Archive for February, 2008

The Pacific Busines News reported today that although foreclosure activity is still growing in much of the country, in Hawaii the rate is still one of the lowest in the nation.

Hawaii had 123 foreclosure filings in January, a 5 percent decrease from the previous month but an increase of 24 percent over January 2007.

Hawaii ranks 42 in the country for its foreclosure rate of one filing for every 0.02 households, according to the latest survey by California-based real estate research firm RealtyTrac.

The national foreclosure rate was up 8 percent over December and up nearly 57 percent from January 2007. There were 233,001 foreclosure filings for the month.

For the uninitiated, here is some high-level descriptive information of certain Honolulu Neighborhoods and special districts.

• Downtown Honolulu is the financial, commercial, and governmental center of Hawaii. On the waterfront is Aloha Tower, which for many years was the tallest building in Hawaii. Currently the tallest building is the 438-foot (134 m)-tall First Hawaiian Center, located on King and Bishop Streets.

• The Arts District Honolulu in downtown/Chinatown is on the eastern edge of Chinatown. It is a 12-block area bounded by Bethel & Smith Streets and Nimitz Highway and Beretania Street – home to numerous arts and cultural institutions. It is located within the Chinatown Historic District.

• The Capitol District is the eastern part of Downtown Honolulu. It is the current and historic center of Hawaii’s state government, incorporating the Hawaii State Capitol, Iolani Palace, Honolulu Hale (City Hall), State Library, and the statue of King Kamehameha I, along with numerous government buildings.

• Kakaako is a light-industrial district between Downtown and Waikiki that has seen a large-scale redevelopment effort in the past decade. It is home to two major shopping areas, Ward Warehouse and Ward Centre. The John A. Burns School of Medicine, part of the University of Hawaii at Manoa is also located there. A Memorial to the Ehime Maru Incident victims is built at Kakaako Waterfront Park.

• Waikiki is the world famous tourist district of Honolulu, located between the Ala Wai Canal and the Pacific Ocean next to Diamond Head. Numerous hotels, shops, and nightlife opportunities are located along Kalakaua and Kuhio Avenues. World-famous Waikiki Beach attracts millions of visitors a year. Just west of Waikiki is Ala Moana Center, the world’s largest open-air shopping center. A majority of the hotel rooms on Oahu are located in Waikiki.

• Manoa and Makiki are residential neighborhoods located in adjacent valleys just inland of downtown and Waikiki. Manoa Valley is home to the main campus of the University of Hawaii.

• Nuuanu and Pauoa are upper-middle-class residential districts located inland of downtown Honolulu. The National Memorial Cemetery of the Pacific is located in Punchbowl Crater fronting Pauoa Valley.

• Palolo and Kaimuki are neighborhoods east of Manoa and Makiki, inland from Diamond Head. Palolo Valley parallels Manoa and is a residential neighborhood. Kaimuki is primarily a residential neighborhood with a commercial strip centered on Waialae Avenue running behind Diamond Head. Chaminade University is located in Kaimuki.

• Waialae and Kahala are the upper-class districts of Honolulu located directly east of Diamond Head, where there are many high-priced homes. Also found in these neighborhoods are the Waialae Country Club and The Kahala Hotel & Resort.

• East Honolulu includes the residential communities of Aina Haina, Niu Valley, and Hawaii Kai. These are considered upper-middle-class neighborhoods. The upscale gated communities of Wai’alae ‘iki and Hawaii Loa Ridge are also located here.

• Kalihi and Palama are working-class neighborhoods with a number of government housing developments. Lower Kalihi, toward the ocean, is a light-industrial district.

• Salt Lake and Aliamanu are (mostly) residential areas built in extinct tuff cones along the western end of the Honolulu District, not far from the Honolulu International Airport.

• Moanalua is two neighborhoods and a valley at the western end of Honolulu, and home to Tripler Army Medical Center.

This information is courtesy of Wikipedia, the free encyclopedia.

When Should Oahu Home Buyers Jump In?

Investors who time any market hope to buy at the lowest price point and sell at the highest price point, but homebuyers have a trickier time knowing when to sit on the sidelines and when to jump in. The reason? There are several.

