Oahu Home Sales

Step #2: Set The RIGHT Price For Your Home From The Start

Every seller wants to realize as much money as possible when selling his or her home. The natural inclination is to price your home high, thinking you can always come down in the future.

But a listing price that is too high can be a disaster, and frequently nets the seller LESS money then they ever anticipated—even after paying a real estate commission!

Why is this?

Because buyers will reject your home in favor of other homes in a reasonable price range. And if that doesn’t frustrate you, think about this: Buyers will use YOUR home to compare and justify the purchase of a similar, but correctly priced home.

But the problem gets worse…

It’s a fact that 96% of all homes are sold by REALTORS®. So whether you sell your home yourself, or through a professional, you MUST be able to attract the REALTOR® community to your home.

Problem is, agents who otherwise would readily bring buyers through your home will automatically cross it off their showing schedule because it’s priced too high. They don’t make money showing homes…they make money SELLING them.

They know market values in your area. And if your home is priced too high, they’re not even going to waste their time showing it.

And word spreads with the agent community. If your home gets “branded” as overpriced, not only will agents NOT show it, BUT you’ll have to lower the price further than you ever expected…just to get them back!

Agents Simply Will NOT Show Overpriced Homes Because They Work By Commission. Showing Overpriced Homes That Will Never Sell Means They’re Working For FREE!

But we’re not out of the woods yet…

You see, your home is MOST valuable when it’s new on the market. And if you delude yourself into thinking you can price it high and come down later, you’re in for a big surprise.

Here’s what’ll happen: After months on the market without even a nibble, you or your agent will decide to reduce the price. Even with your price reduction, there’s still little activity because your home’s been “branded” as overpriced.

So after a while longer you decide to lower the price a little more. Now you’re pushing the limits on what you wanted to receive in the first place.

Finally, you start to get a nibble or two.

Problem is, your home has been on the market for months now. And when you finally receive an offer, you can bet your bottom dollar it’s going to be discounted further.

Why?

Because buyers usually want to know how long a home has been on the market before they decide how much to offer. And the longer your listing has been sitting unsold, the more desperate your home looks.

Like sharks smelling blood, buyers will see your home as prey.

And their offers are going to knock you over. But you’ll have little choice but to negotiate. You have no other options.

How could this all have been avoided?

By simply pricing your home correctly in the first place.

Homes That Sell Fastest Also Sell For The Most Money!

It’s a known fact: the very same reasons that make a home sell fast will make a home sell for the most money. Homes are best positioned to sell when they’re new on the market.

Here’s a little help for pricing your home. The first thing you need is VALID local market information. Take a look at homes that have sold in your area. Compare the price sold as a percentage of list price. This will help you get a feel for the average discount in the area.

Generally, your list price will be within 2.5 to 5 percent of what you expect the final selling price will be. But be careful!

The amount of discount should be dictated by real world FACTS from YOUR AREA, not some real estate agent’s guess on what he or she expects offers to come in at. If the selling market is hot in your area, there will be little or no discounting. There may even be bidding wars, and homes selling for more than list price.

On the other hand, if homes are not selling well, you will need to be flexible.

Next, DO YOUR HOMEWORK to determine what your home is worth. You don’t just use a CMA like many agents use. Do a total market analysis.

When you narrow down your area, you need to correct values for distressed sales, divorces, remodeled homes, and other events that affect the value of other homes that have sold.

Each factor (distressed sale, condition, siting, location, etc.) will add to or detract from the value of your home. And in most cases, the only person who can really give your this information is a GOOD agent—someone who has extensive experience valuing homes.

Notwithstanding all your hard work, in the end…

The MARKET Is the Only Determinant Of The VALUE Of Your Home

There’s an old saying in real estate: “Sellers are NOT the deciders of what their home is worth, but they ARE the deciders of how quickly their home will sell.”

The REAL value of your home is what a willing buyer will pay for it, and what you will accept. Nothing more. Nothing Less.

OK, so let’s say you’ve determined that the average discount on homes in your area is 2.5 percent of expected selling price. And sales information shows that your home is worth $600,000. To determine a list price that is within 2.5 percent, divide $600,000 by .975 (1.00 less .025 = .975). This gives you a list price of $615,384.

