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How The IRS Can Be A Minneapolis Duplex Seller’s Best Friend

August 16th, 2010 categories: Selling A Duplex

I’ve recently met with several prospective duplex home sellers who, facing a slower real estate market, were surprised to find the IRS could save the day.

In each case, the property owners had owner-occupied their duplexes at some point in the last five years, ultimately moving out and renting their old unit.

Of course, one of the benefits of owner occupying a duplex is the ability to avoid any capital gains tax on the unit that wasn’t leased; provided the owner lived in the premises two of the last five years.

While I encouraged all of these sellers to consult a qualified tax professional, most reported back by selling now and avoiding capital tax on their half of the duplex, they would be saving thousands of dollars.

This was a bit of a silver lining for them, as it was as if they’d found some of the money they thought they’d lost; in the sofa.

Spoken by Kari Lundin | Discussion: No Comments »

List A Duplex As A Short Sale: Get A Realtor – FREE!

July 19th, 2010 categories: Short Sales/Foreclosure

So if you’re facing foreclosure because you don’t have the money to pay your mortgage, how are you going to pay a Realtor to get the duplex sold as a short sale?

Simple.

You don’t have to.

Just as with any duplex home sale, Realtor’s commissions are paid out of the proceeds of the transaction. Typically, the seller agrees to pay the listing agent’s broker a percentage if the property sells successfully. That broker, in return, agrees to share a portion of the commission with the buyer’s agent’s broker.

And even though the duplex owner being foreclosed upon or conducting a short sale retains all the rights to the property up until six months after the Sheriff’s Sale, she isn’t responsible for the commission. After all, she’s not taking any proceeds from the sale.

But the bank is.

The Realtor’s commissions come out of the funds the bank will receive.

Short sales are among the most lengthy, labor-intensive transactions Realtors face; Realtors who, for all intents and purposes, work for the seller for free!

Spoken by Kari Lundin | Discussion: No Comments »

Why Duplex Buyers Should Plan A Trip To The Mall

July 12th, 2010 categories: Buying A Duplex

Sometimes I wonder if duplex foreclosures have been good for Sears.

See, foreclosures often come with many things; abandoned socks, broken toys, dust bunnies…

But they don’t always come with appliances.

Believe it or not, big items like refrigerators, stoves, washers and dryers are considered personal property. As such, the party who lost the duplex to foreclosure has the right to either sell them on Craigslist before they leave, or put them on the moving truck. 

Even if there are appliances on the premises after the bank has taken possession, they can’t guarantee they’ll be there after closing. Most of the time they are, but theoretically anyway, they belong to the previous owner.

As a result, it’s always a good idea to budget for new appliances as you begin the duplex buying process.

Spoken by Kari Lundin | Discussion: No Comments »

Why Selling A Duplex Is Like Owning A Truck

June 18th, 2010 categories: Selling A Duplex

I have a high mileage Ford F-250 pickup that’s in the shop for the third time this year.  And I have to confess: I have a love/hate relationship with it.

On the one hand, when it’s running well, it helps me move heavy things, haul lumber home from Home Depot or pull lesser cars out of snow banks in the winter.

On the other, due to the 300,000 plus miles on the odometer, it breaks down a lot. Especially as of late.

So I’ve been thinking about selling it. Kelly’s Blue Book says it’s worth about $11-12,000 in it’s present condition. But I was thinking if I advertised it enough, I could get $30,000 for it.

After all, I’ve got at least that much into it.

Are you laughing?

You should be.

Believe it or not, as flawed as my truck logic may be, I hear it all the time from duplex sellers.

They tell me all about the repairs and improvements they’ve made to the property. They tell me about all its wonderful qualities. And then, inevitably, they tell me why they’re selling it.

More often than not, it’s due to a desire to change their lifestyle. That change may involve simplifying or streamlining their lives. Or, it may involve moving up to a bigger property.

No matter their motives, the fact is this: no buyer is going to pay a price for a property that’s based on what the seller “has into it”.

