Archive for March, 2008

Slow Housing Market Good for Rentals?

I was asked to explain in 25 words or less why a slowing Oahu housing market might be good for rental property owners……So here goes.

As the 2008 Oahu housing market continues to unfold, one thing is for sure, skittish would-be buyers will remain renters for the time being.


If you are now living in an apartment that has been built in the last seven years, you are probably enjoying a number of nice features. These may include a modern kitchen, a large master bedroom, convenient laundry facilities, high-speed internet connections and perhaps, a pool, tennis courts, or clubhouse.

If you are interested in becoming a homeowner, you may have to make some adjustments when moving into a house you can afford. The first step into homeownership is usually a little difficult for anyone who has been a renter. After the first home has been purchased, however, each successive house you buy will have more of the features that you would like to have. In order to get this process in motion, you must make the initial leap from renting to owning.

Here are some of the adjustments you can anticipate:
1. The home will probably be considerably older than the apartment you are living in now. Consequently, you may have to invest money and effort to upgrade its condition.
2. The room sizes may not measure up to the ones you have now. The master bedroom, in particular, may be smaller and may not have a private bath.
3. The kitchen may be in need of updating in order to accommodate some of the conveniences that are common in the modern kitchen of today.

Buying your first home is like any other decision you make in your life. There are advantages and disadvantages. Although you may have to contend with some adjustments when living in your first home, it is the ticket to your financial future. It is a forced savings account that allows you the privileges of owning your own home while building an equity that can be tapped with either an equity loan or when you sell and step up to a better property.

Remember that people who have amassed wealth have done it through homeownership.

Ask your Realtor® how you can become a homeowner for the first time.

The Fed Takes Action To Avoid A Recession or Depression?

The Federal Reserve today lowered the federal funds rate by .75%, going down to 2.25%. This is a significant rate cut, however, many market participants markets expected a full percentage point drop. The Stock market has responded to the news with a big gain (over 400 points at this writing).

The FED made several dramatic moves in the last few days to assist in avoiding/overcoming a growing, worldwide financial crisis.

First, on SUNDAY, yes SUNDAY, the Fed lowered its lending rate to banks by a quarter percent, going from 3.50% to 3.25%.

Second, also on SUNDAY, the FED setup a new lending facility – described as a cousin to the Fed’s emergency lending “discount window” for banks – is geared to give investment houses a source of short-term cash on a regular basis – if they need it. This new lending facility is for big investment banks to secure short-term loans and will be available to big Wall Street firms on Monday. It will be in place for at least six months and “may be extended as conditions warrant,” the Fed said. The interest rate will be 3.25% and a range of collateral – including investment-grade mortgage backed securities – will be accepted to back the overnight loans.

Third, on SUNDAY, yes SUNDAY, the investment broker company Bear Stearns, the 80+ year-old multi-billion dollar investment firm, collapsed and was bailed out by the FED with a small portion of the assets being sold in a quickly approved deal to JP Morgan for $2 per share. This deal that represents a stunning collapse for one of the world’s largest and most venerable investment banks. Just on Friday the Fed had raced to provide emergency financing to cash-strapped Bear Stearns whose stock was trading at $160 last January and was at about $30 on Friday.

I my entire lifetime the FED has never taken such action.

The Good News and The Really, Really Bad News:
Until this financial crisis and associated remedies by the FED filters through the economy, look for more stringent requirements for getting a loan, nationally and locally.

The good news, however, is that rates will probably go lower to attract borrowers/buyers to our market.

The bad news, in my opinon, and this is REALLY, REALLY BAD NEWS, is that the FED is taking these steps to avoid a full-fledged economic collapse much like the Depression of the 1930′s instead of just trying to support the economy in an election year, as some have claimed…..Until now, given that Hawaii has been somewhat spared from much of the sub-prime crisis with relatively few foreclosures (see other entries in this blog), I have not expected the likelihood of a Depression, figuring that we would just be in for a long recession that would lead to a 5 to 7 year period of plateuing home prices and then normal appreciation after that for another few years………Now I am not so sure, and I pray to the Lord above that the FED is successful in its financial market management attempts. May God provide these decison-makers with wisdom as we journey through these perilous times.

According to a recent article in the Pacific Business News, Hawaii ranked 43rd in February 2008 Foreclosures.

