Davids’ Big Island Mauna Lani Real Estate

November 12, 2009

Buyers Are Liars? Not Today, Buyer’s Coming to Hawaii Are Smart & Knowledgable

Filed under: General — David C. Swanson @ 5:19 pm

Have you ever heard the phrase “Buyers Are Liars?”    Yes? Agents have used this term for as long as I have been Hawaii licensed.  In fact, before I bought our first house back in the 70′s, that saying had been kicked around from both sides of the Atlantic Ocean to the Pacific Ocean.  As a consumer of real estate , I was labeled that dreaded three letter word.  Ouch!!!  I never expected me of all people to be tagged as one of those!

Sometimes,  buyers are not clear about where they are in the buying cycle.  Buyers get nervous especially with large money investments being on the table.  Timing is everything.  All the buying conditions must be right.

As an agent, I  have been left out & disappointed when a buyer just cannot make up their minds.   I have to admit that it is an emotional  letdown not to get a contract signed and open escrow.  Buyers are smarter today with more knowledge.   It is critical to understand what your buyer is trying to do when they come over to the Big island and meet with you.

 Never assume anything today.  Buyers coming to Hawaii & our Big Island have done their homework before the plane lands at Kona International.  They have searched the net.  They have read blogs, chatted and been online getting as much information as humanly possible.  They are ready! Believe me they are not liars!   They want deals & want to make the most of the present declining real estate Hawaii market.

Buyers need us, real estate professionals,  to discover their needs and wants. Buyers  also need our guidance.  Patience is a must.  It is my opinion that buyers may act that they know everything about purchasing real estate but may be out of practice or not familiar with Hawaii and the process.  Therefore,  be prepared.

Never Assume that Buyers…

1) Understand the local market.   Some buyers believe what they hear. What they hear from other Realtors, from the media, and from friends and family. It is our job to educate them about our Big Island market, trends, location, climate, culture, taxes, etc. Educate!

2) Understand Agency.  Some buyers do not understand agency.  Some buyers are unaware of agency and do not understand the fiduciary duties of an agent. It is an agent’s  job to educate potential buyers on the importance of agency before they begin their search.

3) Understand How We Get Paid.  Some buyers think they have to pay a buyers agent. Some ask me what my fees are?  Let buyers know that they do not pay you if the property is represented in the multiple listing service.  

4) Understand Our Real Estate Contracts.   Some buyers do not understand our contracts.  Do not assume that they understand real estate terminology. It is an agent’s responsibility to explain the whole contract.  Take the time to educate your client.

 5) Understand the Purpose of a Home Inspection.   Some buyers do not understand that the home inspection is a contingency to the contract if performed. This home inspection is for their protection.  

 6) Understand the Negotiation Process.  Some buyers do not know how to negotiate and look to us to help them.  Some do not understand this Big Island market as we real estate professionals do.  The buyer make the final decision; it is our job to guide them.

 7) Understand Their Legal Rights.  Some buyers do not understand the legal aspect to real estate transactions. I recommend that they hire a real estate attorney. Leave the legal advice to the professionals.

 8) Understand the Loan Process.  Somebuyers have never purchased a 2nd home or vacation investment property.  The loan process  in Hawaii is different from the mainland.  Buyers are from all parts of the world.  Suggest a number of good mortgage companies who have worked with what type of property your buyer is purchasing.  If property is bank owned or short sale, focus your buyer on companies that know what they are doing.

Real estate has transformed into an open exchange of information and data.  Buyers need help in processing information to make their dreams of owning Hawaii real estate a realty.

Agents be aware not to point the finger at our buyers who may not be ready to buy today.  Buyers are not liars.  Maybe a bit more cautious or waiting  longer to decide.  The real estate industry over the past few years has had some highs and lows.  Stability is returning.

 Key is to educate.   Prepare a buyer packet or buyer checklist for your client.  Do your homework.  Do your very best to represent your client and not have them go back to where they came with the words on their lips , “Agents Are Liars”

January 24, 2009

Home Valuation Code of Conduct: Buyers Take Notice

Filed under: General,Real Estate Information — David C. Swanson @ 7:02 pm

The Federal Government is attempting to regulate appraisers and mortgage lenders in 2009. How will new regulations affect Big Island buyers? Clearly, there are big changes ahead for the appraisal and mortgage industries. Federal Housing Finance Agency (FHFA) Director James B. Lockhart has recently announced that Fannie Mae and Freddie Mac will implement a revised Home Valuation Code of Conduct (HVCC) effective May 1, 2009.

