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Tax Credit Puts Squeeze On Minneapolis Duplex Sales
October 6th, 2009 categories: Tax Credits, Twin Cities Real Est
The federal $8000 first time home buyer tax credit has been a lot like brushing your teeth.
We all know it’s good for us and the economy. And we all know if we don’t rush to take advantage of it, it, like our teeth, may well be gone.
But like brushing, buyers haven’t taken as much advantage of the tax credit as they should until they absolutely had to.
Realtors have been warning them for months of the coming rush, just as dentists warn of decay. And now, the deadline is near.
This fact is clearly reflected in this week’s Weekly Activity Report from the Minneapolis Area Association of Realtors.
The association reports that pending home sales for the week ending September 26 were up 41 percent from the same week last year.
To make matters worse for procrastinators, there are 20 percent fewer homes on the market to choose from than there were one year ago.
Things are even tougher over in the small multi-family market, where there were 40 percent less new listings for the week.
Of those duplexes that came on the market, 84 percent were listed below $200,000. Meanwhile, traditional sellers contributed 29 percent of the new inventory. This is up slightly from the 21.7 percent share of traditional sellers in the market in 2008.
Pended duplex sales were up as well, with 40 percent more receiving purchase agreements in the week than they had in the same strecth one year ago. While the average off market price was down 9.7 percent from last year’s figure, the properties that left the market did so after just 64.6 days. This is 12.4 fewer days than for the week in 2008.
Both years saw banks involved in the negotiations for about 84-85 percent of the transactions.
As we near the end of the tax credit, it looks like we’re all going to be squeezing the tube of toothpaste from every angle.
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How Tenants Can Keep You From Selling Your Minneapolis Duplex
October 5th, 2009 categories: Selling A Duplex
I experienced a bit of frustration this weekend as a tenant stopped me from showing a duplex to a buyer.
The tenant was out of town and didn’t feel comfortable, even if the listing agent was present, letting anyone into her unit. As a result, the listing agent, my buyer and myself had to rearrange all of our schedules to accommodate her return.
Trouble is, the law said we didn’t have to.
While I’ve said it before, it bears repeating. In the state of Minnesota, tenants do not have the right to 24 hour notice if a landlord needs to enter their unit for business purposes. The law says “reasonable attempt to notify”. Nowhere in state law does it define reasonable attempt.
Of course, this doesn’t mean a landlord should be inconsiderate. Not only does notice keep tenants happy, it gives them the opportunity to tidy up their unit, which ultimately helps it show better.
Many tenants, however, not understanding the process, use this as an attempt to thwart any sale of the property. It’s important, before going on the market, to explain to them that all of the protections afforded them in their lease will remain in effect upon and after the sale.
Fortunately for this seller, it is not a pre-foreclosure situation. Had it been, he would have lost three valuable days on the market, which could have cost him considerably.
Worse yet, had my buyer been less interested, he might never come back.
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What Should You Repair First In Your New Minneapolis Duplex?
September 21st, 2009 categories: Buying A Duplex
If you buy and intend to owner occupy a foreclosed Minneapolis duplex, triplex or fourplex, it’s likely that it need some work.
So which unit should you rehab first?
While the answer may seem obvious, new landlords don’t see something standing right in front of them.
You should repair and improve the rental unit(s) first. Especially now that it’s almost October. In Minnesota.
Why?
Even though it takes only one or two days, people don’t like to move in winter. More specifically, tenants don’t like to move when the thermometer is in single digits.
Something about getting stuck in the snow, slipping on ice, tracking into the house…
And if your rental unit is empty?
You spend the whole winter paying one hundred percent of the mortgage yourself.
If that was your goal, wouldn’t you simply have purchased a single family home?
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Can Minneapolis Duplex Market Survive Without The Tax Credit?
September 18th, 2009 categories: Legislation
As the sand in the hourglass of the $8000 first time home buyer tax credit begins to run out, an article in the New York Times this week reported there are doubts that the housing market can function without it.
The Times article estimates that as many as 40 percent of all home buyers this year qualify for the credit. In fact, the National Association of Realtors estimates the credit is responsible for 350,000 in sales this year alone. Moody’s Economy.com, however, is still more optimistic, putting the figure at 400,000.
Evidence to support this may be found in the fact that mortgage applications for the week ending September 3, showed the largest gain since early April.
Home builders and the National Association of Realtors want Congress to extend the tax credit through at least next summer. The groups are suggesting the program be expanded to $15,000, and the credit granted to all buyers.