Buying a home is one of the largest financial investments a homebuyer will make. Transaction costs are expensive enough that homeowners remain in their homes approximately six years before trading up or down. As the recent buyer’s market shows, homes aren’t liquid, and may not find buyers at the price and in the time frame that sellers prefer.

On the other hand, homeownership provides significant benefits including property rights, tax benefits and other government subsidies including support for a mortgage lending market, quality of life, appreciation, and equity.

Since two factors move markets — fear and greed — it’s easy for buyers to be overanxious to buy in a seller’s market and reluctant in a buyer’s market. In a seller’s market, prices rise, sellers hold firm, inventories are short and days on market are short. In a buyer’s market, sellers are fearful that home prices will either flatten or drop below what they paid, causing inventories to rise, days on market to increase, prices to drop, and sellers to sweeten deals.

If buyers pay attention to housing news, they can be discouraged: interest rates are near year-ago highs, builder confidence is down, and some predict that housing will drop in value for the first time since 1968.

So is it the time to buy?

Here are a few factors for you to consider:
According to a recent article, “When The Housing Rebound Comes,” by George Mannes for Money Magazine, the time for buyers to jump in is when conditions improve. Mannes suggests that buyers look for four signposts: declining inventory (preferably under 6.5 months of inventory on hand); houses selling faster; Realtors opinions of local market conditions growing more favorable; and signs that sellers are less desperate, such as fewer incentives and homes selling closer to asking price.

For some buyers, the lesson that it’s time to buy is a hard one. They may wait so long that the home they hoped would go down in price sells to someone else. They have to start their search over finding that the remaining homes don’t compare to the “one that got away.” They may wait for interest rates to drop, and find that they stubbornly stay at higher rates. They’re knocked out of the neighborhood and price range they wanted to buy into and find themselves looking at homes with fewer features, less square footage, or more distance from work, family and friends.

When those scenarios happen, buyers learn that there’s an opportunity cost for waiting.

If you’re a buyer, you sadly realize that to get the home you want — at both the price and interest rate you want — will be nearly impossible. If you’re lucky, you’ll get two out of three. So, if you’re waiting to see what other buyers are going to do, you’ll soon find that once buyers move collectively, they will either drive prices down or drive them up. If prices are down, but likely to recover, do you really want to compete with other buyers on the way back up?

In other words, the price of feeling more comfortable about buying is inevitably paying higher prices and having less to choose from.

So here are some surefire ways to tell that it’s really time to buy:
• You found the home you really want.
• It’s affordable.
• You can get a reasonable loan.
• It will serve you and your family for years to come.
• You’re not looking for perfection. No home is perfect.
• You’ve given up trying to beat the market.
• You’re comfortable with your compromises, whether it’s location, size, price, features, or condition.
• You’re confident the home you chose is desirable enough that you will be able to sell it in any market.

If you need help in your search process, call me and I would be glad to assist.

Note: Blanche Evans provide some content for this blog entry as well Real Estate Newsletter Update.

When your local housing market is down and you have to sell, what do you do? You want top dollar, you may also need to sell in a hurry — especially if moving day is right around the corner.

In a tight housing market, remember that you are competing with all of the other homes for sale in your neighborhood. The key to success is to make your home and the deal itself more attractive than what the competition is offering without giving away too much.

If you find yourself having to sell into a slow market, here are some tips to help you make your home more attractive and sweeten the deal to generate more interest in your home:

Price it to the market, don’t be greedy. Most sellers tend to set the price too high, thinking their home is worth more than it really is. Check the sales prices of comparable homes that recently sold and the asking prices of comparable homes that are currently for sale in your neighborhood.

Obtain an appraisal in advance, so you know what the house is officially worth (based on the appraiser’s professional opinion).

Use a seasoned Realtor. Your Realtor has already experienced price wars in the housing market. According to the National Association of Realtors®, a home sells on average for 16-percent more when the seller uses as certified Realtor.

Have your home professionally inspected before showing it. Get everything repaired so lookers won’t have an excuse not to buy.

Have your home professionally staged. A professional stager can transform an empty or overly cluttered house into a warm and welcoming home.

Be willing to pay closing costs for the purchaser, up to 3 percent. A slow market is usually that way due to a slow economy. Buyers are strapped for cash and may need you to help in some way with the financing.

Give your Realtor copies of all improvements to the home and any guarantees for anything like a new roof, furnace, or hot water tank.

