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Economics, Home Prices, Housing, Housing Trends, Investment Real Estate, Minneapolis / St. Paul Housing, Real Estate Brokerage, Real Estate Trends, Residential Real Estate, Technology, Twin Cities Real Estate

iBuyers are Changing The Landscape of the Housing Market

April 2019

University of St Thomas Twin Cities Housing Market Update

What is an iBuyer?

An iBuyer is a company, in many cases an institutional investor, that will make an offer on your home within hours (or days) based on a proprietary valuation model. If you choose to accept the offer, you can close the sale in as little as a couple of days. The recent big news in the Twin Cities market is that last Monday Zillow began offering its Zillow Offers service to home sellers in the Twin Cities. The Twin Cities is the 10th metro area in the nation where they are offering this service. In addition to Zillow there are a number of local and national iBuyers here already with a number of new companies on the way.

How is the iBuying process different?

Traditionally, home values are calculated by using recent comparable sales of similar homes in the nearby area. The issue is that no two homes are identical and adjustments need to be made to account for the differences. Some of these adjustments are hard to calculate and can be somewhat subjective. Many of the newer, well capitalized iBuyers use “automated valuation models” or algorithms using computers to process massive amounts of home sales data to arrive at a value. Based on that value and information that home sellers upload about their homes they can close a sale in as little as a few days. There are some iBuyers may require a visual inspection by a local real estate partner.

Is iBuying the apocalypse for traditional agents and brokers?

The short answer is No. Nationally, in 2018, iBuyers accounted for 0.2 percent market share. At this point, even in markets where iBuyers has been operating longer they are only accounting for 3 – 6% of the sales volume. As more home sellers become more familiar and comfortable with the iBuying process that percentage will undoubtably increase. While a few iBuyers work directly with home sellers many of the iBuyer’s business models include working with and paying commissions to local real estate partners. Additionally, local Realtors do have the advantage of local market knowledge and are able to spot emerging neighborhood trends. As an example, look at what happened to the travel industry when technology made travel booking information directly available to individuals. At the time some were saying that it would be the end of travel agents. In reality travel agents have survived, however the industry has consolidated, become more sophisticated and has changed the way it does business.

Should I use an iBuyer?, What is the cost?, What is the Value Proposition?

Sellers are looking for a faster, simpler, less stressful way to sell their home. They want the process to be more efficient. Not all iBuyers offer the same services, some are full service, they want to be able to offer a one stop experience. Their process works like buying a car where you can buy a car, trade in your car, obtain financing and insurance all in one place. Since the larger iBuyers are buying and selling homes all the time, their business model works well taking trade ins. There others in the market who offer varying levels of service including those at the other end of the service spectrum who will only buy your home.

Average commissions using an iBuyer are about 7%, additionally their offer is discounted below fair market value. They expect to make necessary repairs and make a profit when they sell the home. In contrast commissions are about 5% – 6% for traditional sale listings. Sellers need to consider the trade off between convenience and maximum offer price.

The following are situations where a seller may consider using an iBuyer;

  • If the purchase of your next home requires the sale of your current home, you may need access to the equity tied up in your current home. Many Americans can’t quality for two mortgages at the same time meaning they have to sell their current home before they buy the next one. In today’s tight housing market contingent on sale offers are rarely successful.
  • If you can’t or don’t want to do the work to repair or upgrade your property before you sell.
  • If you’re moving to a new city and need to be on the job ASAP, you may not have time to wait for your home to sell
  • You’ve inherited a home you don’t want to own or manage

iBuying can provide a quick cash option but this speed and convenience comes at a price. In many cases a local agent may be able to get you a higher price for your home if you have the time available. Is it worth it? That depends on your priorities and circumstances.

There is more to come

Look for more large iBuying companies to come to town. Much of recent iBuying activity is being driven by multi-billion dollar organizations. In addition to Opendoor, who entered the Twin Cities market last fall, there will be other new arrivals such as Knock, OfferPad and Redfin. With technology advancing at such a rapid rate there will be more concepts and companies entering the market like Ribbon and Eave that work on the other side of the transaction helping buyers compete with cash offers.

