5 Reasons Listing Your Minneapolis Duplex With A Neighborhood Realtor May Cost You Money

Many duplex sellers believe when it comes time to list their property it’s crucial to hire a Realtor who’s a neighborhood specialist. After all, the thinking goes, they know the houses in the area, and therefore, they’ll be the most qualified to sell their duplex.

The fact is, however, that’s like going to a doctor who’s a general practitioner when you’re about to have a baby.

Yes, your family physician is a doctor. Just like an agent who is an area expert is a Realtor.

But when it comes to having a baby, don’t you want someone who’s had a lot of education about and experience delivering babies?

I’m guessing the answer is yes.

So why would you trust a general real estate practitioner to sell an investment asset?

Most Realtors who sell single-family homes have little to no experience selling investment property. In fact, it is probable they don’t own any themselves. As a result, they can’t provide adequate representation or guidance in selling investment properties; which may ultimately cost the seller money. In fact, here are 5 ways not listing with a Realtor who specializes in duplexes may cost you money:

1. Valuation – The price to list a single-family home is determined by sales of comparable properties in the area. For example, the value of a house with 3 bedrooms, 2 bathrooms and a 2 car garage is determined by studying the sales of other homes with three bedrooms and two bathrooms. However, using comparable properties with identical bedroom and bathroom count has no bearing on the value of a duplex. After all, is a duplex with two bedrooms in each unit (4 bedrooms total) the same as a property with one three-bedroom and a single one-bedroom unit? Aren’t the rents, and therefore the property values, different?
2. Tenant notice for showings – does a neighborhood specialist know that, as of right now, it is not required to give the tenants 24-hour notice prior to showing? That’s important. Duplex buyers tend to shop in multiple neighborhoods, simply due to a lack of inventory. In the interest of efficiency, their agents will often organize showings geographically. If there are other duplexes available to be seen the same day in your neighborhood, but yours requires notice, they may skip showing it; coming back to it only after visiting another neighborhood first.
3. Tenant notice to vacate – Realtors who represent primarily single-family home sellers may not be aware of the legal time requirements to give a tenant notice to vacate so an owner-occupant buyer can move in after closing. Worse yet, that agent may ask the seller to give that notice prior to closing. If the sale falls apart for some reason, the seller s left with an empty unit and no buyer.
4. Taxes – Realtors who don’t sell a lot of investment property may not be aware that unlike with the sale of a house, the sale of an investment property can result in capital gains tax and depreciation recapture. Failing to adequately strategize in order to mitigate taxes can, needless to say, result in an enormous financial cost to the seller. Working with a specialist can help sellers find ways to minimize taxes, or even defer them for a lifetime.
5. Rent control – In my experience, Single family home Realtors don’t pay much control to rent control legislation. Not knowing the latest rules and amendments, or the imminence of law changes can have catastrophic consequences to duplex sellers. For example, not knowing to advise duplex owners and would-be sellers to raise rent to market rent before the St Paul rent control deadline may not have only cost owners thousands of dollars a year in cash flow but also tens of thousands of dollars in property values as the result of the added value to a buyer of market rate rent.

Specialized knowledge is important in both medicine and real estate. In one field a general practitioner could cost you your life, and in the other, someone without that expertise could cost you a fortune.

And at the end of the day, aren’t those skills more important than knowing what the best pastry is to order at the local bakery?