Archive for June, 2008

Homeowners sometimes wonder if they would be dollars ahead by selling their house themselves and saving the fees that are paid to a REALTOR®. People with a sales background in some other field are particularly tempted to go it on their own. Twenty years ago, when things were much simpler, some people did have success selling the house themselves. Today, we face a much more complicated world in every endeavor — including home sales. Here are some of the services that a REALTOR® provides:

PRICING KNOWLEDGE:
It is not easy to determine the proper asking price. REALTORS® now have computer software that notify them of new listings, recent sales, and price changes as they occur. This vital information reflects the current market in your area as it really is. After making many comparisons between your home and like properties, your REALTOR® can recommend an asking price that is competitive with similar homes on the market. After the house is listed, periodic checks can be made into the MLS system to assure you that your price does keep pace with ever-changing market conditions.

MARKETING EXPERIENCE:
Because the sale of your home profoundly affects your financial well-being, it is no undertaking for an amateur. It is best to get the help and advice of someone who is working in the real estate business everyday. REALTORS® also possess selling tools not available to the average homeowner. These include membership in a multiple listing service, large advertising
budgets, access to the transferee through referral organizations and corporate relocation departments and home financing expertise used to qualify buyers.

NEGOTIATING AND CLOSING ASSISTANCE:
Handling an offer and counter-offer require the right touch. This is only learned through experience. Once the offer is signed and accepted, the job is still not complete. Now, the sale must be guided through numerous closing procedures that involve financing, inspections, conditions, legalities, and a myriad of details.

So, Choose your REALTOR® wisely.

I am often asked by my clients….”What can go wrong during the real estate transaction involving the purchase or sale of a home?” Obviously, I cannot list ALL of the possible types of turbulence that can occur during a transaction, but here are a few that can and do happen here on Oahu involving active real estate transactions……..And I have categorized each potential problem by transaction participant…………..And, let me say, a good REALTOR can help you deal with these problems effectively:

The Buyer/Borrower:
1. Does not tell the truth on the loan application.
2. Submits incorrect information to the lender.
3. Has recent late payments on credit report.
4. Found out about additional debt after loan application.
5. Borrower loses job.
6. Co-borrower loses job.
7. Income verification lower than what was stated on loan application.
8. Overtime income not allowed by underwriter for qualifying.
9. Applicant makes large purchase on credit before closing.
10. Illness, injury, divorce or other financial setback during escrow.
11. Lacks motivation.
12. Gift donor changes mind.
13. Cannot locate divorce decree.
14. Cannot locate petition or discharge of bankruptcy.
15. Cannot locate tax returns.
16. Cannot locate bank statements.
17. Difficulty in obtaining verification of rent.
18. Interest rate increases and borrower no longer qualifies.
19. Loan program changes with higher rates, points and fees.
20. Child support not disclosed on application.
21. Borrower is a foreign national.
22. Bankruptcy within the last 2 years.
23. Mortgage payment is double the previous housing payment.
24. Borrower/co-borrower does not have steady 2-year employment history.
25. Borrower brings in handwritten pay stubs.
26. Borrower switches to job requiring probation period just before closing.
27. Borrower switches to job from salary to 100% commission income.
28. Borrower/co-borrower/seller dies.
29. Family members or friends do not like the home buyer chooses.
30. Buyer is too picky about property in price range they can afford.
31. Buyer feels the house is misrepresented.
32. Veterans DD214 form not available.
33. Buyer has spent money needed for down payment and closing costs and comes up short at closing.
34. Buyer does not properly “paper trail” additional money that comes from gifts, loans, etc.
35. Does not bring cashier’s check to title company for closing costs and down payment.

The Seller:
36. Loses motivation to sell (job transfer does not go through, reconciles marriage, etc.)
37. Cannot find a suitable replacement property.
38. Will not allow appraiser inside home.
39. Will not allow inspectors inside home in a timely manner.
40. Removes property from the premises the buyer believed was included.
41. Is unable to clear up liens against their property – short on cash to close.
42. Did not own 100% of property as previously disclosed.
43. Thought getting partners signatures were “no problem,” but they were.
44. Leaves town without giving anyone Power of Attorney.
45. Delays the projected move-out date.
46. Did not complete the repairs agreed to in contract.
47. Seller’s home goes into foreclosure during escrow.
48. Misrepresents information about home & neighborhood to the buyer.
49. Does not disclose all hidden or unknown defects and they are subsequently discovered.
50. Builder miscalculates completion date of new home.
51. Builder has too many cost overruns.
52. Final inspection on new home does not pass.
53. Seller does not appear for closing and won’t sign papers.