The code is primarily directed at regulating banks and other mortgage lenders and promoting appraisal independence. Mortgage brokers and realtors will no longer be allowed to choose appraisers. Instead, the appraisers will be chosen by the lenders. In the case of lenders’ in-house appraisals, the loan-origination departments will not be allowed to influence the valuation process in any way.

According to Christopher Palmeri of Business Week, “The appraisal industry has justifiably come under fire for its role in the great housing bust. Property appraisals, required by lenders before a loan is made, are supposed to provide an independent assessment of the home’s value. But during the boom, appraisers routinely signed off on a doubling or tripling of home values, sometimes racked up in just a matter of months. Investment properties were appraised at prices that made no investment sense.”http://www.businessweek.com/bwdaily/dnflash/content/jan2009/db20090118_003174.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis

Palmeri continues, “The new rules only apply to loans bought by or guaranteed by Fannie and Freddie. Lenders who operate independently of those channels do not have to follow them. But since Fannie and Freddie buy or guarantee a huge share of all U.S. mortgages, the changes should have wide application.”

Most professional appraisers strongly disapprove of the HVCC. They fear that the independent appraisers who have always depended on referrals from mortgage brokers will be forced out of business. They believe the HVCC will compel mortgage brokers and banks to hire a new appraisal workforce for independent appraisals, or to use the services of large appraisal management companies (AMCs).

AMCs are a dirty word in today’s appraisal industry. George Dodd, an appraiser based in Virginia, says “the most experienced appraisers (will be) the hardest hit” by the new code “because of our unwillingness to sacrifice integrity and quality by doing business” with management firms [AMCs]. Rather than work for peanuts, Dodd said, “I can flip burgers at McDs for more.” http://www.washingtonpost.com/wp-dyn/content/article/2009/01/09/AR2009010901920.html

AMCs are notorious for demanding that appraisers perform their work for half the usual fee, while at the same time charging lenders and borrowers more for the appraisal. This has a negative impact on the quality of the appraisal as individual appraisers might try to compensate for their lost income by performing a higher volume of appraisals.

Proponents of the HVCC believe that it will hold the appraisal industry to a higher standard and protect the appraisal process against inappropriate influence and coercion. They argue that the impact on appraisers will be minimal and positive. AMCs are mentioned several times throughout the HVCC, in that AMCs are prohibited from pressuring appraisers to reach pre-determined values.

The National Association of Mortgage Brokers and appraisers’ trade organizations have plans to appeal to Congress and Fannie and Freddie regulators to reverse certain aspects of the code, for instance, the code’s ban on broker selection of appraisers. Four of the five federal bank regulators have called for the withdrawal of the HVCC, stating that it could contribute to a greater incidence of inaccurate real estate appraisals and consumer credit problems.

How does all this affect mortgage borrowers? One commonly voiced concern against the HVCC is that the use of less experienced or non-local appraisers could arbitrarily deflate property values further, forcing buyers to come up with larger down payments, creating difficulties with refinancing, and ultimately leading to a higher risk for foreclosures or short-sale contracts. An overvalued appraisal can have severe consequences for a homeowner later on if they have to sell or decide to refinance, and then learn that they owe more for their property than it’s worth.

With the upcoming May legislation and regulations, what is the future? The US government will hold lenders, banks and appraisers in a tighter grip. Will the real estate buyer be more protected or less so? It will be interesting to see how this all unfolds. How do you see it?