But remember this: Markets and the economy change. If interest rates rise by a point, people who could otherwise afford your home may not be able to any longer.

And this will ultimately affect the value of your home. So you may need to adjust your price over time. Stay on top of market events, both island wide and within your neighborhood.

If the market’s declining, it’s best to discount your price up front. If the market’s rising, be prepared for full price offers, or even bidding wars.

See you tomorrow for Step #3…..Aloha, Jon.

Yesterday, I promised six steps to sell your home for the most money…….Here is step #1.

Step #1: Understand What The TOTAL Market Is Doing, And Get The FULL FACTS.

One of the biggest mistakes people make when selling homes is they rely solely on “local neighborhood market analysis information” to determine the right price to list their home.

Your local real estate agent shows up with a “canned” analysis they took right off a computer screen. They typed in a few parameters, and out popped a report showing the homes that sold in your area.

They put it into a fancy folder with their “Colossal Real Estate Company” name on it, and pass it off on you.

In most cases, they didn’t view the homes. They didn’t call anyone. They don’t know WHY one home sold for 5% more, and another sold for 10% less. They don’t know how construction materials, siting, location, or other features have affected each home they just provided you price information on.

In most cases, they simply haven’t taken the time to do their homework. They just average them all together and tell you that’s what you’re home’s worth.

Who are they kidding?!!

First and foremost, before you list your home for sale, INSIST on seeing a “total market overview” of exactly what is going on in the ENTIRE market. Then narrow your analysis to local market information.

Why do I say this? Because you want to know two things:

2) What is your specific area doing with market values? How does it compare to what the total market is doing? Are the growth rates the same, lower, or higher than the overall market?

Next, insist on real world FACTS to justify the various sales prices of comparable homes. Was there a home that sold out of financial distress? A Divorce? If so, it’s going to affect how you price your home.

Was an add-on or remodel completed poorly? Was one of the homes on the best or worst lot in the subdivision? Is one made out of CMU (concrete masonry) compared with a frame/stucco home? Is one home single wakl construction while another is double wall construction?

Understanding these parameters will save you thousands of dollars when you list your home for sale. I perform both of these analysis for my sellers, in an easy to understand format, so you know EXACTLY what your home is worth. With real world FACTS, not opinions!

Check back for step # 2 in a couple of days…..Aloha, Jon.

If You’re Trying To Sell Your Oahu Home Today…..With Or Without A Real Estate Agent…..You Could Lose Thousands Of Dollars, And Take An Enormous Amount Of Time If You Don’t Know What You’re Doing.

That’s why I am writing this 8-part blog entry this report. Every day I see home sellers lose money, and waste precious time because they make critical mistakes they didn’t have to make. Here are just a few….

• Not getting accurate information about how to price your home correctly.
• Not getting a “total picture” of the entire market before you start to sell your home.
• Selling your home using the outdated marketing techniques and methods from the 1980’s and 1990’s.
• Trying to add costs of home improvements on top of your sales price.
• Not understanding how to “dress” your home, so it shows like a model home, and commands top dollar.
• Using worn-out, ineffective “image” advertising to promote your home.
• Opening yourself up to crime by not tracking visitors to your home.
• Hiring a real estate agent who tries to sell their “multi-million dollar producer” pitch instead of demonstrating skill and proficiency in marketing homes.
• Letting a real estate agent seduce you into their services by promising you an over-inflated sales price.
• Not having bridge financing or other contingencies if you are on a time deadline.
• Hiring an agent who isn’t willing to educate you on a systemized approach to selling your home…AND can back up their analysis with FACTS, not opinions!
• Not understanding whether you should sell your home yourself. (It may be to your advantage to go it alone, OR it may save thousands, and end countless headaches to use a REALTOR®.) How do you know?

There are many “old school” real estate companies that still believe all you need to do is put your home in MLS, pop up a sign, and the sellers will flock to your door. Or who say things like “we give you the highest level of quality, trust, integrity, and service.” (Isn’t that the least you should expect from an agent?)