The Realtor(s):
54. Have no client control over buyers or sellers.
55. Delays access to property for inspection and appraisals.
56. Unfamiliar with their client’s financial position – do they have enough equity to sell, etc.
57. Does not get completed paperwork to the lender in time.
58. Inexperienced in this type of property transaction.
59. Takes unexpected time off during transaction and can’t be reached.
60. Jerks around other parties to the transaction – has huge ego.
61. Does not do sufficient homework on their clients or the property and wastes everyone’s time.

The Property:
62. County will not approve septic system or well.
63. Termite report reveals substantial damage and seller is not willing to fix or repair.
64. Home was misrepresented as to size and condition.
65. Home is destroyed prior to closing.
66. Home not structurally sound.
67. Home is uninsurable for homeowners insurance.
68. Property incorrectly zoned.
69. Portion of home sits on neighbor’s property (encorachment).
70. Unique home and comparable properties for appraisal difficult to find.

The Escrow/Title Company:
71. Fails to notify lender/agents of unsigned or unreturned documents.
72. Fails to obtain information from beneficiaries, lien holders, insurance companies, or lenders in a timely manner.
73. Lets principals leave town without getting all necessary signatures.
74. Loses or incorrectly prepares paperwork.
75. Does not pass on valuable information quickly enough.
76. Does not coordinate well, so that many items can be done simultaneously.
77. Does not bend the rules on small problems.
78. Does not find liens or any title problems until the last minute.

The Appraiser:
79. Is not local and misunderstands the market.
80. Is too busy to complete the appraisal on schedule.
81. No comparable sales are available.
82. Is not on the lender’s “approved list.”
83. Makes important mistakes on appraisal and brings in value too low.
84. Lender requires a second or “review” appraisal.

The Inspectors
85. Pest inspectors too busy to schedule inspection when needed.
86. Pest inspectors too picky about condition of property, hoping to create work for them.
87. Home inspectors not available when needed.
88. Inspection reports alarm buyer and sale is cancelled.

I could go on…….But my fingers are getting tired……..Sufficeth to say, problems can and do happen, so choose your real estate agent wisely so that you can have help in working through any potential problems successfully.

Trend To Watch…..Look For Real Estate In Town

The sobering reality of paying $4 to $5 a gallon of gas is likely to accelerate the trend of in-town development on Oahu, just as it has been doing on the Mainland cities where young professionals and Baby Boomers are giving up on the suburbs. Expect to see more “infill” developments in Honolulu – reclaiming vacant lots for new housing – and strong sales prices for homes in close-in neighborhoods like Manoa, Kaimuki and Kapahulu. If you are an investor and interested in financing such in-fill projects, give me a call as I am currently working with three different developers to initiate such projects.

Content for this blog entry courtesy of the Pacific Business News Hawaii Economic Outlook Quarter 3 in 2008.

A Commonly Missed Tax Break

Condominium or cooperative residents often miss the fact that upgrades to the common areas of communities can affect the amount of tax an owner pays when the home is sold.

If the property is a principal residence and the owner has lived in it for two of the previous five years before the sale, a big chunk of the profit is already exempt from federal tax — $250,000 for a single person and $500,000 for a married couple.

But the seller will owe taxes on any profit beyond that, and he will owe taxes on the whole amount if the property isn’t a primary residence.

A proportional share of the amounts spent by the condo or cooperative association on improvements to the property — not simple maintenance — can be added to the amount paid for the property, or in tax lingo, “the basis.” The basis is subtracted from the sales price to determine any taxable profit.

“It surprises me that many community association owners are not aware of this tax benefit. Particularly for older home owners who have watched real estate profit build up over many years and now have a profit of more than $500,000, every dollar of capital improvements they can document is valuable,” says Benny L. Kass, real estate attorney.

Thanks to the Washington Post for this content. Source: The Washington Post, Benny L. Kass (06/21/08)

Which is Better for You: A New Home or a Resale?

When it’s time to make a move, one of the first decisions most people think about is whether to buy a brand new house or a previously-owned home. On Oahu, you have many choices and here are some distinct advantages of each choice:

New house:

• Modern floor plans that could include a “great room,” bigger closets, more baths, entertainment room, etc.

• The opportunity to choose upgrades and customize floor coverings, colors and more.

• More energy-efficient insulation, windows and heating/cooling systems

• The added protection of a warranty from the home builder

Resale home:

• Existing features, including window treatments and mature landscaping.

