Archive for July, 2010


[youtube][/youtube]When my alarm went off this morning, NPR informed me RealtyTrac released its Midyear 2010 U.S. Foreclosure Market Report.

And I wanted, with evey fiber of my being, to get out of bed, open my window, and make like Howard Beale in the movie, “Network” and shout, “I’m mad as hell and I’m not going to take this anymore!”

But outside of letting off steam, I don’t know what good that would have done.

It seems that in the first six months of this year, there were 8 percent more notices of defaults, sheriff’s sales and foreclosures than there was in the first six months of 2009. The good news, however, is the rate was 5 percent lower than it had been in the last six months of last year.

What does that mean in real numbers? Well, somewhere near 1.7 million homeowners received a warning related to foreclosure between January and June. That’s one out of every 78 homes in the U.S.

During the month of June, 3140 Minnesotans received a foreclosure-related notice. That’s one in every 743 households; far behind the national average, but staggering nonetheless.

While the report doesn’t specify the number of duplex, triplex and fourplex owners, it would be surprising to find many differences in percentages. After all, countless smaller multi-family properties are owner occupied.

If you’re one of those who received a notice, please know you’re not alone. There are literally millions of people all over the country facing the same stress, the same obstacles, the same sadness and frustration.

While it is my hope that each and every one of you receives a loan modification, if you don’t, remember, there are alternatives to foreclosure. And if you ever need help, as a Certified Distressed Property Expert, I’d be happy to point you toward resources or solutions that may help ease your load.

In the end, helping you through that would probably be a whole lot more productive than yelling out my window.

 Then again, maybe we all open our windows at the same time…

Minneapolis Duplex Market Is What It Is

said on July 27th, 2010 categorized under: Twin Cities Real Est


white flagThe word for today is “is”.

As in the Minneapolis and St Paul duplex market just “is”.

For example, three months after the expiration of the first time and move up buyer tax credits the market is what it is.

And outside of trudging on, there isn’t much we can do right now to change it.

Pended sales for the week were down 36.8 percent from the same week last year. Of those properties that received offers, just 12.5 percent were put on the market by traditional sellers. This is down from last year’s 15.8 percent for the week.

Comparing prices week over week, this year’s average off market price of $71,825 paled in comparison to last year’s sold price of $109,234. Considering the off market price, which is the last figure the property active on the MLS is usually higher than the actual sold figure, this isn’t good news.

New duplex house and small multi-family listings for the week 4 percent from last year.

In the single family market, sales notched their 9th week in the 500-600 transaction range; down 39.7 percent from one year ago.

Fortunately, the number of new listings were down 10 percent as well. Trouble is, with less demand, the amount of inventory has already swelled by 4.8 percent over last year.

The Best Way To Get Your Duplex Sold Is…

said on July 26th, 2010 categorized under: Selling A Duplex


DuhWant to know the number one key to selling your duplex?

It doesn’t matter if you’re selling because you want to move, have a better investment opportunity, or simply have to get out because the mortgage is eating you alive, the method is the same.

And I’m not talking about a fresh coat of paint on the front door; though I’d recommend it and a host of other things to make your investment property more appealing to buyers.

No, you probably won’t hear this one from a home stager or see it featured on HGTV.

This one is more basic and inexpensive.

Give up?

The best way to sell your duplex house is to let people see it.

Duh. That seems obvious.

Doesn’t it?

And yet, out of the five multi-family properties I attempted to show to qualified, motivated buyers today, only two owners made the effort.

In two instances, the buyer and I had ample opportunity to examine the property closely while we were waiting for a listing agent to show up or re-confirm our appointment. Rather than being “wowed” by the inside of the property, my buyer had enough time to discount it because of the outside.

And he won’t circle back.

Sadly, I may not either. And in one case, I have no less than FOUR qualified buyers for the property.

All of our lives are busy. Realtors schedule showings to coincide with a geographic list of properties. We rarely circle back unless the listing was a buyer favorite or unbelievable deal.

But most of the time, those aren’t the duplexes buyers purchase anyway.

They tend to buy the ones that move them on some level- when they walk in.

If you have to offer tenants an incentive to accomodate showings, or you yourself have to go nap in the car so your duplex can be shown, make those arrangements.

I’ve never had a buyer purchase a property either they, or I, haven’t seen.

Duplex Short Sales Make Tax Chicks Happy

said on July 23rd, 2010 categorized under: Short Sales/Foreclosure


Business woman with a calculatorThe name of this blog is Duplex Chick.

Not Accountant Chick.