Realtor commissions are negotiable. Consider offering a higher commission to your Realtor as an added incentive.

Keep your home in ready-to-show condition at all times. Do not require a 24-hour notice.

Focus on curb appeal and making a good first impression. You do not get a second chance to make a good first impression.

Be open to negotiating on things like leaving furniture or appliances behind.

Although you may be tempted to take the first offer that comes along, be careful. Not all offers are created equal. Here are some warning signs to watch out for:

Someone tells you to take your house off the market for a period of time, and in exchange, the person will pay you more than the asking price later. This is usually a sign that the person plans on using your home as part of a mortgage fraud scheme in which he obtains a loan for more than the house is worth, pays you a little more than what you were asking, and pockets the excess proceeds.

A cash back at closing deal in which the person offers you more than the home is worth if you agree to kick back the extra money at closing.

The buyer is not pre-approved for a mortgage loan. This person can tie up your home, preventing you from considering better offers.

The person is offering no or very little Earnest Money Deposit. The lower the deposit, the more likely the deal will fall through.

The prospective buyers make the purchase agreement contingent upon their home selling, and for that to happen, several other transactions must occur first. This is known as the domino effect, and you should avoid it, if possible.

You can successfully sell a home in a declining market, and even profit from the sale, if you set realistic goals and work a little harder at it than your competitors. Just remember to work hard, stick to it, and avoid some of the common pitfalls described in this article.

Note: Ralph Roberts provided content for this blog entry, as well as, my Monthly Real Estate Newletter.

How to Handle Low Ball Offers

If your house has been on the market for quite a while, you may have already dropped your price and now you’re waiting for the buyers to rush in and make wonderful offers on this now-priced right property. And then it happens.

The lone buyer does appear, like a bandit in the night and offers you even less than what you just agreed to. Quite a bit less — about 10 percent less. So on your $350,000 house, that you just dropped to $324,000, you now have an offer for $299,000. With a seller subsidy request of $5,000. At this point, your net is $294,000.

So how do you handle such a low-ball offer. Well, first of all — don’t panic, get angry or lose sleep. Especially, don’t reject the offer right off the bat and tell them to come back when they’re serious. Remember, it’s now a negotiation game and the buyer IS serious or he or she would not have made an offer.

Several things have happened before this offer came in. The buyer, with his agent, has researched the market, walked through as many as 30 or 50 properties, conducted a study on the value of the property and written an offer for your house. Remember, you just won the lottery. They could have written on any other house, but they selected yours. So let’s get busy.

First of all, do an analysis of your own goals and needs. How much do you really need to come out of this house to meet your goals of moving to your next home? What could you really live with and what amount are you going to counter. Remember this last point — what are you going to counter? This is assuming that you’re not rolling over and that you’re going to stay in the game.

Next, conduct a comparative market analysis of the house once again. What’s happened in the market to get this buyer to offer such an offer (notice I didn’t say ‘low’). It might be that your house is now worth that amount. And if it is — that’s okay, because it probably means the house you wanted to buy up into is also worth less. At the worse, you’re going to take away less money. The best thing to look at, however, is that now you’re going to buy up with a smaller down payment because the buy-up property is also less.

Now, let’s start the negotiation. Keep in mind, this is for the long haul. Keep it alive as long as the buyer will keep it alive. Give up a little bit at a time. If you reduced the house to $324,000, expecting an offer of $319,999 with closing costs of $10,000 — then start there. You’re already willing to accept a net of $309,999, so you’re not really that far off. Understand you’re not going to get top dollar with no seller subsidy. So come down to $320,000 and give them their closing costs. So now, your net has come up to $315,000.

Hey — you’re actually ahead of the game if they accept. Oops — they don’t. Now they’ve countered to $309,000 and still want the $5,000 in closing. (Now our net’s at $304,000). Great. Just think. When you started, you were $324,000 apart (remember, you had NO offer at all). Now, you’re only $5,999 away from the net you were willing to accept in the first place.

We’re almost there. Now, before I go much further, here’s a negotiation tip — keep this civil. Use a lot of complements about the offer, the buyers and the agent. “What a great offer. Thanks so much for writing. We are very excited about selling this house to you.”
You want the buyer agent and his/her clients to know you’re wanting to work with them. You’ve been waiting six months for this day (negotiation day) and you want to keep everyone engaged in the process to get your goals met — sold and on your way to your new home in the country.

