Some of the best duplex deals out there are short sales.
Not only are they often in better shape than the foreclosures, but there tends to be a better selection of duplexes to choose from.
Some people even think they are such good deals that you can outright steal them.
This is such a common belief that I’ve been getting lowball offers on my Minneapolis duplex listings all summer long.
I understand the impulse. After all, the seller may need to get out, no matter what, and the buyer has to wait a long time for an answer. So heck, that’s worth a good deal, right?
Except there are some problems with that thinking.
First, the seller may be required by the lender, especially if the duplex has a second mortgage, to bring money to the table to keep the mortgage holder from pursuing a deficiency judgment even after the property has been sold or lost to foreclosure.
Needless to say, the bigger the offer the seller receives, the greater the likelihood is there will be some money available to give the second lien holder.
So don’t be surprised if the seller gives you a counter offer.
Second, not every short sale owner is in foreclosure or behind on payments. Many need to sell their duplexes due to a job relocation, marriage, divorce, death or any number of other legitimate reasons.
“Short sale” is NOT synonomous with foreclosure, it simply means the seller owes more than the property is currently worth, and is “short” in the amount he or she owes the bank.
Third, the banks aren’t stupid. Well, not always. They hire Realtors to do something called a Broker’s Price Opinion or BPO before they agree to any sale. Essentially, they retain an agent who doesn’t represent the buyer or the seller, for independent opinion of what a property is worth.
These agents are familiar with the market, and have access to not only data on duplexes that have recently sold, but also those currently for sale. If an offer on a duplex seems way out of line with the market, they will advise the bank to respond to the purchase agreement with either a counter offer or an outright rejection of the price.
All of this doesn’t mean you can’t simply make an offer on a duplex listing. Just know the odds and be realistic.