• Location — existing homes are often closer to metropolitan areas instead of farther out in the suburbs.

• Established neighborhoods and sense of community.

• The opportunity to use an existing home as a base to remodel and create a unique property.

Only you can decide if a brand new home or one with a few years on it is right for you. If you would like additional information on which option might work best for you, don’t hesitate to reply to this blog or call me with any questions…..Aloha.

How to Make Rooms in Your Home Look Larger with Lighting

A bright and well-lit home can dramatically change the mood of your home and help you feel relaxed and comfortable all year long, not to mention help your property sell for top price. Here are some tips to lighten up your home and make the rooms look big and inviting:

• Choose different types of lighting to avoid the expense of installing windows or skylights. Lamps or other accent lighting can make a dull room appear elegant or small rooms seem larger.

• If you have a room with a dark wall or a narrow, dark hallway, hang a group of pictures and light them with adjustable halogen track lighting to create the effect of a photo gallery.

• Paint ceilings a light color to avoid making them seem lower than they are and give the room a cramped feel.

• Use color to add cheer to a room. Pink and green tones have a calming effect while darker colors, such as red, tend to cause agitation. Neutral wall tones create a harmonious environment. Bright colors should be used as accents in pillows, artwork or flowers.

• When selecting paint, tape large color chips together on a wall to get a better idea of the shades you like. When you’ve narrowed your choices down, buy a quart of 2 or 3 colors and paint 1 or 2 foot squares next to each other on both shaded and brightly lit walls. Choose the color that looks best in both kinds of light.

Six Ways To Beat The Stress Of Buying A Home In Oahu

Repotedly, DEATH, DIVORCE & MOVING are the three most stressful experiences in life. I will let the self-help gurus tackle the first two, but I will comment on the third. There are two very different kinds of needs that people have while moving. First there are the transactional needs, like finding the home that is just right for them, finding a seller who is realistic, negotiating the price, filling out the paperwork, handling the escrow, and arranging for the move. But there are also emotional needs that are involved when moving, and this is where the biggest stress comes in. Any competent agent will handle the transactional needs for you, but if your emotional needs are unfulfilled, you’ll be frustrated and may not act in your own best interests. The ideal real estate agent is one, who is competent with paperwork and numbers, but can also guide, direct, and counsel you through the emotional ups and downs of moving.

Here are the six best ways I have found to beat the stress:

1. Begin with the end in mind. Have an ultimate scenario of where you’re trying to be. What will life be like when you get there? How will it be better than where you are now? Dwell on that picture and write it out, fill up at least a page about how it feels in the new place. This is imperative. Having the goal in front of you at all times energizes you to achieve it, in spite of setbacks and frustrations. Emotions will run high and you need an anchor. You too must focus on that future goal when anxiety threatens to get the better of you.

2. Be flexible. In your monetary calculations, overestimate by several thousand dollars. In this market, anything can happen between contract acceptance and closing. It could be the inspections reveal areas of concern that the seller is unwilling to fix or the repair costs are higher than the amount limited in the contract. Or the interest
rate changes which affects the necessary down payment and closing costs you will need to come up with. As your real estate agent, I will strive to tie up loose ends as quickly as possible, but remember there is no perfect world. Most buyers feel a bit overwhelmed when taking on a new mortgage and the responsibilities of a new home. I have seen many buyers get angry when it seems like the cost just keeps going up. Anger is caused when reality doesn’t match up with the expectations you had in your mind. So if you anticipate this happening in advance, you won’t get angry. In fact, it’ll probably go better than you expected.

3. Trust in the process. There’s just so much to do, it’s easy to panic. You wonder if it will ever work out. In fact, when my friends bought their house, they couldn’t eat for a day, they felt sick to their stomachs! You think you’re taking a big chance, but the truth is you’re giving yourself a big chance. Even though you can’t see every step of the way, as you move towards your goals, the way opens up. I know that you haven’t moved in a long time and it’s a major upheaval in your life. But I have been there many times before, and I will be looking out for you. Trust that I know the way to get you there.

4. Get knowledge. One thing you’ll probably feel during this transition time is being out of control. It feels like everyone else has taken over your life. The seller, your
lender, the appraiser, the inspectors, they all have the power to say yes or no to your moving plans. I will try our best to let you know ahead of time what your expenses will be, and what the unknowns are. I will tie down the loose ends as soon as possible. I will try to get your loan approved within a reasonable time frame. I will educate you as best I can and let you in “behind the scenes” so you won’t ever feel out of control.

