
Traditional sellers also contributed 87.9 percent of the 33 new listings for the week. Meanwhile, only 61.5 percent of 2013’s new listings for the week belonged to sellers with equity in their properties.
The single family home market saw the number of New Listings for the week increase slightly; up 1.4 percent over last year. Meanwhile, Pending Sales dropped 13.4 percent. The combination of the two helped total Inventory rise 2.6 percent.
For the month of April, the Median Sales Price rose 7.6 percent to $196,425. This may be the result of the persistence of a seller’s market, where home owners are receiving 95.8 percent of their asking price within 89 days of being on the market.
Twin Cities duplex sellers are certainly hoping to see that trend return to duplex prices.
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When selling a duplex, Realtors are often asked to reduce the amount of commission we charge. And while a commission structure is always negotiable, the money you think you may be saving may actually cost you a lot.
When an agent takes a listing, almost half of the percentage she agrees to charge is usually shared with the Realtor and their brokerage who bring a buyer to the table. This commission is advertised on the Multiple Listing Service.
In other words, a reduced commission may result in that payout amount becoming less than what most of the other sellers are offering through their agents. And while that won’t usually be a deal breaker for buyer’s agents, they may choose to show your property after the one with more competitive compensation, or ask their buyers to pay the difference.
Often, in order for you property to remain competitive, your agent may choose to work for less than he’s willing to pay the buyer’s agent; which may mean he’s less likely to negotiate hard for you.
And quite often, he just met you. He agreed for his family to live on less within minutes of meeting a total stranger. This doesn’t speak well of his negotiating skills.
A reduced commission may also result in your Realtor cutting the amount of money he spends on marketing your property. The first place this usually happens is photography.
In today’s technology-driven world, recent National Association of Realtor’s studies show more than 90 percent of all buyers use the Internet to find property.
And the most important way to represent your duplex on the Internet is through photography.
Many discount agents use little more than their cell phone camera to communicate with all these prospective buyers. After all, hiring a professional photographer costs money.
This poor visual representation attracts fewer buyers. And we all know the more people you have who want to buy something, the more valuable it becomes.
Bad photos, also make it hard to create great-looking brochures and ads that entice the other 10 percent of the people in the market to come take a look at your property.
And of course, your Realtor won’t have money to spend on that advertising anyway.
As the saying goes, have you ever tried to save a little and had it end up costing you a lot?
Comments Off on Duplex Sellers Love Spring
Equity Minneapolis and St Paul duplex owners are coming out of hibernation as the spring housing market brings warm rays of rising prices.
During the week ending April 26, there were 35 new listings that came on the market. This is a 25.7 percent increase in new inventory from last year. The vast majority of these, at 80 percent, are being offered for sale by traditional sellers.
One year ago during the same week, traditional sellers were still hibernating. Just 52.2 percent of the 23 new listings at that time came from sellers who had equity in their properties.
There were 26 duplex, triplex and fourplex sellers whose properties were already on the market during the same week. While 80.8 percent of these folks had equity in their property, the average final list price these duplexes left the market at was $194,381.
Last year, there were 28 happy duplex owners who accepted offers. And while just 60.7 percent of these sellers had equity, on average, they sold their properties for $236,535.
The single family market also saw a rise in New Listings, up 25.6 percent over last year. Meanwhile, the number or property owners who accepted offers on their homes decreased 2.4 percent from the total during the last week of April 2013.
In all, there was a .5 percent increase in housing inventory. While microscopic increases in inventory are a good sign, they are not enough to relieve buyer frustration over a lack of available properties to choose from.
This will continue to put upward pressure on prices.
Which should make this spring the best part of every seller’s year.
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According to the most recent report from Black Knight Financial Services’, only one in ten Americans is currently under water with their properties. This is down from one in three in 2010.
That means more people actually have equity in both their homes and investment properties.
The company, which analyzes data for approximately 40 million loans, also noted 55 percent of loans in foreclosure are delinquent by more than two years.
On average, loans are in foreclosure 966 days.
Of all the loans in the U.S., only 5.37 percent are delinquent. This is the lowest number since October, 2007.
In all, the total inventory of foreclosures is down 36.69 percent since this time last year.
For duplex buyers, this is bad news. Fewer foreclosures will mean traditional sellers have fewer discounted properties to compete with, which should result in higher prices.
In other words, if you’re thinking of buying, you’d better act now.
Comments Off on What Is A Duplex Anyway?
Do you know the difference between a duplex and a twin home?
Many people don’t.
A duplex is two residences with a common wall or floor. However, these properties have one property identification number (PID) from the county. They are bought and sold has one piece of real estate.
A twin home is also two residences with a common wall. Unlike a duplex, these units each have their own PID, and can be bought and sold as separate pieces of real estate.
Where this is often most confusing for people is when both sides of a structure that was built with the intention of being a twin home are purchased or owned by the same entity, operated as a duplex, but retain their individual PIDs.
This is actually more common than you think. In fact, the other day I visited with an owner who said she had a duplex for sale. The price she was asking seemed light for a duplex, and when I asked whether it included both sides, she said it did.
When I arrived, however, I quickly established she meant she would sell each unit for that price. This, of course, doubled what she was thought the property was worth, and put it out of step with the marketplace.