Hawaii had 143 foreclosure filings in February, a 16.2 percent increase from the previous month but an increase of 142.3 percent over February 2007.

Hawaii ranks 43rd in the country for its foreclosure rate of one filing for every 3,434 households, according to the latest survey by California-based real estate research firm RealtyTrac.

Nevada again had the nation’s highest foreclosure rate for the month, with one filing for every 165 households. The state had 6,167 filings.

California had 53,629 foreclosure filings in February, despite a 6 percent decrease from the previous month, but still up 131 percent from February 2007. The state had a foreclosure rate of one filing for every 242 households.

The national foreclosure rate was down 4 percent from January, but up nearly 60 percent from February 2007. There were 223,651 filings.

Yesterday, I discussed some of the GOOD reasons for selling your home……….and as promised, today I will discuss some BAD reasons for selling your home. Note, that this list is not all inclusive, just some reasons I have heard prospective Oahu home seller’s indicate why they planned to sell their home…….

First, I have had customers indicate that they would like to sell thier home in an attempt to AVOID MAJOR REPAIRS, such as replacing the roof or repairing structural damage from termites. Please keep in mind, that if you sell, you MUST DISCLOSE all repair issues and this will certainly affect the price you can get for your home……while failing to disclose could result in you being sued for failing to adhere to Hawaii law. If you have a home that needs major repairs, talk to someone like myself and let’s discuss what is the best path forward for you and your home……just trying to sell and not fully disclose is a bad course of action and one I would not accept as your Realtor.

Second, some folks try to TIME THE MARKET, in other words, sell at a general market high just to capture equity that has developed. Obviously, it is fine to sell in order to realize equity that has developed in recent years, but, I would suggest it is not wise to sell just because prices have appreciated. If you sell into a recent rise in prices, you will automatically become a BUYER in that same expensive market when you begin to search for your new home. Or, if you sell in a currrent downturn in market prices you will obviously get less than you could have at another time.

Bottom line, I consider selling your Oahu home to AVOID MAJOR REPAIRS and/or to TIME THE MARKET as two BAD reasons to sell and would rather see you sell your home to meet a need, such as the needs mentioned in yesterday’s blog (financial difficulties, relocation,trading up, changing space needs, realizing equity, death/divorce, or changing neighborhood conditions).

Should You Sell Your Oahu Home?

I have always said that selling your Oahu home is a very big decision and should only be made for the correct reasons.

Here are some good reasons to sell your home:

Financial difficulties…….If you can no longer afford to pay your monthly home-related expenses, such as mortgage payments and utility bills, your only choice may be to move to a more affordable home.

Relocation……..If you need to relocate for a new job (or some other reason) to the Mainland.

Trading Up…………If you wanted to sell your house to acquire another home, possibly in a more desirable area or with more modern features.

Changing Space Needs……..If you have a baby or tow or three on the way, or siblings that need their own bedrooms……you get the picture.

Realizing Equity…….This is often accomplished in Trading up.

Emotional Associations…..Some folks consider selling their home after a divorce, death in the family or other such event.

Changing neighborhood conditions……Over time, some neighborhoods change character due to construction projects, rise in crime or other valid reasons.

These are the good reasons to consider selling your home…….Tomorrow, I will discuss some BAD reasons to sell your home……Aloha.

For Sale By Owner

When the time comes to sell your home, will you consider selling it yourself? The obvious appeal would be to save the commission that you would normally pay to a Realtor®. At first glance, it seems like selling a house may not be all that difficult. Homeowners with a sales background are often tempted to try it themselves because they feel selling a house is like selling anything else. As obvious as all this sounds, it really isn’t quite that simple.

In fact, national statistics tell us that only eight percent of all “For Sale By Owner” efforts are successful. Yes, only one out of every twelve actually results in a completed sale. What are the pitfalls in selling your home yourself?

1. Bargain Hunters - Some people watch for homeowner ads in an effort to steal the house from an owner who may be inexperienced in pricing or negotiating. These bargain hunters also know the owner is not paying a commission so they will deduct the amount of a commission from their offer.

2. Unqualified Buyers - Because a homeowner does not have the opportunity to meet a potential buyer in advance of showing him or her the house, many owners spend time and effort showing their home to people who may be financially unable to buy the home.

