Archive for the 'Selling A Duplex' Category

Comments Off on How To Keep Tenants While You Think About Selling Your Duplex

Decision to sell a duplexSometimes duplex owners who are thinking about selling their properties are not only on the fence about selling, but also what to do with tenants who are either under month-to-month leases, or are about to expire.

After all, if both units are leased, doesn’t that eliminate the possibility of an owner occupant moving in?

Yes and no.

First, even if a prospective duplex seller hasn’t made her mind up as to whether or not to move forward, I suggest modifying the lease she uses to include language that in the event she chooses to sell, and a buyer wishes to occupy that tenant’s unit, the tenant will agree to do so given appropriate notice.

Of course, if you’re in a rent control neighborhood or city where such clauses are prohibited, or tenants must be compensated for relocation, you must abide by those standards.

A second option many duplex owners who are considering selling choose is to simply let the tenants continue renting on a month-to-month basis. Some owners feel this puts them in a precarious position; giving the tenant an opportunity to leave he might not otherwise seize. However, if the current happens to be at or below market rate, the fact is most tenants don’t seem too excited about the prospect of moving.

Both options are worth consideration, if you simply need more time when deciding to sell your duplex.

Comments Off on Why Rising Duplex Prices May Be A Bad Thing For Procrastinating Sellers

rising duplex pricesWith recent news of rising duplex prices, many prospective sellers are holding off, thinking that with just a little more time, the market will catch up with 2006 prices.

Sounds perfectly reasonable. And yet, according to a recent report from Radar Logic, rising prices may ultimately attract more sellers, which will result in a slower or reduced rate of price growth.

As of April, the 25 metropolitan area the analytics firm tracks saw an average composite price of $205.46 per square foot, which is up 13.1 percent  year-over-year, and represents a 23.7 percent  gain from January 2012.

These gains are a result of several factors. First, “motivated sales”, which Radar Logic defines as REO or bank-owned properties, have gone from a 26 percent share of the market, to just 11 percent. In a normal market, foreclosures are just 5 percent of the market.

There are some who think rising prices may incite Fannie Mae, Freddie Mac and other lenders to release some of their shadow inventory into the market, and/or start moving many delinquent borrowers through the foreclosure pipeline at a more rapid pace.

It is estimated that Fannie and Freddie alone have an estimated 1.7 million delinquent properties on their books nationally.

Rising prices and interest rates will also deter real estate investors looking for high rates of return. As they have been responsible for as much as one-third of the market in recent years, their withdrawal from it could cause prices to decline. What’s more, many of these investors bought properties with the intention of selling when the market improved. Rising prices may move them to do just that.

Finally, traditional sellers who have been sitting on the fence may decide to sell. This too will increase the amount of inventory for buyers to choose from, creating more competition among sellers.

For now, it remains a great time to sell; before the competition heats up.

Does Size Matter In Duplex Value?

said on April 15th, 2013 categorized under: Selling A Duplex

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duplex sizeWhen pricing a duplex to sell, the biggest mistake many Realtors who don’t specialize make is calculating value based on the number of finished square feet in the property.

That makes sense with a single family home. After all, if two properties have exactly the same number of bedrooms, bathrooms and garage stalls and are in similar condition, isn’t a bigger house worth more than a smaller one?

What about a duplex?

Well, if you have a big duplex with two one bedroom units in it that rent for $800 a month each, and a total of $19,200 a year, is it worth more than a slightly smaller duplex where each unit rents for $900 a month and a total of $21,600?

No.

Finished square feet only impact duplex value in two circumstances. First, if the size of the  either results in the owner being able to charge more rent, then the property generates more revenue and is therefore, worth more.

In the second case, if the duplex would appeal to an owner occupant and therefore, a larger sized unit might be perceived as more desirable.

In neither case, however, should the duplex’s value be determined the number of finished square feet by the average cost per square foot comparable properties in the area have sold for.

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.

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.

Let Your Duplex Speak For Itself

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

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duplexes sell themselvesIf you’re selling your Minneapolis duplex and a buyer’s agent wants to show it to a client, should you be there?

No.

Buyers want the opportunity to objectively look at your duplex; to decide whether it fits their wants, goals and needs in a property, and if not, what they could do to make it so.

While it may seem important to share the property’s history, attributes and benefits with a prospective buyer, doing so when they are in the initial stages of considering your duplex may be perceived as you trying to “sell” them something they don’t want.

Nobody likes to be pressured to buy something, or to feel so smothered we can’t think for ourselves.

Buyers chose a property to buy based on its value compared to other duplexes for sale,  and how well it suits their needs as a place to live and/or an investment.

Telling them the property’s’ history won’t change those facts, but may, in the end, leave the buyer feeling so smothered they chose to buy somewhere else.