Just like my truck’s value, a buyer and her agent have determined value based on all the other properties they’ve seen on the market and those that have sold recently.

That’s also how the listing agent arrives at a suggested price.

In other words, I could spend a half a million dollars advertising my truck. And at the end of an elaborate ad campaign, a buyer and Kelly’s would still say the truck is worth $11,000. No one would be willing to pay more for it than the truck next door simply because it had its own web site.

True, advertising and marketing help drive buyers to properties.

But at the end of the day, it’s the market that tells you what it’s truly worth.

Just like my truck.

Spoken by Kari Lundin | Discussion: No Comments »

Minnesota Tenants Get Trashed

June 3rd, 2010 categories: Tenants

One man’s junk is another man’s treasure.

According to the state of Minnesota anyway.

I was reminded of this last night when I a unit tenants had recently vacated.

It was a mess. Everywhere my clients and I looked there were pieces of broken furniture, abandoned clothing, framed posters on the walls…

All of which needs to be stored and taken care of by the owner, for the next 60 days.

Of course, that would involve cleaning up the duplex, boxing and packing the departed tenant’s belongings, and moving them to a storage unit. Or moving them to the garage. Or, I suppose, leaving them right where they are, which, I assure you, would not entice anyone to rent the place.

While it’s a pain, and the likelihood of recouping damages is remote, the landlord does have a claim against the tenant for the costs she incurs in boxing, moving and storing the property. Of course, recouping that may involve legal fees.

There is some good news. As a result of the passage of the “Tenants Bill of Rights”, after August 1, 2010, the number of days a landlord has to store abandoned property will drop to 28 days.

What’s more, regardless of the length of time, the duplex owner may sell the abandoned belongings once the required storage time has expired.

The owner must make a reasonable effort to notify the tenant of the pending sale at least 14 days before it occurs.  Notification must be in writing; either by personal service or certified mail.

Who knows? After all, there might be the Antiques Roadshow treasure buried in the trash.

Spoken by Kari Lundin | Discussion: No Comments »

Minneapolis Duplex Sellers Rush To Beat Tax Credit

May 4th, 2010 categories: Twin Cities Real Est

Thank God that shipment of newly listed single family homes and duplexes hit the market just in time for the expiration of the first time and repeat buyer tax credits.

I’m being sarcastic, of course.

But with 2,147 new single family listings for the week ending April 24, representing an increase of 19.1 percent over last year, and duplex and multifamily listings up 32.7 percent year over year, it does appear sellers were rushing to get their properties on the market before the incentives ended.

Traditional sellers represented a clear majority of the new to market duplexes, with 60,9 percent of the new listings. This represents a significant jump from last year’s 21.2 percent market share.

Of the multifamily properties that received purchase agreements over the week, 38 percent were offered by traditional sellers. While not the majority of the transactions, this figure nonetheless represents healthy improvement over last year’s 7.9 percent.

This increase in traditional seller market share may also account for the average off market price of $155,428 compared to $88,026 for the same week last year.

Have the tax credits had an impact? We won’t know until the numbers for last week come in, but pended single family home sales for the week were up 9.8 percent over the same stretch last year.

Guess we’ll have to wait until next week’s report to see if sellers, as well as buyers, benefited from the tax credit’s end.

Spoken by Kari Lundin | Discussion: No Comments »

Minneapolis Duplex Owners See Changing Signs

May 3rd, 2010 categories: Tenants

If you could swear you’re seeing fewer “For Rent” signs in area lawns and windows, you’re right.

A report by GVA Marquette Advisors released on Friday announced that Twin Cities vacancy rates dropped to 6.1 percent for the first three months of 2010.

This figure, while still historically high, represents a significant drop from last fall’s 7.3 percent vacancy rate.

While GVA Marquette Advisors tracks this data for communities with at least 10 units, trends in this sector also influence smaller multi-family properties.

Marquette’s report estimates that job growth and an improving economy lead to 1800 vacancies being filled in the metro area, with affordable urban and close-in units going first.