3. No Third Party -There is usually a great deal of emotion displayed by the seller who is selling their prize possession and the buyer who is probably making the largest purchase of his or her lifetime. Because of this, it is difficult to negotiate a purchase of this importance without an intermediary who has the trust and confidence of both parties.

4. Improper Pricing - Because of the emotional attachment most people have for their home, they are not very objective when deciding how to price it. Most “For Sale By Owner” properties are overpriced. Some, on the other hand, because of inexperience, are sold at an unfair below market price.

5. Making The Close - Every selling situation needs someone to ask for the order. Many sales are lost because no one is there to get a deposit and a signed purchase agreement when the buyer is ready to buy.

If you are ready to sell your home and are thinking about selling it yourself, consider the pitfalls mentioned above, and consider giving me a call if you would like the assistance of a dedicated professional.

The Art of Oahu House Hunting

Armed with your down payment and your pre-approved mortgage loan, the next step is finding the house that will best meet your family’s needs. With realistic expectations, patience, and plenty of research, you’ll be well on your way.

Once you narrow it down to the neighborhoods you like, you’ll want to determine the maximum house price you want to spend. Even though you’re pre-approved for a set loan amount, it doesn’t mean you want to spend that much. You’ll want to factor in other expenses, including retirement and college savings, vacations, and home maintenance and repairs, when you calculate how much you can afford for a monthly payment. And don’t forget to budget for homeowners insurance and property taxes.

Next, differentiate your needs versus your wants. You need three bedrooms, but a fourth room would be nice for a play room or guest room. You need a two-car garage, but a larger one would be nice for storage. You need a functional kitchen but want hardwood floor. You need two bathrooms but want a luxurious master suite. You get the picture.

As you begin on your house-hunting venture, you may want to prepare a checklist, perhaps in a table form on your computer. Break it down between exterior and interior characteristics. Make notes on each feature and give each a 1 to 10 score.

Some of the exterior features to rate might include size of yard, quality of fence, paint condition, roof condition, window conditions, garage, back yard. When it comes to interior, think about square footage; the floor plan; condition of walls; the size, quality, and functionality of the various rooms; and closet and storage space. Email me if you would like a sample list.

Your checklist should also include any other general factors you deem important – the amount of traffic, the appearance of the neighborhood in general, safety in the area, the reputation of local schools, etc.

Meanwhile, Freddie Mac, the stockholder-owned corporation chartered by Congress in 1970 to create a continuous flow of funds to mortgage lenders in support of homeownership and rental housing, and other industry experts make additional suggestions, including:

• Take a camera with you to capture an image of each house you look at that makes it to the “maybe” list.
• Don’t make a hasty decision, especially if you feel yourself becoming guided by emotion. Selecting a home takes time, thought, and analysis. You should carefully weigh the pros and cons of each house you like.
• Review your checklist and notes and compare it against your needs, wants, and budget.
• Bring your spouse, friend or family member with you to get a second opinion. They may notice a shortcoming that you’ve overlooked.
• Find out how much utilities and maintenance cost.
• Stay on top of newly listed houses via a Multiple Listing Service on the Internet.
• Remain in close contact with your agent. This is extremely important if want to succeed in your efforts. You want a good agent who will alert you of new listings and who will show you the houses as soon as they’re listed.
• Be prepared to look at the potential of a house rather than what you see in front of you. Set your priorities and decide what can be sacrificed. It’s more important that the layout of the house and the number of bedrooms you need fit your needs and that all major systems are functional versus your dislike for the avocado green carpet or the lack of landscaping. Those types of cosmetic shortcomings can be easily remedied once you buy the house.
If you find a house you like, offer a competitive bid. Keep in mind you’ll likely be competing against other offers – especially if interest rates stay low and the spring buying season is in full bloom.

And don’t forget – once you make an offer, make it contingent upon the findings of a professional home inspection. If any major defects surface, you’ll want to have the leverage to renegotiate or back out of the deal completely.

Written by Jon Mann with content input from Michele Dawson.