Housing, Housing Trends, Industry News, Minneapolis / St. Paul Housing, Real Estate Brokerage, Real Estate Trends, Residential Real Estate

Will Millennials Buy Homes Online? The Chinese Already Are

This is a reposting of an article written by Omri Barzilay  in Forbes Magazine

The real estate market has of course gotten better since the crash of 2008 – home sales are improving across the country and the market is growing. It seems on the surface that the future is bright for realtors, especially with the advancement of the Internet. It allows an agent’s listings to be seen by a broader audience, which then leads to faster, more efficient sales. The latest numbers show that 95% of homes for sale get published online, but the number of deals closed on the web remains quite small – just a fraction of the $2 trillion real estate industry.  Will Millennials actually buy homes online? It is important to know who the Millennials are and for real estate agents to understand their impact of the real estate market. Millennials make up the generation that follows Generation X, and their birth years range from the early 1980s to the early 2000s.  A large portion of Millennials is just getting to the age where they will dip their toes in the housing market, and there is much debate as to whether or not they’ll turn to the Internet as a source of home buying. The question of whether Millennials will actually buy homes online is the subject of much debate. Millennials certainly make up the first generation to be fully immersed in the web, but will they follow the path of previous generations, using the Internet only to search for homes and instead purchase them in person? While they are the generation that is fully immersed in the web that does not necessarily mean that they are more willing to buy homes online. In fact, they may follow in the steps of Generation X and the Baby Boomers and instead prefer to only search for homes online, but buy them in person.


There’s some trepidation among industry professionals as to whether Millennials will buy homes in the numbers that previous generations have, and it’s reflective of the marketplace. Furthermore, there are questions surrounding the possibility of them using the Internet to purchase their homes, which would cause a major shift in how the real estate industry operates in the U.S. and later in the rest of the world. At the same time, there is also an increased emphasis on the foreign investors who have purchased real estate in the U.S. for years and years – the Japanese in the 1980s, the Russians at the turn of the 21st Century, and the Chinese today. The Chinese, in fact, may be in a much better position to make future purchases online thanks to a recent deal with the most popular real estate auction site in America,   The Advancement of

Follow this link to read the entire article:


Commercial Real Estate, Industry News, Investment Real Estate, Medical Office, Office Real Estate, Real Estate Brokerage, Retail Real Estate

Building Owners Brace for Tall Order: One Way to Measure Space

 Reposted fron a Wall Street Journal article that apperred on May 27th

Ilona Billington

The MetLife building used to be listed at 2.4 million square feet. Now it is listed at 3 million square feet. Getty Images

Coalition Plans to Announce Measurement System in June

One of the biggest complaints of office tenants is that building owners throughout the world use different systems for measuring how many square feet or square meters tenants are leasing, deviating as much as 24% from one another.

Now an international coalition of real-estate organizations formed last year is hoping to change that. The International Property Measurement Standards Coalition in June plans to announce a single measurement system for the global office market.

“The current situation on measuring standards is totally unacceptable,” said Ken Creighton, chair of the coalition’s board of trustees.

But whether or not building owners adopt or ignore the standards remains to be seen. The coalition doesn’t have the clout to require owners to follow its standards and many landlords don’t want to change their current systems, which can mean millions of dollars in extra rent.

For some building owners, adopting a new measurement standard would mean that their building would shrink in size and lose value. “There is a risk that some firms may be sitting on balance sheets that are actually worth significantly less when measured by a common standard,” said Scott McMillan, chief of real estate at the International Monetary Fund.

For many, the debate might seem surprising. After all, landlords throughout the world are governed by the same laws of physics.

But they use widely different systems for measuring space and this affects rents, which typically are charged on a price-per-square-foot or price-per-square-meter basis.

For example, for a space that measures 10,000 square meters (108,000 square feet), some landlords will simply charge rent based on that amount. But most will increase the size by some factor depending on what formula they use for apportioning public space in the building—lobbies, bathrooms, hallways—to tenants.

Landlords also vary in whether they begin their measurement from inside or outside an exterior wall. Some begin measurements at their building’s farthest extremity, like the nose of a gargoyle.

In some cities, including New York, landlords generally have increased loss factors over the years. For example, in 1979, architectural guides listed the Pan Am Building at 2.4 million square feet. Today the tower, which has been renamed the MetLife Building, is listed at 3 million square feet.