Now offer your final counter (or maybe next to final). You definitely want to use the complements at this point: “We are so close.” “I can’t wait till we wrap this up, then we can all celebrate.”

At this point, you know the buyers want to buy and your sellers are ready to start packing, so emphasize that you’re very close. Use a dialogue like this: “We are so close. We have some goals to meet, just like you do. And I hope we can bring this together to get us both where we want to be.”

This is when you make the final offer and stick with it. If you offer $314,000, they definitely get what they need and you get closer to your final net — which at this point would be $309,000 — just $999 off of your initial goal. Then you know if it goes forward or you’re back on the market. However, don’t be so stubborn that you lose the lone buyer because of $2,000 or so.
If the buyer is stretching and this won’t work, this is when the honesty comes out. The agent may tell you, If we can’t do $309,000, it’s just not going to work. It goes too far beyond their qualification.” Then you can decide whether to keep it on the market (hoping you don’t have to drop the price again), or you cut the loss and move forward with settlement.

Be patient with the process. Don’t get upset, remember, they’re trying to meet goals just like you are. By working together, both can get what they want.

M. Anthony Carr provided written content for this blog and my electronic monthly, Real Estate Newletter update.

Life Expectancy of Oahu Home Components

One way to prepare for the costs of owning a home beyond the mortgage payment, insurance and taxes, is to know the expected life expectancy of your home’s components.

Such knowledge doesn’t supersede the use of a home inspector when buying a home, new or old, but it can help you develop a savings plan so you are prepared for the inevitable.

Sooner or later you’ll have to repair or replace many of your home’s parts — inside and out.

Knowledge of components’ life expectancies is what homeowner associations use, in part, to build a reserve fund designed to spread, over time, the cost of the inevitable.

When the roof goes, the appliances conk out, or the paint begins to fade, it’s a lot easier to come up with the cash if you’ve already got some socked away for just this kind of rainy day.

Last year, the National Association of Home Builders, along with the Bank of America developed the “NAHB/BoA Home Equity Study of Life Expectancy of Home Components” to help you take the guess work out of preparing for the worst.

The report suggests you use the timelines as a general guideline. Local weather conditions, use habits, regular maintenance — or the lack of it — can all affect the life expectancy of many components.

Personal tastes for contemporary upgrades, remodeling needs and other factors may also dictate replacing parts before their useful life time is up.

In any event based on a comprehensive telephone survey of manufacturers, trade associations and researchers NAHB developed information about the longevity of housing components.

From the foundation to the rooftop, here’s a quick look at how long, on a national average, some of the most common home components are expected to last.

• Foundations. Poured concrete block footings and slab foundations should last a lifetime, 80 to 100 years or more provided they were quality built. The foundation termite proofing, 12 years, provided the chemical barriers remain intact.
Properly installed waterproofing with bituminous coating should last 10 years.

• Flooring. Natural wood flooring has a life expectancy of 100 years or more with proper care. Marble, slate, and granite, likewise, but again, only with proper maintenance. Vinyl floors wear out in 50 years, linoleum about 25 years, and carpet between 8 and 10 years, tops.

• Electrical system. In the electrical system, copper plated wiring, copper clad aluminum, and bare copper wiring are expected to last a lifetime, whereas electrical accessories and lighting controls are expected to fail not much longer than 10 years.

• Outside materials. Outside materials typically last a lifetime. Brick, vinyl, engineered wood, stone (both natural and manufactured), and fiber cement typically last as long the house exists. Exterior wood shutters get 20 years, well maintained gutters, 50 if they are copper, 20 years if they are aluminum. Copper downspouts last longest, 100 years or more, while aluminum ones give out after 30 years.

• Doors. Exterior fiberglass, steel and wood doors will last as long as the house exists, while vinyl and screen doors have a life expectancy of 20 and 40 years, respectively. Closet doors are expected to last a lifetime, and French doors have an average life of 30 to 50 years.

• Windows. Wooden windows last longer than aluminum ones — 30 years compared to only 15 or 20.