Common Mistakes For Oahu Home Sellers

Mistake #1. Using a real estate agent instead of a Realtor®

When you’re looking for help buying or selling property, it’s important to remember that the terms “real estate agent” and “Realtor® ” are not synonymous. Realtor® s can provide an extra level of service, and to be a Realtor® you must be a member of the National Association of Realtors (NAR). The equivalent organization in Canada is the Canadian Real Estate Association (CREA). Both are non-profit trade organizations that promote real estate information, education and professional standards. The National Association of Realtors also has earned a strong reputation for actively championing private property rights and working to make home ownership affordable and accessible. The NAR and CREA members adhere to a strict code of ethics founded on the principle of providing fair and honest service to all consumers. Realtor® business practices are monitored at local board levels. Arbitration and disciplinary systems are in place to address complaints from the public or board members. This local monitoring keeps Realtors directly accountable to the individual consumers they serve and therefore the consumer is more likely to find better service and accountability by using a Realtor®.

Mistake #2. Complacent marketing when selling a home

When selling your home there are no guarantees that the ultimate buyer of your home will have simply walked through the front door. In many cases you may have to bring your home to the buyer. Effective marketing will help ensure that your property receives maximum exposure to attract a ready, willing and able buyer in the shortest period of time. Ask your Realtor® to list for you all of the ways he/she intends to market your home and on what time-line. Also, be sure to ask about the home being advertised on the Internet.

Mistake #3. Taking for granted the “curb appeal” of your home

When you’re preparing your house for sale, remember the importance of first impressions. A buyer’s first impression can make or break whether they even want to go inside for a look. It is estimated that more than half of all houses are sold before the buyers even get out of their cars. With that in mind, be sure to stand outside of your home and take a realistic “fresh look” and then ask yourself what can be done to make the “curb appeal” improve. Also ask your Realtor’s opinion as to how to improve the curb appeal. It could make a huge difference in your final sales price.

Mistake #4. Forgetting about health and safety issues

Be upfront and disclose to your Realtor® any problems with the property. The problems are going to be discovered anyway. A decade ago, health and safety issues were rarely a part of the typical real estate transaction. Today, however, it’s common for inspections relating to health, safety, and even environmental concerns to be a part of most sales contracts. Moreover, in Hawaii, the seller must disclose to the buyer any knowledge of existing property problems. In many cases, these issues have been or can be factored into the home’s listing price.

Mistake #5. Forgetting what you would want if you were the buyer of your home

Remember that although people can be different in personality, they tend to be the same when it comes to expectations at someone else’s expense. In other words, a prospective buyer would probably like to see a perfect home from top to bottom, inside and out, when it comes to your home. Try to do as many of the following items as possible to improve the likelihood of an expedient home sale:

On the outside

1) Sweep front walkway.
2) Remove newspapers, bikes and toys.
3) Park extra cars away from the property.
4) Trim back the shrubs.
5) Apply fresh, clean paint throughout.
6) Clean windows and window coverings throughout.
7) Keep plumbing and all appliances in working order.
8 ) Maintain all sealant (window, tub, shower, sink, etc.) in good condition.
9) Make sure roof and gutters are clean and in good condition.
10) Mow the lawn frequently and plant flowers.
11) Keep pet areas clean.

On the inside

1) The kitchen and bathroom should shine.
2) Quick once-over with the vacuum; carpets should be clean.
3) Place fresh flowers in the main rooms.
4) Put dishes away, unless setting a formal display for decoration.
5) Make all beds and put all clothes away.
6) Open drapes and turn on lights for a brighter feel.
7) Straighten closets.
8 ) Put toys away.
9) Turn off television.
10) Play soft music on the radio/stereo.
11) Keep pets out of the way and pet areas clean and odor-free.
12) Secure jewelry, cash, prescription medication and other valuables.
13) Enhance the spaciousness of each room.

Mistake #6. Thinking you need to be in the home to explain things to a prospective buyer

You will be better served if you allow your Realtor® to do their job without you there. Most potential buyers usually feel more comfortable if they can speak freely to the real estate professional without the owners being present. If people unaccompanied by an agent request to see your property, you should refer them to your real estate professional for an appointment.

