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It would be nice if that worked on this double unit. The rent being paid by one tenant in $550. The taxes and insurance are about $200 a month. Based on a purchase price 32% lower than the asking price, the mortgage payment would be about $1000. So the one tenant is far short of covering the mortgage and that assumes that the seller will lower their price by 32%. Even if the seller came down 32% the new owner would have a $550 tenant and have to pay the other $450 themselves. We think the duplex is over priced. A nearby (2 houses down) 3 bedroom home sold for $30K less than the duplex is listed for.
Presumably the single family home would not be bringing in any money, so it makes sense that it would be cheaper.
Is $550 market rate for rent or maybe it's currently rented far below market rate. You need to compare the duplex to other duplexes sold, rather than comparing to a single family home.
You keep saying you think the duplex is overpriced but your 2 reasons for this are not good reasons. Comparing to a SFH sale isn't a comp and comparing to tax assessed value isn't a comp. I suppose the seller has some real comps that they used to determine the sales price. Since you aren't the seller, I assume you are just trying to guess what the place is worth.
If the seller has no comps and no clue how to price, then what did their realtor say about comps, and what sold properties did the realtor provide to come up with the comps? If your friend isn't comfortable with the comps, then he/she can hire a real estate appraiser to give the estimated market value. Just tell the appraiser that you plan to sell the place and need to know how the market value so the asking price could be properly attained. It's better to know the true market value so the initial asking price is set correctly from day 1.
Presumably the single family home would not be bringing in any money, so it makes sense that it would be cheaper.
How many bedrooms in each unit of the duplex?
Two bedrooms each side. Each unit has it's own kitchen, a/c and heat units. The real estate agent has set the asking price based on comps. The seller told me the agent knew investors who buy such properties. We'll see how fast it sells and for what amount.
It's all about the specific market. I own (well, the bank and me!) half of duplex. It's new construction in a desireable area and these duplexes or paired homes as we call them are extremely popular. A handful in my immediate area are owned by investors who rent them out, but the vast majority are individual owners, mostly families with kids (they are 3-4 bedrooms for each side). That's clearly a very different scenario than you are describing but it also shows how much variability there is and no single answer to who buys a duplex.
Additionally, the relationship of tax assessment value to selling value varies by location. In many areas, the two bear pretty much no relationship, while in others, they are pretty close.
We have a friend selling one and they think they have the same audience as a single family. We disagree and we know an investor would be a category of potential buyers. They were also told their price is likely way too high.
The price they are asking is 50% higher than the tax assessed value. Yes that is tax assessed which can vary from the asking/eventual sale price but......
Since you don't list a town, city, or metro region that can be hard to determine. I imagine in NYC or SF you could potentially get some fairly well to do people, but here in the Balt/DC/Annapolis burbs of Maryland Duplexes are considered fairly low end. You're actually better off with townhouses that have 5-7 or so in a row.
I've been shopping around for awhile and I honestly don't want to live attached next to one other family unless it's the end row unit of a set of town houses. I just do not get why you'd want to share only one wall like that.
But to answer your question, yes, Duplexes can be had for the CHEAP. But because of that you get the customers that come with that kind of market. Many of them are also rentals because people eventually give up on trying to sell them. Check Zillow to get a feel for the number of days on the market.
It's also 2016, not 2006. Has your friend's real estate agent informed them of this development? My guess is that they haven't.
We have a friend selling one and they think they have the same audience as a single family. We disagree and we know an investor would be a category of potential buyers. They were also told their price is likely way too high.
The price they are asking is 50% higher than the tax assessed value. Yes that is tax assessed which can vary from the asking/eventual sale price but......
How does this affect YOU? Are you trying to buy it off of him for a low-ball offer and he isn't biting? Did he ask you for help in pricing then ignore your input? Or do you just consider yourself an expert in real estate pricing? If you REALLY want educated opinions on the pricing, feel free to post the actual address so we can cut through all the vague generalities.
In my neighborhood, people with money.
Each side of new build duplexes sells for $700K.
For example, https://www.redfin.com/CO/Denver/397.../home/34059964
DoM was 10 days, but has been creeping up as asking prices went above $730K.
The south side of this just sold for $655K. No basement.
Our HOA has 40 duplexes (one story, two units side by side) and 40 single family homes. The duplexes were Phase 1 and the developer changed to singles in Phase 2 as he said there was a larger/demanding market for singles.
There is no one thing I can see to differentiate/define the owners of either style ala single, couples, etc. The duplexes cost about 30% less and I believe that is the major decision for many as in what can one afford and what does one get for their money.
The singles do not turn over as much as the duplexes and the singles sell much faster. In the last year, only two singles turned over. Right now there are 4 (as in one side) duplexes on the market and maybe 8-10 turned over in the last year. I do not believe any one person owns both sides of a duplex in this neighborhood. The duplex owners do seem more transient. I assume this is still a cost issue meaning they can only afford less.
One side note. Our HOA does all outside maintenance so the look of the neighborhood all has the same quality thus no bad, good, etc. They all look good.
There is a big difference between a duplex (a multi-family building where two dwelling units share a single owner and a single tax ID on a single parcel) and a "twin home" or "semi-detached" (a two distinct single-family homes that share a wall, each with their own owners, tax IDs, and parcels.) There are very different markets for each of those housing types.
I just do not get why you'd want to share only one wall like that.
I like what I have now in a paired house much better than a townhouse. Since there's no HOA, I have a much greater degree of ownership. I need to coordinate with the owners of the other half for a new roof or an exterior paint job but otherwise, I can do whatever I want, inside or outside. I doubt you'd ever find a townhouse like that.
And the party wall is so well soundproofed, I truly never, ever hear my neighbors. They have 2 dogs, who I'm sure bark sometimes, but I never hear it. The only time I hear them is when someone is outside - doors closing, voices carrying, etc. but I'd hear that in a detached house too, esp. because the lots are very small where I live.
This style of home is becoming more and more popular in urban areas, both as a very efficient use of space and as a way to keep things a bit more affordable for those who don't need quite as much space and/or are comfortable with a shared wall that shaves a significant amount off the purchase price.
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