• HVAC systems. Air conditioning systems require a religious regimen of maintenance. Still, most components give up within 25 years. Furnaces break down in 15 to 20 years, heat pumps 16 years, and air conditioning units 10 to 15 years. Tankless water heaters can go for 20 years or more, but electric or gas water heaters only 10 years. Thermostats have a 35-year lifespan but are often replaced for more efficient models.

• Appliances. Appliances’ life expectancies depend largely on how much they are used, but they are typically replaced long before they are done. One must keep up with the Joneses. Among major appliances, gas ranges live15 years, dryers and refrigerators die at 13, compactors, dishwashers and microwave ovens might last until they are 9 years.

• Roofing. The life of a roof is largely dependant upon local weather conditions, proper building and design, material quality, and adequate maintenance. Slate, copper, and clay/concrete roofs have the longest life expectancy, 50 years or more. Wood shake roofs, go for 30 years, fiber cement shingles last 25 years, asphalt shingles give up at 20.

* Note That Broderick Perkins provided content for this blog.

If you are looking to finance the purchase of your Oahu home, here are 25 terms you should know, for better or worse ……ha!

A mortgage loan subject to changes in interest rates; when rate change,
ARM monthly payments increase or decrease at intervals determined by
the lender; the change in monthly-payment amount, however, is usually
subject to a Cap.

Repayment of a mortgage loan through monthly installments of principal
and interest; the monthly payment is based on a schedule that will allow
you to own your home at the end of a specific time period (for example, 15
or 30 years)

Calculated by using a standard formula, the APR shows the cost of a loan;
expressed as a yearly interest rate, it includes the interest, points, mortgage
insurance, and other fees associated with the loan.

A document that gives an estimate of a property’s fair market value; an
appraisal is generally required by a lender before loan approval to ensure
that the mortgage loan amount is not more than the value of the property.

A government official who is responsible for determining the value of a
property for the purpose of taxation.

A mortgage that can be transferred from a seller to a buyer; once the loan
is assumed by the buyer the seller is no longer responsible for repaying it;
there may be a fee and/or a credit package involved in the transfer of an
assumable mortgage.

A mortgage that typically offers low rates for an initial period of time (usually
5, 7, or 10) years; after that time period elapses, the balance is due or is
refinanced by the borrower.

A federal law whereby a person’s assets are turned over to a trustee and
used to pay off outstanding debts; this usually occurs when someone owes
more than they have the ability to repay.

A person who has been approved to receive a loan and is then obligated to
repay it and any additional fees according to the loan terms.

A limit, such as that placed on an adjustable rate mortgage, on how much a
monthly payment or interest rate can increase or decrease.

A cash amount sometimes required to be held in reserve in addition to the
down payment and closing costs; the amount is determined by the lender.

A document provided by a qualified source (such as a title company) that
shows the property legally belongs to the current owner; before the title is
transferred at closing, it should be clear and free of all liens or other claims.
Also known as settlement, this is the time at which the property is formally
sold and transferred from the seller to the buyer; it is at this time that the
borrower takes on the loan obligation, pays all closing costs, and receives title
from the seller.

Customary costs above and beyond the sale price of the property that must
be paid to cover the transfer of ownership at closing; these costs generally
vary by geographic location and are typically detailed to the borrower after
submission of a loan application.

A private sector loan, one that is not guaranteed or insured by the U.S.

A record that lists all past and present debts and the timeliness of their
repayment; it documents an individual’s credit history.

A comparison of gross income to housing and non-housing expenses; With
the FHA, the monthly mortgage payment should be no more than 29% of
monthly gross income (before taxes) and the mortgage payment combined
with non-housing debts should not exceed 41% of income.

The document that transfers ownership of a property.

The inability to pay monthly mortgage payments in a timely manner or to
otherwise meet the mortgage terms.

Failure of a borrower to make timely mortgage payments under a loan

Normally paid at closing and generally calculated to be equivalent to 1% of
the total loan amount, discount points are paid to reduce the interest rate on a

The portion of a home’s purchase price that is paid in cash and is not part of
the mortgage loan.

Money put down by a potential buyer to show that he or she is serious about
purchasing the home; it becomes part of the down payment if the offer is
accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls
out of the deal.

