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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 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 »

Why Internet Lenders Are A Lot Like Sea Monkeys

April 15th, 2010 categories: Financing

I used to stare endlessly at the ads in comic books for sea-monkeys.

You know the ones.

They typically featured a cartoon of a little pink sea-monkey family, with their castle in the background.

There was also an image meant to resemble my family enjoying staring at my sea monkeys swimming around in a fish bowl. Of course, these sea-monkeys were waving at us.

Who wouldn’t want a pet like that? Heck, not even my dogs never waved at me.

Of course, when I ordered the sea-monkeys, they weren’t at all what I’d imagined. Oh, they were miraculous to watch hatch. But they weren’t pink, didn’t have a castle and most certainly did NOT wave back.

In fact, they were nothing more than shrimp. Brine shrimp.

Internet lenders remind me a lot of sea-monkeys. They promise to deliver lower interest rates, lower loan origination fees, faster closing dates and yet, no matter what Realtor you ask anywhere in the nation, you’ll get the same answer; they almost never come through.

And on the rare occasions when they do, nothing was what it appeared to be.

Most Realtors have a select handful of local loan officers they recommend. Agents get paid nothing for referring someone to a loan officer.

The reason we suggest our buyers work with these people is from experience, we know they can be trusted to tell our clients the truth, work hard to get them the best deal, and help them close on their new home on time.

Again, there is absolutely nothing in it for us to make these recommendations.

It’s easy for a loan officer who’s 1500 miles away to tell you to just hang out for two weeks while they get your loan together.  They can’t see your moving van loaded with furniture out in the parking lot.

It’s a lot tougher for a local loan officer to avoid looking you in the eye.

Or not wave back.

Spoken by Kari Lundin | Discussion: No Comments »

Minneapolis Duplex Market Open To Interpretation

April 13th, 2010 categories: Twin Cities Real Est

Sometimes interpreting the Minneapolis/St Paul duplex market is a bit like reading tea leaves.

There might be some meaning in the patterns.  But they’re open to interpretation.

For the week ending April 3, 2010, the number of new duplex, triplex and fourplex listings was up 18 percent over those properties new to the market for the same stretch last year.

Of these, 49.23 percent were being offered by traditional sellers. This figure meant a year-over-year decrease in lender owned or mediated listings of 20 percent.

However, it should be noted that the number of pended transactions for the week represented a drop of 9.5 percent year-over-year.

This decrease in sales activity did not seem to impact the average off market price, however, which was $119,734.  While not the obvious improvement of recent weeks, this figure was nonetheless just over $9000 higher than last year’s sold price.

Of those properties that received purchase agreements, 26.32 percent had people sign the purchase agreements rather than financial institutions. This represents a traditional seller gain of nearly 10 percent year over year.

The single family market was a bit easier to interpret. There were 11.8 percent more homes that received purchase agreements than did last year.

The number of active listings on the market are also up, beating last year’s by half a percent.

Further good fortune is promised with the news that the average number of days a property is on the market before being sold has dropped to its lowest in years, while the percentage of the list price a property sells for rose. Most properties now sell within 2.7 percent of their asking price.

Spoken by Kari Lundin | Discussion: No Comments »

Why Buying A Duplex Is Not Like Going To The Salad Bar

April 9th, 2010 categories: Buying A Duplex

I’ve had a number of phone calls of the same flavor the last few weeks.

The voices on the phone are interested in seeing one of my duplex listings; could they meet me there after another agent shows them his?

This always leaves a bad taste in my mouth.

MLS listed duplexes aren’t like cottage cheese and onions on a salad bar. You don’t need a separate spoon for each.

Now I’m happy to show any of my listings to any qualified buyer.  But I’ll be the first to say my sellers property may or may not be the flavor you’re looking for.

Let’s face it. Some people like Ranch dressing. Others like vinaigrette.  Some like Craftsmen duplexes, and others like 1960’s built side by sides.

The listing agent you contact may or may not be able to recommend other properties for you to sample if his isn’t right for you. But beware; he may not even specialize in duplexes.

Every Twin Cities Realtor who’s a member can show you any property that’s active on the MLS.  Properties aren’t limited by type, nor by who the listing agent is. A residential home specialist can show you a duplex, single family, fourplex or even a strip mall.

In other words, you don’t need to use a separate spoon for each offering.

In fact, one spoon will get you a better salad.

Agents who specialize in duplexes not only know the inventory that’s on the market, which properties are over priced, which need work,  and most importantly, often know of duplexes that are available for sale, but not yet on the market.

Like shrimp on a salad bar, good properties go fast. The minute a property comes on the MLS that’s right for one of my clients, we see it. And if it’s what we hoped, we write an offer on it; so by the time it hits Realtor.com, it’s already gone.

And buyers working by themselves, or with inexperienced duplex agents, never had a chance.

Smart buyers pick a spoon.

Especially with just 21 days left to earn the home buyer tax credits.

Spoken by Kari Lundin | Discussion: No Comments »

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