How To Lose Money Selling Your Minneapolis Duplex

Several years ago I had a buyer looking for a very specific type of Minneapolis triplex. Because I couldn’t find one that suited the buyer’s needs on the MLS, I reached out to a seller who had one that fit the bill.

Turns out he was interested in letting my buyer take a look, but wanted to use his buddy as his Realtor.

When we got to the closing table I asked the seller and his friend whether he intended to do a 1031 exchange.  Just as he said “Maybe”, the closer from the title company handed him a check for the entirety of his proceeds.

I said, “Well, it’s too late to do an exchange now.”

The story is old, but its lessons are still very current.

The first and most obvious lesson is if the seller intended to do a tax-deferred exchange, he needed to identify that in an addendum to the purchase agreement he signed. And he should have had the funds wired to a qualified intermediary. The minute he touched the proceeds it became a taxable event.

The second, and perhaps more important lesson is this: using a Realtor who did not specialize in investment property cost him tens of thousands of dollars in capital gains tax and depreciation recapture.

Realtors who specialize in selling rental properties have expertise other agents don’t. This comes from countless hours of additional education, often personal experience as a landlord themselves, and countless interactions with duplex buyers and sellers over the years.

Duplex specialists know the value of the property isn’t determined the same way it is for a single-family home. We know Minnesota landlord-tenant law, and how to make for smooth showings and protect the property owner’s rights of access.  We can also advise sellers of best practices around leases in order to maximize the number of prospective buyers.

If you’re thinking of selling your Minneapolis or St Paul duplex, but aren’t sure whether to use a specialist or your Realtor friend, give me a call.  I’d be happy to show you the difference.