Or those agents who inflate your home’s value to “trick” you into listing with them. Or the ones who tell you, “I’ve got a buyer right now who would love your home, and if you list with me right now…”

You Need To Watch Out For These Dinosaurs, Because As Well-Intended As They May Be, They’re About To Cost You Thousands And Waste Your Time!

Selling a home today requires a total integrated approach many real estate agents are simply not aware of.

You should expect detailed FACTS…not simple promises, opinions, and fancy pictures. And you should expect straight answers, not “sales pitches” or other hype that seduces you to hire a company that boasts they’re “the biggest” or “the best.”

In fact, there are six important marketing steps in the home selling process YOU need to know about. I am going to delve into each one right here during this eight part series, so you’ll know what you’re doing, and can receive Top Dollar proceeds for your home—whether you use a real estate agent or not. So check back tomorrow for Part 2 of 8……and let me know if you have any questions in the meantime…..Aloha, Jon.

For a limited time, (through July 1, 2009) qualified first time homebuyers may receive a tax credit of up to $7,500 as part of the Housing and Economic Recovery Act of 2008.

Homebuyers must repay the tax credit over a 15-year period. It applies to both newly constructed homes and pre-existing homes. Buyers may qualify for the tax credit as long as the home is their primary residence and they have not owned a home during the past three years. It is available on single-family detached homes, townhomes and condominiums.

Buyers qualify for the full tax credit are single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000.

So put the tax credit to work for you and let’s work together to make the most of this unique opportunity!

In a study released last week, Moody’s Economy.com said recession was widening throught the United States. Hawaii, as well as 29 other states, have all fallen into recession.

Not exactly shocking news for the average consumer. Then again, one of the best ways to overcome a problem, it admitting it exists.

Hawaii is now in a recession, according to Moody’s Economy.com, which has updated its list of states in recession.

Using employment and industrial production data, Moody’s compiles a monthly list gauging whether the nation’s 381 largest metropolitan areas are in expansion, at risk or in recession.

The report determines an area’s status based on a six-month test that compares the six-month moving average in the current period to the six-month moving average in the period six months ago. If the test shows the area is in contraction, it is said to be in recession.

There were 637,550 people in the work force in Hawaii in September. The unemployment rate rose to 4.5 percent and there were 12,050 more people out of work than there were a year ago.

So now that we have admitted that the problem exists, I am going to start looking for signs of receovery…..Just as I mentioned last week in this very blog……..All the market factors are lining up perfectly for the next six to twelve months……Remember, it is as simple as 1, 2, 3.

3. Inventory, foreclosures and pricing of properties in our Oahu housing market indicate that the signs of a market shift are coming….

I realize I may be in the minority here, given typical media pundiits calling for the end of the economic world, but I feel strongly about where I see this market going from here…….What are your thoughts?

This past week I merged my real estate Sole Proprietorship with Prudential Location LLC because I feel strongly that the time is NOW for Oahu Real Estate. Working with a large firm like Prudential enables me to more easily get the word out that now is a great time to buy Oahu real estate. I feel strongly that this is the type of real estate market that two or three years from now everybody is going to say, “I wish I had bought then”.

All the market factors are lining up perfectly for the next six to twelve months……Let me explain. It is as simple as 1, 2, 3.

1. Interest rates are dropping below 6% on residential mortgage loans. Rates are seldom that low and when they have reachd that level, mortgage loan rates usually do not stay there for long.

2. Mortgage Money is available….that what lenders across the island are telling me. With five percent down or less. Of course, the Buyers DO need to have a steady job, and areasonable credit rating. The days of Buyers needing to prove employment, have cash on hand and credit worthiness have returned for good, hopefully.

3. Inventory, foreclosures and pricing of properties in our Oahu housing market indicate that the signs of a market shift are coming, that is the supply of new home construction and foreclosure homes are beginning to be absorbed by first time buyers, investors and secure homewoners taking advantage of their financial strength and current market weakness. This spring may be the tipping point when the market activity flourishes. I believe it will. This Buyer and investor activity will create its own momentum. as more buyers and investors choose to buy now the demand they will create will stabilize the market and lead to market appreciation. It is simple supply and demand.