Tenants say consistent standards are greatly needed. “I would have preferred this to have happened five years ago, but better now than in five or 10 years’ time,” said Billy Davidson, group property director of Vodafone. VOD.LN 0.00% Vodafone Group PLC U.K.: London GBp209.50 0.00 0.00% May 30, 2014 4:38 pm Volume : 63.70M P/E Ratio 0.01 Market Cap GBp55.39 Billion Dividend Yield 7.13% Rev. per Employee GBp420,129 05/29/14 Vodafone to Meet With Indian O… 05/27/14 FCC Could Use Merger Concessio… 05/22/14 Why is Vodafone Flogging a Net… More quote details and news » VOD.LN in Your Value Your Change Short position “This is the right thing to do.”

The Standards Coalition was formed in 2013 by a group of international property organizations including the Royal Institution of Chartered Surveyors in the U.K., the Building Owners and Managers Association in the U.S. and the International Monetary Fund. The move was partly in response to increasing pressure from large global tenants that are frustrated by the numerous measurement systems.

A group of 18 experts representing 11 countries have been working on the standards. Proposed standards have been circulating for comment among real-estate professionals for months.

Coalition members expect the standards to be controversial. “In any initiative in standardization there will inevitably be winners and losers,” said Marc Mogull, an executive with the investment firm Benson Elliot who also is a member of the Royal Institution of Chartered Surveyors.

There is also the question of implementation. Building owners will have to voluntarily accept the new standards and it isn’t clear how many will do so, especially if it could mean a financial loss.

Many real-estate executives in New York are skeptical that new standards will change the minds of the city’s landlords. “It’s an important enough market that they can make their own rules,” said Mark Weiss, vice chairman of Newmark Grubb Knight Frank.

But tenants could put pressure on building owners to accept standards by avoiding properties that don’t. “I need the confidence from my suppliers to know when they give me comparable details that it’s really comparable,” said Vodafone’s Mr. Davidson. “With [the new standards] I can say that I won’t consider your building unless you show me the measurements based on these standards.”

Some government agencies say they will help pressure owners to accept the standards. One such agency is Dubai’s Land Department, according to Mohamad Al-Dah, a senior director. “From our own point of view we don’t have very fair standards in Dubai, but once the Land department begins using it, we will encourage businesses in Dubai to adopt it,” he said.

Write to Ilona Billington at

Commercial Real Estate, Development, Executive Insight Series, Investment Real Estate, Office Real Estate, Real Estate Brokerage, Upcoming UST Events

Spring 2014 Real Estate Executive Insights Speakers Announced

The Real Estate Executive Insight Series invites speakers from the real estate industry to provide valuable information and discussion about hot topics and current trends. This is a free program and is open to the public. Attendees who are interested in the MS Degree in Real Estate program are encouraged to participate in an optional class visit following the speaking presentation. Registration is required.

Schedule of Events
5:30  – 6:00 p.m.: Registration and networking reception
6 – 7:00 p.m.: Speaker presentation
7 – 9:00 p.m.: Optional class visit

Cost: Free


Wednesday, March 5
Commercial Real Estate Investment and Ownership
Speaker: Will Hoeg, Falcon Ridge Partners

Will Hoeg, Falcon Ridge Partners

Will Hoeg, Falcon Ridge Partners

Real estate investment involves a substantial amount of risk. Will Hoeg of Falcon Ridge Partners will discuss the challenges and opportunities of investing in and owning commercial real estate. Hoeg will also discuss how to create partnerships for the purpose of making successful real estate investments.

Falcon Ridge Partners, LLC is a commercial real estate acquisition, investment and asset management company. Projects include data centers, complete campus renovations, confidential startup growth incubators, notable towers, building repositioning, and overall corporate campus redevelopment. Total investment value has exceeded $1.2 billion with primary concentration in Minnesota and Silicon Valley.

This program has been submitted for one hour of real estate agent/broker continuing education credit through the Minnesota Department of Commerce.


Wednesday, April 23
Retail & Office Development/Asset Management
Speaker: Tim Murnane, Opus Holdings, LLC.

Tim Murnane, Opus Holdings, LLC.

Tim Murnane, Opus Holdings, LLC.

Tim Murnane has been a leader in the commercial real estate market in the Twin Cities for many years. He will discuss where he thinks the opportunities are for Opus Holdings and for the market in general as the commercial real estate climate continues to improve.