Republican Senator Johnny Isakson of Georgia, the sponsor of the original Senate bill, is working on just that. Isakson is submitting a new bill that would give a maximum $15,000 tax credit to any buyer who stays in the home for at least two years.
A former Realtor, Isakson accurately states that “The problem now is not first-time buyers, it’s the move-up market…”
Don’t hold out for the $15,000 credit, however. Washington, being the contentious place it is, is sure to hotly debate any additional stimulus package. If a new housing tax credit is passed at all, expect it to be a watered down version of Isakson’s original idea.
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Twin Cities Duplex Sales Go Back To School
September 8th, 2009 categories: Twin Cities Real Est
While it’s been a while since I went back to school, somehow coming in to the office today also felt like summer’s end.
Except, well, in this case, there weren’t any new pencils, crayons or erasers waiting for me.
There was, however, the Weekly Market Activity Report from MAAR, which, unfortunately, felt like a surprise essay question on the first day back.
For the week ending August 29, 2009, the number of new single family listings was higher than at this time last year. In fact, there were 3.3 percent more of them.
Suggesting something of a shift, there was also a 20.3 percent increase of traditional home sellers among the new inventory.
When we make our way over to the small multi-family classroom, however, things looked a little too familiar. While the number of new duplex listings was down 28 percent, pending sales were as well, dropping 12 percent from the same stretch last year.
The good news, however, is of this year’s new inventory, 58.8 percent was bank owned, compared to last year’s 74.6 percent.
Pended sales for the week consisted of 88.9 percent lender-mediated inventory. While this is down from 2008’s 90.2 percent, it is still disproportionately high.
Of course, lender mediation seems to put downward pressure on prices as well. While the average off market multifamily price for the last week of August in 2008 was $98,571, this summer’s end posted a paltry $79,270.
Let’s hope getting back into a routine helps us all.
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Minneapolis Duplex Markets Like Night And Day
September 3rd, 2009 categories: Buying A Duplex, Twin Cities Real Est
One of the most difficult concepts for Minneapolis buyers to understand is that right now, there are really two duplex markets. And seeing the differences in them is like looking at property in the moonlight vs sunlight.
The first duplex market the one we’ve all heard about, consisting of foreclosures and short sales. The second, on the other hand, is comprised of traditional sellers trying to market their properties without the involvement of a bank in the negotiations.
Believe it or not, who’s selling the properties makes a radical difference as to their value.
A chart recently released by the Minneapolis Area Association of Realtors of Foreclosures and Short Sales in the Twin Cities Housing Market illustrates exactly this point.
Let’s start with one of the neighborhoods I’m often asked about; Calhoun/Isles. Close to the lakes and within walking distance of countless restaurants and activities downtown, many people find it a desirable place to live. And in today’s market, the perception is, a foreclosure in the neighborhood can be a tremendous deal.
Statistics provided by MAR seem to support this. The average sales price for a foreclosure in the Calhoun/Isles neighborhood in the second quarter of 2009 was $129,250. Compare this to an average sales price of $287,000 for properties sold by traditional sellers. That’s a difference of $157,750!
So who would want to buy anything but a foreclosure? Or at least, so the thinking goes.
You’d be surprised.
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Minneapolis Duplex Market Puts On Weight
September 1st, 2009 categories: Twin Cities Real Est
Today’s real estate market is kind of like my favorite pair of jeans.
You probably have a pair too. The kind you wear regularly; because they’re comfortable, easy. They always feel good.
But if you’re anything like me, there are times they aren’t. The waistband is suddenly tighter, somehow slightly uncomfortable. And I can’t remember where I overate, stopped exercising or fell off the healthy wagon, but I know, without question, things have changed.
The belt of the Twin Cities real estate market is getting a little tighter too. With active listings down 21.2 percent from last year, buyer’s are finding it harder to breathe. It’s not their imaginations. The supply of inventory has dropped from 10.5 months to 7.2 months. A balanced market, where everything’s even between buyer and seller, occurs at 5 months.
And that number may not be far off. The 1,012 signed purchase agreements for the week ending August 22, 2009, is a 23.7 percent gain over the same week last year. In fact, that week represents the 59th week of the last 60 with a year-over-year increase.
This duplex market seems to be packing on the pounds as well. There was a 26 percent increase in the number of pended sales from the same stretch last year, resulting in an average off-market price that was a whopping $20,012 higher than last year’s.