5. What is your option? When things don’t go as smoothly as you had hoped, don’t let emotions take over. Always ask yourself “What is my option?” because there are always options. Let’s pretend the lender takes longer than agreed upon to get your loan. He keeps asking you for more and more documentation until it feels like he also needs to know how many gold fillings you have in your mouth! You feel upset because you wanted to feel certain about the move and now you still have to live with the uncertainty. You want to say “Forget it, I’m fed up with this!” But what is your option? Find a new lender and start the process over again? That may take weeks, plus you will have to provide all the paperwork all over again. If the lender is trying his best, it may be better to give him a few more days. Each case is unique, but when setbacks occur we’ve found that asking yourself this question helps to defuse the situation and restore clear headed thinking.

6. Seek entertainment. When there’s nothing you can do about the situation, take your mind off of it altogether. Maybe you expected loan approval on Friday, but now it won’t come until Monday. You hate being in limbo and feeling powerless. So do something else entirely, maybe something where you aren’t powerless. Take a hike,
play tennis, get out of town for the day, watch a movie, pray, or pour yourself into your work. Whatever diversion works best for you, now would be a good time to
engage in it. Just forget the situation and refuse to listen to those irritating thoughts when they come into your head. Think about something else instead and just take it
one day at a time.

I hope this information is helpful to you……Aloha.

According to a forecast done by the University of Hawai’i Economic Research Organization (UHERO) as part of its quarterly outlook on the state’s economy,the group said prospects for the state’s economy had taken a downturn since it issued a forecast three months ago with the failures of ATA and Aloha Airlines and a surge in oil prices.

“A significant recovery of the local economy will not begin until 2010, making this a relatively shallow but lengthy Hawai’i economic contraction,” said the report, which updated one that projected the state’s economic growth would “grind to a halt.”

“A deeper slowdown could occur if oil prices remain at their current record levels or if the national housing slump worsens more than expected.”

The revised UHERO outlook cut expectations for the eight economic indicators tracked by the group, with new tourism arrival projections calling for a 4.6 percent decline in visitors.

No exact comparisons exist for what the state is going through since the downturn after the Sept. 11 terrorist attacks was sharp but relatively short, Gangnes said. Hawai’i's economic sluggishness of the 1990s lasted years with a succession of negative shocks creating a long stagnant period, he said.

“We don’t think that’s what we’re headed for this time around,” Gangnes said.

The new forecast also projects:

Visitor arrivals from the Mainland will decline 7.1 percent this year and increase 0.7 percent next.

Japanese visitor arrivals will fall by 8 percent.

Payroll jobs will be off 0.2 percent this year and by a similar amount next.

Unemployment will rise to 3.7 percent for the year and increase to 4.2 percent in 2009.

Energy and food costs will contribute to a 5 percent inflation rate this year. It will drop off to 2.2 percent next.

Significant content for this blog item was taken from an article written by Greg Wiles, of the Honolulu Advertiser.

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According to Pacific Business News,(PBN)

  • Hawaii ranked No. 42 in the nation for foreclosures in May, up from 36 in April, according to the latest report from RealtyTrac.
  • Hawaii had 162 foreclosure filings in May, down 22 percent from April and up 25 percent from May 2007.
  • There were 210 foreclosure filings last month and 129 foreclosures in May 2007.
  • Hawaii had a foreclosure rate of one filing for every 3,087 households, said the latest survey by California-based real estate research firm RealtyTrac.

    Nevada again had the highest foreclosure rate in the country with one filing for every 118 households. California had the second highest foreclosure rate, with one for every 183 households receiving a filing in May. Arizona ranked third, with one filing for every 201 households. California had the highest number of foreclosures at 71,930. Nationwide there were 261,255 foreclosure filings for the month, up 7 percent over April and up 48 percent from May 2007, according to the report.

  • The Homebuyer’s Skin and Bones

    When house-hunting, keep in mind the difference between the “skin” and the “bones” of every property you see. The “bones” are aspects of the home that cannot be changed, such as the location, lot size, surrounding noise, school district, and other fixed features. While most buyers find it difficult to find exactly the “bones” they’re looking for, this guideline helps them narrow down their choices.

    The “skin” of a house, on the other hand, represents superficial qualities such as carpet & wallpaper color, front lawn / backyard characteristics, and window coverings. These can be easily modified once you move in – don’t let them influence your decision. In fact, when making your final choice, always buy the house with good “bones”, simply because the “skin” can always be changed to suit your needs. One useful tip is to imagine every house as if it were vacant; this will help you consider the property’s underlying merits, and not the seller’s decorating skills.