The Real Estate Executive Insights Series is presented by the Opus College of Business MSRE program. This series invites speakers from the real estate industry to provide valuable information and discussion about hot topics and current trends. This is a free program and is open to the public.

This program has been submitted for one hour of real estate agent/broker continuing education credit through the Minnesota Department of Commerce.

Commercial Real Estate, Office Real Estate, Real Estate Brokerage, Think Outside The Box

Crowd-sourced Lease Database CompStak Launching in Minneapolis

CompStak, the crowd-sourced database of lease comps, recently announced that it will be launching in Minneapolis this September. CompStak offers a marketplace for the exchange of lease comps with the goal of creating “transparency in commercial real estate by gathering information that is hard to find, difficult to compile or otherwise unavailable.” The basic service is free, and allows brokers and other real estate professionals to trade lease information they have in exchange for receiving the lease comps they want — the detailed records of rent prices, square-footage, landlords, tenants, and income that buildings brought in. The company also sells enterprise licenses for access to its database to real estate investment trusts, banks, private equity firms and other companies; the licenses cost about $20,000 a year.

CompStak launched in January in New York City, where it claims to already have data on nearly 100% of Manhattan commercial office deals completed in the last year. The service has also recently expanded to San Fransisco, Los Angeles, and Washington, D.C. Minneapolis will be CompStak’s sixth market, following a launch in Boston later this summer. The startup company recently raised $4.5 million in venture capital and plans to expand to the 10 largest U.S. office markets by the end of this year.

CompStak has found opportunity in the fact that real estate data is often hard to acquire, with many professionals relying on simple word of mouth exchange of information. Co-founder Michael Mandel first noticed the lack of transparency in pricing of commercial real estate leases when he worked as a broker in New York. Different agents and firms had small pieces of data, but there was no centralized resource of lease comps. Mandel knew that if he could create that centralized database, he could sell the data to help landlords price their space, agents find tenants whose leases are expiring, brokers negotiate deals for their clients, and real estate investors know where to invest their money. CompStak’s innovative barter system has allowed it to seed its database with a large amount of information that would have been too expensive for the startup company to buy.

CompStak envisions rolling out additional products in the near future. In an interview with The Real Deal, Mr. Mandel said that right now the company is “focused on lease comps, but we’re going to move beyond lease comps. We’re a real estate data company that uses crowd-sourcing to gather data, and we’ll do that in new ways.”

Commercial Real Estate, Real Estate Brokerage

UST Alumna Jill Duemelands Named one of Nation’s “Brokers Who Dominate”

Jill Duemelands, President & CEO of Bismarck-based Duemelands Commercial Real Estate, was recently named one of the nation’s top real estate brokers in the book Brokers Who Dominate. We interviewed Jill to share her experience and insights on commercial real estate, the North Dakota market, and beginning a career in real estate.

Tell us a little about your background and experience. How’d you get your start in real estate?
Our company has been in business for over a hundred years and I am the fourth generation in the business, so I was learning about cap rate on the way to school in third grade. However, I said I was NEVER going into real estate nor was I going to join the family business….until my freshman year at University of St. Thomas. I still remember vividly in the spring of 1999 calling my dad from my dorm room in Grace Hall on south campus saying “Guess what dad? St. Thomas is starting undergraduate real estate program and I am going into real estate”. From that moment on, I was all in!

Could you describe your company Duemelands Commercial Real Estate and the services it provides? How did it fare during the recent economic downturn, and what opportunities do you see for growth in the near future?
At Duemelands Commercial, we connect people with real estate opportunities. We have been successful in doing this since 1905. We are a full service real estate company providing development, brokerage, property and construction management services.

While the rest of nation was experiencing an economic downturn, new technology was formed which allowed oil companies to drill horizontally and access large amount of oil in the Bakken Oil Shale in North Dakota. As a result, our market has experienced significant growth. Williston and Dickinson have seen $400 million in building permit valuations for the last two years and lead the nation in job growth creation.  The communities in our area have been in a race to keep up with infrastructure needs and seeing growth in all sectors of real estate.  We are only in the 2nd inning.

What are some of the trends influencing commercial real estate in Bismarck and in greater North Dakota?
Our greatest challenge in the market are Continue Reading