Archive for June, 2008

What Will the Seller Take for That Minneapolis Duplex?

said on June 30th, 2008 categorized under: Buying A Duplex


Gummy BearsI’m often asked what a seller’s bottom price is for his or her property. This seems to happen most often in open houses.

Here’s the deal…even if I know, I can’t tell you. Not only is it against the law, it wouldn’t be fair to the seller.

A Realtor who has a signed listing agreement with a property owner has a fiduciary duty to that seller. It is the agent’s responsibility to act in that seller’s best interest at all times.

After all, the owner hired the broker to do a job.

I said “broker”. Not agent. Is there a difference? Yes.

A broker is a person/company with a broker’s license. For simplicity’s sake, think of brokers as companies. Examples include Coldwell Banker, Edina Realty, Re/Max, Keller Williams, etc.

When a seller signs a listing agreement, the contract is actually with the company, and everyone on that team. The Realtor is a sub agent in the transaction. As a result, the entire company has an obligation to that seller; not only ethically, but under the law as well.

Read the rest of this entry »


Log CabinBack in the olden days — when gas was cheap and property went up in value…as long as 18 months ago…the federal government’s department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) implemented “anti-flipping” rules to help stem fraud during the housing boom.

Under these rules, neither agency would insure mortgages on properties that had been owned by the seller for less than three months.

The purpose was to prevent people from using low-down payment FHA loans to buy foreclosures at incredibly low prices, then resell them within days for enormous profits.

According to Realty Times, the FHA is temporarily suspending its moratorium through June, 2009.

Of course, investors will still have to be able to qualify for the loan. But the resale buyer will not be prohibited from buying the property using an FHA loan simply because it sold within the previous 90 days.

Let’s hope this temporary reprieve helps absorb some of the excess foreclosure inventory. 


Carbon Monoxide DetectorIt’s easy to forget about carbon monoxide (CO) After all, who thinks about turning on the furnace in the heat of summer?

Well, the state of Minnesota does. With good reason.

Between 2002 -2006, 89 people died from carbon monoxide poisoning. That translates to an average of 18 a year.

Carbon monoxide is produced when fuels such as gas, oil, kerosene, wood or charcoal are burned. Dangerous amounts of the gas can build up when fuel is not burned properly, or when heaters aren’t vented correctly.

Carbon monoxide has no odor or color. As a result, by the time people realize they’re suffering from carbon monoxide poisoning, they’re no longer able to move.

So why worry about it now? Read the rest of this entry »


HotdishOver the years, I’ve been lucky to be able to help a number of people relocating from other states find homes in Minnesota.

Some grew up here and after sojourns on the east or west coasts, were returning to start or be near families. Others grew up elsewhere and moved due to a job transfer or to attend school.

It seems like I consistently hear one complaint. Minnesota Nice…isn’t.

Oh sure, the natives to the state are friendly enough. They wave when they pull in their driveways. They talk about getting together some time, or having the neighbors over for dinner. And then don’t. Everyone’s busy with their lives. Or their families. Or going “up north”.

It’s just flat difficult sometimes to make friends here. I’m not alone in hearing this. In fact, every now and then there are continuing education courses offered for Twin Cities Realtors about how to help our clients overcome this.

At one such event I heard of an organization called I’m Not From Here. They’re a group of people who have moved here from elsewhere and decided to confront the issue head on. They organize events, network and support one another. It’s a great option for people struggling with this issue.

And as for those who just wave and keep driving? Maybe we could actually be “Minnesota Nice”, and have that new neighbor downstairs over for some hotdish.

Twin Cities Duplex Sales Jump Again

said on June 24th, 2008 categorized under: Twin Cities Real Est


Party DressMAAR released its report of market activity for the week ending June 14 this morning.

The study included some encouraging news: namely that the number of pending single family home sales increased by 3.8 percent over the same week last year. In the last six weeks, sales are down just 30 transactions over their pace from the same period in 2007.

Don’t break out your party dress just yet.

Of those pending sales, 27.9 percent were on bank owned or short sale properties. Sales of homes not in a distressed financial situation were down 21 percent over the same period last year.

Meanwhile, duplex sales continued along at a robust pace, up 133% over the same week last year. (Remember, I’m doing the math in this part.)

While foreclosures and short sales represented just 21% of last year’s multi-family statistics, they comprised a full 93.75% of this year’s.

Short sale and foreclosure properties are continuing to stunt sales for the traditional single family or multi-family seller. Once this inventory is absorbed, we should be back on track for a more balanced, healthy market.

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Fire EscapeI showed a three story duplex in southwest Minneapolis featuring a deck on every floor. There were stairs leading from the second story deck to the ground, but none from the third to the second or the ground for that matter.

And the question came up: would the owner be required to add stairs to comply with the fire code?

According the the Minneapolis Fire Marshall, no.

No matter what story a unit is on, there must be one window in each sleeping room that is easily openable from the inside. It is required to have a net glazed area of 5.7 square feet. The minimum openable height of the window is 24 inches, while the minimum openable width is 20 inches.

Of course, the window can’t be more than 48 inches above the floor either. And area wells must meet minimum size requirements.

The same criteria holds true for St Paul. However, the city may require the property owner to install another escape on the third story. According to the Fire Marshall, while a secondary stairway isn’t required on the second story, the third floor is judged on a case by case basis. The fire marshall determines whether or not it is necessary by considering the square footage of the third floor as well as the layout of the property.