Of the 2009 properties that received offers, 26 percent were owned or negotiated by real people, as opposed to lending institutions. Last year for the same week, banks sat at the table on 96 percent of the transactions.
The amount of new inventory that came on the small multifamily market may result in us splitting our pants altogether in the not too distant future. The number of new listings for the week was down 43 percent over last year. Meanwhile, the percentage of those new listings that will be lender mediated held relatively steady; consisting of 66 percent of the new inventory as opposed to last year’s 69 percent.
While all of this is wonderful news for sellers, it should serve as a warning to buyers too. Start getting your excercise by running around looking for duplexes; before you can’t get your pants on at all.
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Why Buying A FSBO Duplex Costs You Money
August 31st, 2009 categories: Buying A Duplex
From time to time I have clients ask about purchasing a duplex that’s For Sale By Owner (FSBO).
This makes sense. After all, can’t they save a lot of money?
Honestly?
No. In fact, it may even cost them money.
Most FSBO’s want to save the commission they would pay to the broker of an agent who represents a buyer. They would rather put that money in their pocket.
So, instead of a buyer getting professional advice and representation from a Realtor, he pays the equivalent of the commission to the seller, yet receive none of the benefits of the agent’s counsel.
Let’s say a duplex is listed on the Multiple Listing Service for $200,ooo. In order to be featured there, the listing agent’s broker agrees to pay a portion of the sales price to the broker of the agent whose client buys the property.
While commissions vary, in the Twin Cities they seem to average about 2.7 percent. On a $200,000 duplex, this represents $5400 for the buyer’s agent’s company.
Won’t the seller pass all that money he’s saving on to the buyer? Probably not. After all, if he was willing to part with it wouldn’t it have been wise to expose his property to a much larger pool of buyers on the MLS?
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How Can That Minneapolis Duplex Be Sold And Be On The MLS?
August 27th, 2009 categories: Buying A Duplex
One of the most confusing things for many buyers looking for a Minneapolis duplex is how a property can appear to be available on whatever web site they’re using to search the Multiple Listing Service (MLS), yet when they ask me to set up a showing, I tell them it’s sold.
How can a duplex still be “for sale” but be sold?
Well, it comes down to where the buyer and seller are in the process of negotiating an offer.
In today’s market, there are two types of sellers; an individual or corporation who may sell the duplex without consulting an outside party, and a short sale, where the seller must also come to terms with the bank that holds their mortgage.
Regardless of the type of seller, when a buyer submits an offer on a property, she does so with certain contingencies.
For example, a buyer will most likely make the purchase contingent on her ability to get a loan. If she can’t, she may cancel her purchase.
Thanks to sellers requiring buyers to provide proof they can financially qualify to buy the property by submitting a pre-approval letter with their offer, most buyers are able to get a loan and the transactions goes forward.
However, a buyer may make the purchase contingent on a home inspection. During a limited window of time, she can hire a home inspector to come in and check things like the furnace, the roof, water pressure and electrical circuits, as well as ask to review copies of the leases.
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Minneapolis Duplex Sales Go To The Movies
August 25th, 2009 categories: Twin Cities Real Est
Remember the movie The Incredible Shrinking Woman?
After being exposed to a mix of household chemicals, the lead character, played by Lily Tomlin, inexplicably begins to shrink. This, of course, baffles everyone involved.
Kind of like the Twin Cities housing market.
Amid reports of a glut of foreclosures on the horizon, and an uptick in foreclosure notices, the Minneapolis Area Association of Realtor’s Weekly Market Activity Report notes shrinkage.
For the week ending August 15, there were 25,765 active listings on the MLS; the least since 2005.
There were 1,630 new listings for the week; the fewest since 2002.
And, there were 1,026 signed purchase agreements; the most since 2005.
Over in the duplex and small multifamily market, new listings were down 42 percent from 2008. The percentage of those new listings that will involve a lender in the negotiations lost an inch as well, dropping 1.5 percent year over year.
Unfortunately, pending sales lost a little altitude also; experiencing a 35 percent decline week over week. While I can’t prove it statistically, I believe this may be a result of a lack of inventory for owner occupants to choose from.
While the average off market price for the week was a healthier $112,620, it still trails last years average sales price for the week which was $133,130.
The good news is the percentage of bank owned or lender mediated properties that left the market appears to be stabilizing; up just 1.7 percent over 2008.
We’ll hope for a growth spurt next week.
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