And if you’re concerned about somebody stealing something, it is a good idea to remove all valuables from the property before it goes on the market. Most Realtors keep tabs on their buyers, but simple preventative measures can keep the worst from happening.

Home and Duplex Values Rise

said on February 6th, 2013 categorized under: Selling A Duplex

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Avereage List Price for Minneapolis Duplexes for Sale

Avereage List Price for Minneapolis Duplexes for Sale

You might have heard the news: according to CoreLogic, which provides residential real estate data, released its December report yesterday.

Nationally, home prices, including distressed sales, increased 8.3 percent over December 2011.

That’s the biggest increase since May 2006, and marks 10 consecutive months of increases in national home prices.

If you take distressed sales out of those number, prices were still up 7.5 percent. Traditional home and duplex sellers even saw prices rise on average .9 percent between November and December in 2012.

Phoenix lead the nation with a 22.9 percent spike in values. Only four states posted home price declines: Delaware, Illinois, New Jersey and Pennsylania.

Minnesota ranked 19th in the nation, experiencing a 6 percent single family price increase when including distressed properties, and a 6.4 percent rise when the bank negotiated sales were eliminated from the calculations.

While duplexes, triplexes and fourplexes aren’t calculated as part of the averages, the Twin Cities actually saw a slight decline in median sales prices, with sales falling as a result of continued inventory shortages.

It continues to be a great time to sell.

Why Is A Duplex Seller Selling?

said on February 1st, 2013 categorized under: Selling A Duplex

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Property and house for sale concept 3d illustrationWhen I have a duplex listed for sale, I am sometimes asked why the owner is selling.

I love to provide answers when people have questions, but that’s one I actually can’t answer.

It isn’t that I don’t know. It’s that the law won’t allow me to.

When a duplex seller signs a listing agreement with a Realtor, that agent has certain fiduciary duties to him or her.

Perhaps the most important one is to act in their best interests at all times.

Disclosing with the public that sellers reason for selling might adversely impact their ability to get the most money they can for their property.

For example, if you called me about a duplex I have listed, and I told you they were getting a divorce, would you offer them full price?

Most likely, you would think they’d take less, just to get out of a difficult emotional situation.

And in that instance, I would have cost my seller money.

Duplex Sales: There Are Simply Too Few To Sell

said on January 28th, 2013 categorized under: Selling A Duplex

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Minneapolis Duplex Inventory Near 10 Year Low

Minneapolis Duplex Inventory Near 10 Year Low

According to a report issued today by the National Association of Realtors (NAR), pending home and duplex sales declined in December, but have stayed above levels from the year before for 20 consecutive months.

So if sales are up, why did fewer homes and duplexes sell in December than had in November?

Because there’s no inventory on the shelves.

According to Lawrence Yun, NAR’s chief economist, “The  supply limitation appears to be the main factor holding back contract signings in the last month.”

He added that shortages of available inventory are hampering sales in some areas, adding that, “We expect a seasonal rise of inventory in the spring to help, but a seller’s market may be developing.”

Minneapolis duplex owners are already in a sellers market.

When looking at the number of active listings on the Minneapolis and St Paul real estate market by month and by year over the last decade, it’s clear the number of duplexes available for people to purchase hasn’t been this low since June of 2003.

In fact, it appears we’re down 75 percent in inventory fromthe market’s peak in June of 2007.

Again, it’s a great time to sell a Minneapolis duplex!

Will Duplex Prices Rise When Interest Rates Do?

said on January 17th, 2013 categorized under: Selling A Duplex

Comments Off on Will Duplex Prices Rise When Interest Rates Do?

3D arrow on a staircaseOne thing many prospective Minneapolis duplex owners don’t consider when thinking about selling their duplex is the impact interest rates could have on the value of their property.

Right now, many are thinking they’ll wait to sell until the market is even better. For some, that is defined as 2005 values.

The problem with that rationale is right now, mortgage interest rates for both duplex owner occupants and investors are at historic lows. Many are getting 30 year fixed rates in the range of 3.5-4 percent.

In the single family home market, conventional wisdom states that a one percent rise in interest rates impacts a buyer’s ability to borrow by $10,000. So, if the rates rise by one percent, a buyer who may have qualified to purchase a $200,000 duplex can now only afford to pay $190,000.

This impact, in my opinion, is even greater on duplex buyers.

The reason is a one percent rise in interest rates on a $200,000 loan will reduce cash flow on that property by $2000 a year.

That makes many properties less attractive to the buyers in today’s market, because the return on their investment dollar isn’t as great.

With interest rates predicted to remain low through the end of the year, it’s a great time to be both a Minneapolis duplex seller and a duplex buyer!