Of course, the increased numbers of vacancies the last few years has lead to more rent concessions and incentives. Collectively, this has lead to an average effective rental rate which is 2 percent lower than it was one year ago.

Continued vacancy rate reduction should, over the long term, force a shift in this trend as well.

Spoken by Kari Lundin | Discussion: No Comments »

Minneapolis Duplex Short Sales May Be Your Prince

April 29th, 2010 categories: Buying A Duplex, Tax Credits

With just hours left to take advantage of either the $8000 first time home st  buyer or $6500 repeat buyer tax credits, you may find the inventory of decent dupelxes offered by traditional sellers and banks gone.

In fact, with time running out, you may feel a bit like Cinderella. Your carriage is about to revert to a pumpkin.

But fairy tales aren’t the only place where magic happens.

In this case, have your fairy godmother Realtor wave her wand at a short sale.

Legal counsel for Coldwell Banker Burnet’s parent company, NRT, has found that in order to qualify for either credit, a fully executed contract must be in place no later than 11:59 pm on April 30, 2010. Counsel further advises that a short sale is considered a legally binding contract when both the buyer and seller have signed the purchase agreement.

The fact that the lender still has to approve the terms doesn’t prevent the contract from being created. Therefore, that contract qualifies the buyer to earn the credit.

Of course, Cinderella still had to wait for her glass slipper to be returned. Duplex tax credit sales are no different. They must still close no later than June 30, 2010, in order for the buyer to earn the credit, which may or may not be problematic.

Spoken by Kari Lundin | Discussion: No Comments »

Duplex Tax Credits Enter The Home Stretch

April 27th, 2010 categories: Twin Cities Real Est

As we race like Kentucky Derby entries toward the finish of the first time and repeat home buyer tax credits, word came from the Minneapolis Area Association of Realtors  that new listings may be the fastest horses racing, not pending sales.

For the week ending April 17, new listings finished 21.9 percent ahead of the same week last year.

Pending sales, on the other hand, also grew but at a pace neck and neck with the 2009 statistics. In the end, however, 2010 nosed out 2009 by just 1.8 percent.

Duplex sales had a close year-over-year finish as well, with pending sales for the week finishing 11.5 percent ahead of last year’s.

The average off-market price for the week was also a nose ahead, crossing the wire at $124,789 compared to $121,742 for the same week last year. Of those listings that left the market, just 23 percent were offered by traditional sellers.

New listings for the week were the real winners; leading last year by 40.5 percent. Of that new inventory, 52.54 percent were offered by traditional sellers compared to last year’s 45.2 percent.

After the tax credit race ends on Friday, let’s hope the real estate market doesn’t come up lame.

Spoken by Kari Lundin | Discussion: No Comments »

Buy A Duplex, Get A Tax Credit

April 22nd, 2010 categories: Buying A Duplex, Tax Credits

With just 8 days left to qualify for both the $8000 first time home buyer’s and $6500 repeat buyer’s tax credit, it’s important to remember that a duplex qualifies for both.

Remember, the credits are for up to 10 percent of the purchase price of the property, with the total benefit not to exceed $8000 for  a first time home buyer, or $6500 for a move-up or repeat buyer.

For a duplex, qualification is based on the percentage of the property the buyer intends to owner occupy. For example, if the purchase price for a duplex was $200,000, and the buyer lived in half, her tax credit would be based on a purchase price of $100,000, with the total not to exceed the caps set by the federal government.

To be eligible for the first time credit, a person may not have owned a home in the last three years. Repeat buyers must have lived in their home for five consecutive years of the last eight years.

Both tax credits require that buyers have a binding purchase agreement in place no later than April 20,2010. However, these purchases have until June 30, 2010 to close.

Remember, FHA financing may be used for most duplexes, triplexes and fouplexes; meaning an owner occupant need only have 3.5 percent saved for a down payment.

Investors, on the other hand, are still restricted to conventional loans requiring 20 to 25 percent down as minimums.

Spoken by Kari Lundin | Discussion: No Comments »

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