Archive for the 'Selling A Duplex' Category

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Minneapolis Duplex ValueIs the Realtor who tells you the highest price for your duplex the best agent for the job of selling it?

When it comes to getting a listing, some Realtors will tell you what you want to hear. They’s say your property is worth thousands of dollars more than the other agents, just to get the listing.

Then, when it sits on the market month after month, they will ask you for a price reduction. And by that time, the biggest wave of qualified buyers who are already in the market looking for property will have passed.

When it comes to selling your duplex, it’s important to remember Realtors do not determine the value of your property; the market does. A Realtor’s job is to help you interpret market data in order to price your duplex competitively.

That price will not be based on what you need or would like to have in your bank account after the sale is closed. It is based on comparable properties in your area that have recently sold.

Incidentally, these are the same sales an appraiser will use to substantiate or refute value when your buyer asks for a loan.

In other words, you and your Realtor are going to have to prove, scientifically, the property is worth what you think it is. And the only way to substantiate that is with data.

 

 

 

Thinking About Selling? Start Training Now

said on November 17th, 2014 categorized under: Selling A Duplex

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Training in the parkWith news that the real estate market recovering, you may be considering selling your Minneapolis duplex in the spring.

And because you’re not the only one who’s heard the news, you’re likely facing a lot of competition. That’s because there are a whole lot of duplex owners who’ve been waiting to sell when the market got better.

In other words, you’re probably going to have competition.

So what can you do to make sure your duplex stands out and wins?

Of course, the most obvious answer would be to sell now. Fueled by a drop in interest rates, there are a lot of buyers currently in the marketplace who are frustrated by a lack of quality inventory.

If there’s absolutely no way for you to achieve that, however, then you should remember the spring housing market (in years when it isn’t 50 degrees below zero) starts the week after the Super Bowl.

 

By the time the grass is showing through the snow, everyone else will be ready to sell too.

So what can you do to get an edge now?

  • Freshen up paint throughout the duplex.
  • Purge the basement of any belongings either left behind by tenants or that you don’t need on a regular basis.
  • If you can, increase rent where possible.
  • If you renew any leases, be sure to include a clause that allows an owner occupant to take possession of a unit within 60 days of closing. This will ensure you don’t eliminate owner occupants from your pool of potential buyers.
  • If you have any open permits with the city, get them closed.
  • If it’s required in your community, get your Truth In Sale of Housing report completed. The inspector may find items that are required repairs, and your property will fare better if you’ve completed those items before it hits the market.
  • Of course, it’s virtually impossible to do anything with the landscaping at this time of year, but you can make sure all walkways and the driveway are free of ice and snow.

And finally, give me a call for an opinion on what else you may be able to do in order to maximize the value of your duplex.

6 Great Reasons To Sell Your Minneapolis Duplex Now

said on November 3rd, 2014 categorized under: Selling A Duplex

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snowChances are if you’re a Minneapolis or St Paul duplex owner who’s been wanting to sell once the market rebounded, recent good news has you thinking about doing just that.

And odds are if you’re like almost every duplex and homeowner I’ve ever met, you’re thinking about waiting until spring.

That’s a problem.

After all, if everyone’s thinking about it, won’t you have a lot of competition?

Right now, there’s little to none.

Last year, there were 128 new duplex, triplex and fourplex listings that came on the market in the month of October.

This year, there were just 91. That’s a 29 percent decline in new listings.

Meanwhile, falling interest rates once again have inspired many buyers to jump back in the market. Once again, they’re doing so and finding very little to buy.

There are a number of advantages to selling your duplex in the fall. The biggest, especially this year, are:

  1. Less Competition - with the number of active listings on the market dwindling, your property will stand out to buyers vs. being lost in the crowd.
  2. Buyers Are Serious - Think about it. If you’re out looking for property in the fall and winter, would it be fair to say you’re very determined to buy?
  3. Tax Advantages of Buying At Year’s End - Even if an investor closes on a duplex purchase on December 31, he or she may depreciate it for the entire year. If a buyer is looking for strategies to reduce tax obligations, real estate investment is one of her options.
  4. Less Competition May Mean Higher Prices - If there are 100 buyers looking for a great duplex, and only one on the market, wouldn’t those buyers do everything they could to secure it? Compare this to the spring and summer months, when buyers are lulled into a bit of complacency. After all, they believe another one will come along.
  5. If You’re Doing A 1031 Exchange, You’ll Have More To Choose From - time it right and you’ll close in the winter market, but be looking for your replacement property in the spring market.
  6. Properties Look Better During The Holidays - With the holidays being a time for gathering family and friends, tenants are more likely pick up and decorate. This creates a more favorable impression for buyers.