Mary RichardsA bit of a rant…

Sometimes I get frustrated with neighborhood “reputations”.

There’s a lot of crap on the market right now.  It’s hard to believe, but finding a decent property at a good value is, even in this market, challenging.

I showed a duplex and a fourplex last night; both foreclosures, both in nice neighborhoods.

The first was in a “water hood”. Located near one of the lakes, it appeared to be a tremendous bargain; that was until I opened the door. Ugh. Two questions. Why do some people think it’s a great idea to convert a duplex to a fourplex? And, perhaps more importantly, why are people willing to pay exorbitant amounts of rent for them? This property is priced $150,000 below what it last sold for, and needs at least that much in cash to make it the property the neighborhood’s reputation implies.

While not within a block of a lake, the second property was nonetheless also in a sought-after neighborhood.

I knew it was dated before I opened the door (photos of paneling on the MLS gave it away). And the buyer was OK with that. After all, this duplex was over 3500 square feet, the worst house on the block (which for investment is always the best house to buy), and priced below $250,000. While it had a shared boiler, the number of bedrooms on the property suggested it would be a tremendous value for my client.

Over all, the property was in reasonable condition. Except for one thing. I think there was a total of one heat source that hadn’t been blown due to frozen pipes over the winter. It will require thousands and thousands of dollars to re-plumb!

Meanwhile, there are properties in neighborhoods without the hype of Mary Richards  having lived there, with equivalent amenities (walking trails, coffee shops, etc.) that linger on the market because they haven’t had the hype.

(For the record, the property that served as the exterior for Mary, Rhoda and Phyllis’ house sold for $2.8 million last year.)

If you’re looking for the right property for your needs and you’re frustrated because you’re not finding it, be willing to think outside the box. Ask a Realtor who works in the area for some suggestions. He or she might be spotting a trend.

After all, history is filled with examples of property owners making a fortune when because of media exposure, their neighborhood suddenly became “the next big thing”.


HandshakeA contract for deed is a type of owner financing. It usually requires the buyer to make payments over time, with interest on the unpaid balance; just like a bank. After the loan iis paid in full, the owner gives the buyer a deed to the property.

There are several advantages to buying property this way:

1. There are no loan origination fees, therefore closing costs are lower.

2. The purchase can close quickly.

3. The seller may accept a smaller down payment.

4. There is no limit to the number of properties that can be purchased this way.

5. The seller may be willing to accept a note from a buyer with a less than perfect credit score.

Of course, there are caveats too. The disadvantages of buying a property on a note include:

1. Typically a higher interest rate than a bank held mortgage

2. Shorter foreclosure period. The seller may begin foreclosure if you are 60 days behind in payments.

3. Sellers aren’t always familiar with a contract for deed, and may be reluctant to carry a note.

4. The buyer may face a balloon payment down the line.

Of course, it is crucial to do the numbers before you buy so you are certain you can cover the note in the event of any loss of revenue.

And it is always wise to seek the counsel of either a real estate attorney or Realtor who is familiar with the process before you buy.






mortgage deedWith each day’s basket full of negative, I’m increasingly convinced the banking industry doesn’t want any of us to buy property ever again. OK, so maybe it’s not quite that dramatic, but…

First it was the end of stated income programs. 

Then it was word that as of August 8, Freddie Mac will restrict lending for investors who own more than four properties.

And there’s the looming threat of the end of gift programs for seller down payments like Ameridream, Nehemiah and Genesis.

Regardless of market conditions, people will always need to buy and sell property. There are countless circumstances other than short sales or foreclosures that necessitate a sale. Perhaps a seller faces a job transfer, an addition to the family, a divorce, or has simply happened upon a better investment opportunity.

So how are those with less than perfect credit, who own five or more properties or work for themselves going to finance real estate?

My guess is we’ll see the re-emergence of the contract for deed, which is also known as a land contract.

With the impossibly low interest rates and readily available loans of recent years, this way of financing fell out of style. (Except in the case of farm land which is often difficult to obtain conventional financing for.) However, it was not an uncommon way to finance property in the late 1970’s, when interest rates hovered in the high teens and low 20s.

Quite simply, when a property is purchased on a contract for deed, the seller becomes the bank.

How does this benefit the seller?

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Twin Cities Duplex Sales Continue At Healthy Pace

said on June 17th, 2008 categorized under: Twin Cities Real Est


running shoesThis week’s market activity update from MAR is encouraging, but not quite the cry for celebration that last week’s was.

In the single family home arena, new listings for the week ending June 7 continued their leisurely jog, declining 13.9 percent from a year ago. Pending sales also declined by 5.3 percent when compared to the same time last year.

The good news is with fewer new listings, excess supply is starting to be absorbed. However, the market presently has a 10.4 month supply of inventory. What that means is if not a single new house came on the market, and the amount of buyer activity stays at is, it would take 10.4 months to sell all the homes available.

Meanwhile, in the small multi-family home market (2-4 unit), sales continued their healthy sprint past last year’s pace.New listings were down seven percent over the same week last year. Sales, on the other hand, were up 178%, with 34 going off the market the week ending June 7.  In the same period last year, just 19 properties sold.

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