January 14, 2009

David’s Big Island Real Estate, Humpback Whales and other Musings

Filed under: General,Humpback Whales — David C. Swanson @ 6:14 pm

The Big Island is beloved for its dramatic natural beauty, diverse eco-climate and rich culture and history. Yet, it remains the least discovered of all the Hawaiian Islands. Visitors and residents usually have their special favorites that include—splendid sunsets falling into the glorious Pacific Ocean; the pristine beaches, both public and “hidden,” along the Kona Coast; ubiquitous rainbows; the enchanting and mysterious Hawaii Volcanoes National Park; Mauna Kea’s Onizuka Visitor’s Center for some of the best stargazing in the world; viewing or hiking into the breathtaking valleys of Waipio, Waimanu and Pololu; the heavenly Hamakua Coast and sleepy Hilo town on the Windward side; swimming with wild spinner dolphins in Kealakekua Bay; the warm springs and black beaches of Puna; the historic City of Refuge (Pu`uhonua o Honaunau); and, the wide ranges and pastoral landscapes of Paniolo Country, just to name a few.

The humpback whales are at the top of my own “Appreciation List” for the Big Island. Whenever I am near the coastline during the months of their seasonal migration, my eyes are peeled for these colossal creatures. I never tire watching them blowing geysers and frolicking, flipping and splashing their tails with the utmost freedom and joy of expression. Communing with whales, even at a distance, is always a heartwarming experience because whales are intelligent beings with whom we share our very delicate and sacred planet. They often remind me to lighten up after an especially stressful day…oh yes, we have those in Paradise, too!

From October until May, the waters of Hawaii are visited by over 1000 humpback whales that have migrated to the warm waters of Hawaii from as far north as the Aleutian Islands of Alaska, as far east as Glacier Bay and as far south as the Farallon Islands off the coast of central California. These humpback whales come to the warm waters of Hawaii where they breed, calve and nurse their young.

This 3500-mile journey from their summer feeding areas takes between one and two months. It ensures that pregnant females and mothers with new-born calves spend the majority of their time in the relatively warm waters of Hawaii. Humpback calves are both conceived and born near the Hawaiian Islands. (The gestation period for the female is between 10-12 months.) http://animals.nationalgeographic.com/animals/mammals/humpback-whale.html

What is a Humpback Whale?

The humpback whale is the fifth largest of the world’s great whales. In 1781, a German naturalist named Borowski gave it the scientific name of Megaptera novaeangliae, which means “Big-Winged New Englander,” referring to the size of the whale’s huge tail fins and the fact that it was once widely sighted off the coast of New England. The more common English name of “humpback” appears to come from the animal’s tendency to round its back when diving.

The humpback whale is grayish-black, blue-black to dark black in color, with pale to white undersides that can show black markings that are varied according to the individual whale. It is with these markings, and particularly those found on the tail, that individual whales can be identified and the population and migratory patterns recorded. 

A humpback whale also has flippers (or pectoral fins) which are located on each side of its body. These flippers are used to turn and steer. Whales are mammals, and these fins are actually modified forelimbs with a bone structure similar to that of the human hand and arm.  

When born, calves weigh an average of 3000 pounds and range from 10-16 feet in length. They can grow to between 40-52 feet in length, with the females being slightly larger than the males. A fully grown humpback weighs approximately one ton per foot, or about 84,000 to 90,000 pounds, on average. Researchers believe humpbacks live between 40-60 years: http://www.imagequest3d.com/photos/humpbackwhale/index.htm

Why should we as realtors need to know more about the humpbacks? Well, factual knowledge is what our clients want! Along with real property, we sell the Hawaiian lifestyle to our clients—the sizzle that goes with the steak! Our clients often want to learn about our eco-systems and the cultural history of the islands, and the whales are one very important symbol and a favorite fixture of our marine landscape.

Realtors are the most trusted resource for real estate information. Especially during this market correction when some of us have a bit more free time than usual, we owe it to ourselves to become “expert” guides to Big Island living. You might want to go out and take a tour yourself: http://www.gohawaii.com/big_island

For those interested in taking a whale watching cruise, check out: http://www.tombarefoot.com/hawaii/whales_bigi.html

For me its balmy airs are always blowing, its summer seas flashing in the sun; the pulsing of its surf is in my ear; I can see its garlanded crags, its leaping cascades, its plumy palms drowsing by the shore, its remote summits floating like islands above the cloud-rack; I can feel the spirit of its woody solitudes, I hear the splashing of the brooks; in my nostrils still lives the breath of flowers that perished twenty years ago.
~Mark Twain, a Biography