$2,000 a Bedroom

Powderhorn Park Duplex for $18,000

Where: 30xx 11th Ave. South, in Minneapolis' Powderhorn Park neighborhood.
What: listed on MLS as a duplex with 8 Bedrooms and 4 Baths, "rehab needed."
How much: Listed for $19,000; sold for $18,000 (tax assessed value = $83,500).
When: listed 9/15; closed 10/21.

Clients asked me to look up how much this South Minneapolis duplex sold for.

You were right, guys: under $20,000 . . .

Sold Price: Almost 5X(!) Over Ask

List Price: $17,900; Sold Price: $85,100

Sure, it was a mess. But this beat-up, bank-owned home was in a prime location -- just a couple blocks from the Mississippi, in Minneapolis' Longfellow neighborhood (the land alone had a tax assessed value of $44k).

So it wasn't surprising to see this home sell quickly.

However, even by the standards of recent South Minneapolis "foreclosure feeding frenzies," the selling price -- almost five times the asking price -- was still a shocker.

Want to guess how many offers came in on it?

Bonus (non-rhetorical) question: who was the seller?

Answer: Washington Mutual, one of the biggest peddlers of toxic loans before it blew up and was seized by the FDIC last September (what was left of its carcass was bought by JP Morgan Chase).

P.S.: in what is close to a record for turnaround time, the Buyer did a gut rehab and just re-listed the home for $239.9k.

Next Post: Foreclosure Bait and Switch

Fixing Wall Street (and other things)

Blueprint for Fixing a Broken System

If something exists, it must be possible.
--Amy Lovins

After decades of ineffective band-aid's, senior government officials finally "bit the bullet" and commited to a long-term fix.

First, they came up with a design that would meet 21st-century needs. Then they raised enough capital to overhaul the old, antiquated system, and implement the new one. Finally, acting on the public's behalf, key politicians stood up to special interests who didn't want to see the status quo changed.

Sounds like a blueprint for fixing Wall Street and the financial system, right?

Actually, it describes the $300 million, 35W/Hwy 62 Crosstown Project in South Minneapolis, currently in-progress and due to be completed by the end of next year. (If infrastructure's your thing -- and even if it's not -- it's hard not to be impressed by the project's sheer scale and rapid progress.)

The "officials" in question were Minnesota state and local lawmakers. Before the project could begin, dozens of private homeowners had to be bought out and relocated.

Maybe somebody on Wall Street -- or in Washington -- should take note . . .

(Another) Foreclosure Feeding Frenzy

Home Focus: 38xx Harriet Ave. (South Mpls.)

What: 2 BR/2 BA; 1,364 FSF in South Minneapolis' Kingfield neighborhood
When: On market 4/17/09; closed: late May
List Price: $75,000
Sold Price: $91,000
% Over List: 21%

This home sold for $91,000 -- a mere 21% over asking price. I was told that there were at least 8 offers on this home within 2 days.

Lots more of these deals are in the pipeline, because they came on the market earlier this Spring, and are just closing now.

Based on what I saw, I wouldn't be surprised to see at least a few bank-owned foreclosures that fetched 50% over asking price (imagine telling your client what the asking price is, then telling them what they likely have to bid to actually have a chance of getting the property).

I'm also hearing that Seller bad behavior is -- surprise, surprise -- begetting Buyer bad behavior: namely, the best way of winning one of these "real estate lotteries" is to buy lots of "tickets" (submit offers on multiple properties simultaneously).

As a consequence, the fall-through rate on these deals apparently is astronomical.

South Minneapolis Foreclosure Sale: 36% over List

Where: 37XX 17th Ave. South, Minneapolis

What: 4 BR/2 BA, 2,386 FSF

When: on market, April 3; closed, May 22; days on market: 2

How much: list price - $88,900; sold price - $121,000

Want an example of a too-cheap foreclosure setting off a feeding frenzy?

This spacious 1 1/2 story (much bigger than it looks) in south Minneapolis attracted more than 10 offers -- my client's was one of them -- and ultimately sold for $32,100, or 36%, over the asking price.

While these numbers are eye-popping, they are by no means unusual these days: I've personally seen at least two dozen of these real estate lotteries just in the last two months.

They create a handful of winners, plus a whole lot of losers: all the runners-up Buyers and agents who wasted their time in a process that looks and feels manipulative; the banks, who may or may not be selling their foreclosed homes at market prices; and the people who own the banks that own the foreclosures: the taxpayers.