Mistake #7. Not knowing how to price your home to sell

Perhaps the most challenging aspect of selling a home is listing it at the correct price. It’s one of several areas where the assistance of a skilled real estate agent can more than pays for itself. Listing the home too high can be as bad as too low. If the listing price is too high, you’ll miss out on a percentage of buyers looking in the price range where your home should be. This is the flaw in thinking that you’ll always have the opportunity to accept a lower offer. Chances are the offers won’t even come in, because the buyers who would be most interested in your home have been scared off by the price and aren’t even taking the time to look. By the time the price is corrected, you’ve already lost exposure to a large group of potential buyers. The listing price becomes even trickier to set when prices are quickly rising or falling. It’s critical to be aware of where and how fast the market is moving – both when setting the price and when negotiating an offer. Again, an experienced, well-trained agent is always in touch with market trends – often even to a greater extent than appraisers, who typically focus on what a property is worth if sold as-is, right now.

Mistake #8. Not planning your move earlier enough

Many sellers simply don’t plan their move early enough and then feel totally overwhelmed at the time of moving out of the house. If you are able to move at any time of the year, don’t wait until summer, the peak-moving season. Consider also that the first and last few days of the month are extra busy. If you plan to sell your house, get it on the market as soon as possible. Keep a record of all expenses related to the move, some of which may be tax deductible. Fill out the Personal Household Inventory for each room. This is important for establishing the amount of declared valuation for the shipment and as a permanent inventory for insurance purposes. List, as nearly as possible, the year of purchase and original cost of each item. Attach any invoices or records of purchase to the completed inventory. Prepare a separate high-value inventory if the shipment will contain articles of “extraordinary” value. The following list includes items that might fall into this category:
* Antiques
* Art Collections
* Cameras
* China Collections
* Computer Equipment
* Crystal
* Figurines
* Firearms
* Jewelry
* Manuscripts
* Oriental Rugs
* Silver
* Stones Or Gems
* Tapestries
* TVs Or Stereos
Also, unless you have been given a binding moving estimate where a firm cost is established in advance, the exact cost of a move cannot be determined until after the shipment has been loaded on the van and weighed. The weight on which charges are based is calculated by weighing the van before and after loading. The total cost of the move will include transportation charges, any charges for declared valuation, plus charges for any extra services performed at your request. All of these charges are based on tariff rate schedules.

Mistake #9. Using a “convenient” Realtor® rather than using an experienced Realtor®

When working with a real estate agent, it’s critical that you have full confidence in that agent’s experience and education. A skilled, knowledgeable agent should be able to explain to you exactly why your home needs to be priced at a certain level – compared to recent listings and sales of homes similar to yours. Experienced agents also know exactly what the current pool of buyers is looking for in relation to particular styles and price ranges of properties. A skilled agent can recommend changes that will enhance the salability of your home, thus increasing the price – and/or decreasing the length of time before a sale.

4 Habits of Highly Effective Oahu Home Sellers

• Don’t Just Show Your Home – Show It Off

Like it or not, your home is competing with many more homes in the area. Buyers buy on emotion, not rationale; therefore, even the savviest marketing program in the world can only bring lots of buyers into your home – it can’t make them WANT the home. A motivated seller will do everything possible to promote the property’s strengths.

• Commit to a Long-Term Listing Only with a Performance-Specific Guarantee

Don’t rely on verbal promises. Make sure that when you enter into a listing agreement, you receive a written guarantee of performance, with the option to cancel without charge if those standards are not met. Otherwise, any vague language may result in a performance dispute that will only end up hobbling your sale in the long run.

• Obtain a Home Appraisal Before Listing the Property

How would you feel if your home sold for $1,150,000, only find out from the bank appraiser that it was worth $1,275,000? In today’s real estate market, this happens more often than you’d think. Eventually, your home will have to be appraised by a state licensed bank appraiser anyway. Why risk losing several extra thousands of dollars in your pocket?

Insider Secret: Buyers are afraid of paying too much for a house. That’s why they often make low offers. A certified bank appraisal helps you sell for full price because the buyer can see that the price was established by a professional third party.

• Secure Financing Terms and Commitment for Potential Buyers

Before you can consider deeming any buyer as “serious”, you should obtain a pre-approval letter from the lender before taking the time and effort to start the process. After all, what could be more heartbreaking than believing you’ve sold your house, only to find out the buyer is not in the financial position he represented?

Call me if you have any questions about these habits and I can help you implement them in the sale of your home. Together, we will sell it for top dollar.