An owner’s financial interest in a property; calculated by subtracting the
amount still owed on the mortgage loan(s) from the fair market value of the

A separate account into which the lender puts a portion of each monthly
mortgage payment; an escrow account provides the funds needed for such
expenses as property taxes, homeowners insurance, mortgage insurance,

Here is a nice chart provided by the Honolulu Advertiser and Realty Trac:


Loyalty Pays Off

If you are planning on purchasing an Oahu home, you will be faced with many decisions.

Should you try to sell your existing home before buying the next one?
What area would best suit your needs?
What price range can you afford?
Which home would be the best choice from an investment perspective?
When do you know that you have seen enough homes in order to make an informed selection?

Before addressing these questions, however, you have another decision that should be made before those listed above.

Which Realtor® shall I choose to help me get the help and answers I need?

Real estate transactions are becoming more complicated. Because of this, it is in your best interest to work with a professional when making a buying decision of this magnitude. Some buyers like to leave their name with three or four salespeople. Although it may seem to be to the buyer’s advantage to have a number of people to work with, it is usually a very ineffective approach. The basic assumption is that a committee of agents can produce more results than working exclusively with one Realtor.

Like most committee assignments, results are often discouraging. You need the total commitment of one person who knows and understands your particular situation. My advice is to find a Realtor whom you feel will get the results you need. Tell this person that you will work with him or her exclusively as long as you see the effort required to get the job done. In this way, you will have a dedicated agent who will take on the personal responsibility of handling all the details of your home purchase. You see, Realtors are paid on a straight commission basis. They don’t receive a salary are not on an expense account. They are paid only after they sell something. This is why working with more than one agent is not a good idea. None of the Realtors know if it will be financially worthwhile to spend much of their time with you, because they know that you may buy through another agent. So, you don’t get the total dedication you need by playing the field. If a Realtor knows that you will be loyal to him or her, you will provide all the motivation that is necessary. Your Realtor can enthusiastically go to work knowing that all the effort will be rewarded.

Simple Mistakes to Avoid

A great way to make the home-buying process flow smoothly is to educate yourself and learn from mistakes others have made. This can make the difference between buying the home of your dreams and buying a “lemon.”

Not getting pre-qualified or pre-approved
Receiving pre-qualification or pre-approval from a reputable lender strengthens your negotiating position. It shows agents and sellers you are serious about buying a home.

Not seeking guidance from real estate professionals and inspectors
These people are trained in buying, selling and inspecting. Find someone you respect and trust and allow them to help – it will benefit you in the end.

Choosing an agent haphazardly
Don’t jump from agent to agent just because you saw their names on signs outside houses you liked. Interview at least three agents and choose the one you feel most comfortable with and who will focus on your needs.

Not getting enough information about the properties
Obtain market statistics and sales records for the area you are considering so you know how things (prices, conditions, list-to-selling price ratios) stack up in your neighborhood.

Not looking at enough houses for sale
The more you see, the more you’ll learn about what you want and what each house is worth.

Not making the correct price comparison
Don’t assess the value of a house only on the asking price. Your real estate agent should compile reports that reflect and compare the selling price of similar houses recently sold.

Forgetting to calculate all the costs
When calculating the maximum price you can afford, don’t forget to include hidden costs, such as closing and courier costs. Calculate a reasonable price range and look for a house that is priced toward the lower end.

Not asking enough questions
Don’t be afraid to ask questions! You’re not supposed to know everything about buying a home. Remember, this is potentially the biggest purchase you will make. Don’t buy a “lemon” because you didn’t ask enough questions!

Fear of losing a specific house
Don’t fall in love with the first home you see. New listings come onto the market all the time. The best deal may still be around the corner.

Not looking past the interior decorating
Don’t choose a house because you like the interior decorating – that is not what you are buying, and it will probably go with the sellers when they move. Check out the actual structure of the house!

Not checking out every nook and cranny before purchasing
Go through the house with a fine-tooth comb. You don’t want to find out after you’ve bought the house that the roof is leaking. Open cabinets, turn on every switch, notice details, move furniture away from the walls, look in the attic, turn on faucets.

Not making a low offer
Pay only what you can afford. The seller can always make a counter-offer, and you can counter-offer again until you settle on a suitable price, or you can simply walk away.

Being pushed into buying a certain home
Don’t make a decision until you’ve seen enough to pick the best one.