To that end, please heed the following disclaimer: if you’re a duplex home owner facing a short sale or foreclosure, please consult with an accounting chick when you’re considering your course of action.

Don’t worry. She’ll be in a good mood. She’s going to have plenty of business.

See, even though Minnesota is a non-recourse loan state, meaning the mortgage is collateralized by the property; the bank can’t come after you for the amount of the loan you’re forgiven through a short sale or that’s lost on a foreclosure.

However, if you’re an investor, the IRS may perceive that forgiveness as a “capital gain”, and therefore might pursue you for capital gains tax. Oh, and remember how you depreciated the heck out of the place on your taxes? Depreciation recapture tax still exists; even if you didn’t sell the property for a profit.

On the other hand, if you lived in the duplex, the Mortgage Debt Relief Act of 2007 allows you to exclude up to $250,000 of gain if the property was your principal residence for at least two of the last five years. Whether or not this exception applies to the half you didn’t live in is a question for that accountant.

But just like the investor, you depreciated the heck out of the side you didn’t live in too, right? After all, that’s one of the many advantages of duplex ownership.

Guess what. Depreciation recapture probably applies to you too.

Depressing, yes. But remember, insofar as the capital gains tax, it pertains only to the amount of debt you were forgiven. So if you owed $150,000 and sold the duplex house for $100,000, you’d be taxed on the $50,000 you didn’t pay.

However, if you lost the duplex to foreclosure, you’d be taxed on the entire $150,000.

Minneapolis Duplex Market Heads For The Basement

said on July 20th, 2010 categorized under: Twin Cities Real Est


rain troublesI’m starting to feel like the rain is ganging up on us.

The summer has been full of tornado warnings and severe thunderstorm watches that have sent us all scrambling for the basement or at least the comfort of a brightly lit television radar screen. And there’s also been the turbulence of the Minneapolis/St Paul duplex market.

For the week ending July 10, just 9 duplex home owners received and accepted purchase agreements. This was a drop of 65 percent from the number of pended properties for the same week last year.

The average off market price of $176,960 was $29,410 higher than the sold price for last year, and 33 percent of them were offered by traditional sellers.

The other bit of good news was the number of new duplex and multi-family property listings was down 30 percent from last year.

In the single family market, the 545 signed purchase agreements for the week represented a 45.9 percent year-over-year drop.

While the total number of new single family home listings were down 17.4 percent, total inventory continues to grow due to slow buyer demand.

As always, increased inventory results in a shift toward a buyer’s market, which we are in fact seeing. There are currently 7.44 houses on the market for each buyer this month. Last July, there were just 5.06 per buyer.

Let’s hope for sun.


freeSo 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?


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!


wargame_risk_375When I was a kid, my Uncle Jerry like to play the board game Risk with my brother and me.

He was a banker. A former Navy man. An adult.

We were maybe 11 and 13 years-old.

He had a strategy. I’m not sure we even fully comprehended what the word strategy meant.

As such, our countries and armies always got run over, crushed.

Lately there have been media stories that claim a “strategic default” on a duplex mortgage can be a wise financial move in response to being “under water” on your investment property.

What the media doesn’t say, however, is that playing with the banks is a bit like playing board games with my uncle. There can only be one outcome;  crushing defeat.

In a strategic default, a duplex home owner decides to walk away from the mortgage; to simply stop paying even though he may be fully capable of making them. Most of the time this happens when the property owner has concluded he owes more on the duplex than it’s worth, making it a bad investment.

What most of these people don’t understand, however, is doing this exposes them to foreclosure and all its consequences including; credit issues, employment challenges, and possible capital gains tax and debt collection.

Believe it or not, banks don’t like the foreclosure process any more than property owners do.  Foreclosures ultimately cost them more money than a short sale, and I am increasingly hearing of some lenders who have developed even more options to help people avoid foreclosure.

If you want or need to get out of duplex ownership, call me. As a Certified Distressed Property Expert I can help you find more constructive solutions to your issues than those available by simply giving up.

And when you give up, just like in war games with Uncle Jerry, you could get crushed.


Sisyphean toilIn today’s real estate market, many duplex home owners feel like Sisyphus: doomed to roll the boulder of their property up a hill over and over again only to watch it roll back down.

Many are realizing they either owe more on their rental property than it’s worth or, for reasons of unemployment or mortgage resets, can no longer afford the payments.

As a result, they often discover they may be facing  a short sale.