If you’re thinking of selling, please reach out to me. Not only do I have a long list of buyers waiting for your property to appear on the market, odds are so do a lot of other Realtors.

 

Minneapolis Buyers Urgently Need Duplexes!

said on September 15th, 2014 categorized under: Selling A Duplex

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URGENTIf you’re even kinda sorta thinking about selling your Minneapolis or St Paul duplex, I sure could use your help.

I currently have two sets of buyers facing rapidly approaching deadlines to buy a duplex.

The first, David and Gale, are empty nesters who are downsizing from the family home. They are looking for something with at least one three bedroom unit, or a two bedroom unit and either a mother-in-law apartment (non-conforming is ok) or a space they could finish. She works from home, and needs a space to set up shop.

They are looking anywhere from the western suburbs to Cathedral Hill. As they’ve had a more suburban lifestyle due to children, they are now seeking a more walkable location. They are not opposed to some work, but would prefer a property that’s had essential maintenance done.

While like everyone they would prefer to spend less, for the right property they’re willing to go to the mid $400′s. And yes, we’ve seen everything currently on the market.

My second buyer is a seasoned investor who is selling a portion of his portfolio in order to own properties a little closer to home. Home is the south metro, so anything from the Mississippi River to St. Louis Park will do. In the next six weeks he needs to find between four and eight replacement duplexes, triplexes or apartment buildings to do a 1031 exchange into.

You don’t have to be either completely ready or decided to sell. We can do a “One Time Showing Contract”, which means you’d sell if a specific individual wanted to buy your property at a pre-determined price. If that doesn’t happen, life goes on, just as it did before.

Call or email me at the number at the top right of the page. It could be the easiest property sale you’ve ever made!

Duplex Sellers Revist The Past

said on July 28th, 2014 categorized under: Selling A Duplex

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HistoryI’ve recently had to blow the dust off a conversation I used to have with Minneapolis and St Paul duplex sellers long ago.

The topic? Capital gains tax and depreciation recapture.

It’s a conversation I haven’t had since the market crashed in 2007.

Duplex owners, even those who owner occupy, must treat the rental portions of their properties like a business. As such, that portion of the building may be subject to taxes when the property is sold.

Is there a way around this?

Yes. Sellers may choose to do what’s known as a 1031 or Starker Exchange.

This allows you to trade the proceeds of your sale into another property. This may be another multifamily property, or it could also be something like farmland, or a single family rental property anywhere in the country.

Many people understand the principle of the exchange, but make the mistake of putting the proceeds of the sale in their bank account with the intention of buying something else with that money.

Unfortunately, doing an exchange that way is a taxable event.

In order to conform with the IRS’s guidelines, the money from the sale of your rental property must be placed in the hands of a qualified intermediary. That entity holds the money, then releases it to the title company where you close on the sale of your replacement property.

As you go through the process of preparing to put your duplex on the market, it’s as important to have a conversation with your tax professional as it is to have your leases in order.

Not doing so could cost you a lot of money.

 

Why Discount Realtors Cost You Money

said on May 12th, 2014 categorized under: Selling A Duplex

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save money reminder noteWhen 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?

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Can you afford it?By now, everybody knows it’s a great time to buy or sell a duplex.

That’s because interest rates are low and rents are high.

But what happens if interest rates rise even 1 percent, as they have over the last year?

Rates would still be very good. However, it’s important to remember one percent is the equivalent of several thousand dollars a year.

For example, on a $300,000 mortgage, payments would be $3000 higher for every year of the loan.

And for many duplex buyers, that amount is the difference between either an acceptable return on their investment,  or affordability.

For duplex sellers, that means there may be less demand for their properties; for no other reason than people can no longer afford it.

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Small duplex and cash on white background. Isolated 3D imageThis morning, a duplex seller shared with me the “comps” another Realtor had given him for his duplex.

“Comps” are the comparable properties that have sold in the area in the last few months, which help establish the market value of the property.

In his cover letter, the Realtor suggested the seller compare the amount of finished square feet in each property to his own.

And in that note, he revealed how very little he knows about duplexes.

Duplexes are priced a couple of different ways. There are different methods because there are different kinds of duplexes.

Many duplexes always have been and always will be completely occupied by tenants. As such, their worth is dictated almost entirely by the amount of rent they generate every year, their expenses, and the remaining cash flow.

Other duplexes are one hundred percent owner occupied. Since the owner doesn’t usually pay rent, and often makes improvements to the property beyond the scope of what most landlords provide tenants, pricing is a bit more difficult and requires more art than science.

To determine the value of these properties, a Realtor will use a combined approach that includes both the amount of rent a tenant pays, and the ballpark value of single family homes that are comparable to the space in the property the owner occupies.

Neither of these valuation methods use the amount of square feet in a unit; except for how it contributes to the amount of rent the property generates.

In the case of my seller, calculating his duplex’s value according to the amount of square feet actually decreased his value by tens of thousands of dollars!

This again underscores the importance of hiring a Realtor who specializes in duplexes when it’s time to sell. Not doing so may cost you a fortune.

Some Realtors Are Liars

said on April 14th, 2014 categorized under: Selling A Duplex

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Young woman making a lie with long noseIf you want me to tell you what your duplex is worth, I will tell you the truth.

If you want a Realtor to tell you what you wish your duplex was worth, it isn’t me.

But there are plenty of agents who will.

The market determines the value of your duplex. Not you. Not me.

It isn’t worth the total of what you have in to it. Or what your friends tell you that you should be able to get based on what they’ve seen for sale in the neighborhood.

Single family home sales have little to nothing to do with duplex values.

And any Realtor who goes along with your hopes or friends opinions of value without market data to back it up is lying to you.

In the real estate industry, what they’re doing is called “buying a listing”.  They’re telling you what you want to hear, knowing full well that at some point, you will finally realize through either a lack of showings or a sale that the property is simply overpriced.

And they hope at that point, you’ll see the light and agree to lower your price.

There wouldn’t be anything wrong with this if it weren’t for statistics from the National Association of Realtors that sellers who price their properties correctly from the start ultimately net more money thanks to immediate influx of buyers waiting for inventory to come on the market.

When a property is for sale for an abnormally long period of time, it leads buyers to believe there’s something wrong with it.

And, just like new technology at an electronics store, they will wait until it goes on sale to either look at it or buy it.

Ironically, had that new gadget come on the market near their price range to begin with, they would have looked at it and perhaps, even found a way to pay a little more. This is especially true if it was the only one on the market, with multiple buyers vying for it.

So, in the end, the Realtor who agreed to your price not only lacked integrity, but ultimately cost you money.

And wasn’t money the reason you listed with him in the first place?

Does Your Realtor Look Like Pinnochio?

said on March 6th, 2014 categorized under: Selling A Duplex

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realtor lies about price of duplexIf you’ve ever asked your Realtor to list your duplex for more than the market says it’s worth, you’ve asked her to lie.

We all have a price we’d like to get for our properties. And, as it’s human nature, most of the time that’s a number that’s much higher than other people would like to pay for it.

And what someone is willing to pay for it is what it’s actually worth; not how much we’d like to have for it, how much the neighbors say it’s worth, or how much you have in to the property.

Even if you happened to find a buyer who agrees the value of your duplex is much higher than data suggests, unless that person can pay cash, the property must appraise for the agreed upon value. An appraiser is hired by the bank to give them an independent, objective opinion of value, which is formulated by comparing your duplex to others in the area sold for.

Sometimes, Realtors will agree to list a property at a higher price just to get the listing. Their hope is somewhere down the line the seller will agree to lower the price so it can sell. In the real estate industry, this is called “buying a listing”.

And while it might make you feel good as a seller, it will not cause your property to sell. In fact, data from the National Association of Realtors indicates properties listed for too much money ultimately sell for less than they would have had they been priced correctly from the start.

Don’t worry. Properties rarely sell for less than what they’re worth. The market recognizes a great deal, and buyers will rush to a duplex they perceive as undervalued. As a result, the price rises to where it should have been all along.