Of course, with anything that’s new and unfamiliar, there are a number of misconceptions and myths about the process. According to the Distressed Property Institute, these include:

Myth #1- The Bank Would Rather Foreclose Than Bother With A Short Sale

The truth is banks nearly always lose more money on a foreclosure than a short sale.  This myth is so pervasive that many banks, investors and even the federal government have stated that if someone is qualified for a short sale, the deal must be considered.

To qualify, the duplex seller must be able to demonstrate financial hardship, monthly income shortfall or insolvency.

Myth #2 – You Must Be Behind On Your Mortgage to Negotiate A Short Sale

While this may have been true in the past, lenders today are looking for a pending shortfall, insolvency, monthly cash flow shortfall or a verifiable hardship.

Myth #3 – There Is Not Enough Time To Negotiate A Short Sale Before My Foreclosure

Foreclosure is a process. In Minnesota, it can take up to a year; with six of those months occuring after the sheriff’s sale.

The foreclosing bank or home owner’s association can stall a foreclosure up to the last day of the redemption period.

Myth #4 – Listing My Home As A Short Sale Is An Embarrassment

It is understandable to have reservations about telling the world you owe more on your duplex than it’s worth. But you’re not alone. In fact, it’s estimated that one out of every eight homeowners in the U.S. is in the same situation. What’s more, forecasts predict that in the next few years, 40-60 percent of all U.S. sales will be short sales or foreclosures.

Myth #5 – Short Sales Are Impossible And Never Get Approved

Are short sales more difficult? Yes. Is there a learning curve for the property owner? Yes. Are they impossible? Nope. Agents who have earned the Certified Distressed Property Expert (CDPE) Designation are getting thousands of short sale approvals every month. These Realtors have undergone extensive training in methods to help distressed duplex owners and process short sales.

Myth #6 – Banks Are Waiting On A Bailout and Not Accepting Short Sales

OK, can any of us count on Congress to pass legislation? Probably not. And banks know this too. Consequently, banks are becoming more aggressive in pursuing short sales and working with Realtors who know how to process them. In fact, Freddie Mac recently stated the organizational goal of “eliminating distressed assets through modification or short sale.”

Myth #7 – Buyers Are Not Interested In Short Sale Properties

For Minneapolis and St Paul duplex home buyers, short sales and foreclosures are synonymous with “good deal”. In fact, in the last year, many of the rental properties in the Twin Cities that have been the best value for the price have been found in the short sale category. Listings with an experienced agent educated in the short sale process ensure a greater chance of a contract being successfully negotiated on a property.

If you’re wondering whether a short sale might be the right move for you, please call or email me. As a Certified Distressed Property Expert, I’d be happy to explain your options.




shockedEver have a panic attack?

You know– the one’s where you can’t breathe or think?

I had one when I compiled the market statistics for Minneapolis and St Paul duplex sales for the week ending June 26, 2010.

A paltry 12 duplexes received purchase agreements. Twelve. Out of  723 active small multi-family listings in the Twin Cities metro area.

That’s down 37.5 percent from one year ago.

How did I get the color back in my face?

By finding the good news. 

Traditional sellers accounted for 33 percent of the week’s duplex sales. Last year, they were just 9 percent of the market.

The average price the dozen left the active duplex market at was $180,808. Last year, the sold average for the week was $113,138.

And, while there were 42 new listings this year, that’s down from last year’s 57.  Fifty percent of the new listings will not require a bank to be involved in any negotiations of a purchase agreement. Last year, just 22.8 percent were that hassle-free.

The single family housing market had 47.6 percent fewer pending sales for the week, with 6.5 percent fewer new listings than the year before.

With decreasing demand and growing inventory, it’s no surprise that the 27,526 homes presently on the market is 3.2 percent more than last year. There are now 7.44 homes available for every buyer actively in the market.

I think I need to go meditate.

Why Duplex Buyers Should Plan A Trip To The Mall

said on July 12th, 2010 categorized under: Buying A Duplex


Retro FridgeSometimes I wonder if duplex foreclosures have been good for Sears.

See, foreclosures often come with many things; abandoned socks, broken toys, dust bunnies…

But they don’t always come with appliances.

Believe it or not, big items like refrigerators, stoves, washers and dryers are considered personal property. As such, the party who lost the duplex to foreclosure has the right to either sell them on Craigslist before they leave, or put them on the moving truck. 

Even if there are appliances on the premises after the bank has taken possession, they can’t guarantee they’ll be there after closing. Most of the time they are, but theoretically anyway, they belong to the previous owner.

As a result, it’s always a good idea to budget for new appliances as you begin the duplex buying process.

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