Did people who bought at the peak of the Oahu market in late 2005 and 2006 lose equity? In most neighborhoods, yes, and in some neighborhoods they lost a lot. Are Buyer’s who buy over the next year likely to be buying at the (or near the) bottom of the market and benefit from excellent appreciation. Every indication that I see is…..YES!

THEREFORE, I am telling all of my Buyer clients and anyone else who will listen……..what one of the richest men in the world used to say…..(J. Paul Getty)….”I buy when other people are selling.”

So….Get in the Game…..and call me today and I can help you call the plays to make you a winner….Aloha, Jon.

Hawaii’s High Tech REALTOR Joins Forces With Hawaii’s Premier Technology Based Real Estate Company

Just a quick blog entry to announce that I’ve recently merged JON MANN REALTORS, LLC, with PRUDENTIAL LOCATIONS, the largest locally owned and operated real estate firm in Hawaii. The company has a deep understanding of our islands’ unique housing market and extensive knowledge of historical real estate trends that I will be able to share with my clients.

In spite of the recent economic turmoil, It is truly an exciting time for me to be in real estate. Interest rates are still at historically low rates making first time home-buying a realistic and attainable goal for many people. Opportunities also exist for the astute investor to acquire an initial real estate investment, or to trade up to a larger property.

As “Hawaii’s High Tech Real Estate Agent”, joining forces with Hawaii’s premier technology based real estate company was just common sense and good business practice, allowing me to continue to provide excellent customer service and now be armed with unmatched information technology tools, and educational devices for my clients. A win-win combination to be sure.

So continue to look here each week for valuable information on Oahu real estate and if you know of anyone interested in buying, selling, or investing in real estate, I would appreciate your referring them to me. I assure you that I will do my very best in assisting and advising them to enable them to achieve their Hawaii real estate goals. Please call or email me anytime…Mahalo and Aloha, Jon.

Selling a Principal Residence Formerly Used for Investment Purposes? Amendment to IRC §121 May Reduce the $250,000/$500,000 Exclusion.

Internal Revenue Code (“IRC”) §121 allows taxpayers selling a principal residence to exclude $250,000 of gain from taxation (or, $500,000 for married taxpayers, filing jointly) as long as they have lived in the residence for 2 out of the preceding 5 years.

Alternatively, for taxpayers selling investment/rental property, while they may not exclude gain from taxation, they can nonetheless defer payment of taxes by completing their disposition as an exchange under IRC §1031.

While the rules for excluding gain from taxation or deferring payment of taxation may seem fairly straightforward under the above code sections, they become more complicated if the property was used as both a principal residence and for investment/rental purposes.

Fortunately, in February of 2005, the IRS issued Revenue Procedure 2005-14 clarifying that taxpayers are entitled to take advantage of both the §121 capital gains exclusion and the §1031 capital gains deferral. However, Rev. Proc. 2005-14 only addresses situations wherein the property being sold is investment property formerly used as a principal residence; it does not address how to apply §121 to situations when the property being sold is a principal residence formerly used for investment purposes.

Now, pursuant to the Housing Assistance Tax Act of 2008, taxpayers selling a principal residence formerly used for investment purposes, have specific guidance on the application of §121. Specifically, IRC §121 has been amended, effective January 1, 2009. Again, the amendment only affects taxpayers who are selling a principal residence (“qualified use”), which they formerly used for investment (“non-qualified use”). The central point of the §121 amendment is that these taxpayers are not entitled to the full §121 exclusion because the prior investment use is considered “non-qualified” use and any gain allocated to the period of non-qualified use may not be excluded under §121.

How to determine the amount of gain that is not eligible for exclusion:

The period of non-qualified use (period not used as a principal residence) must be divided by the total years of ownership to determine the amount of the gain that is not eligible for exclusion under §121.

Any period of non-qualified use before January 1, 2009 should not be included in the calculation. And, depreciation should also be excluded from the calculation and is simply taxed at the applicable recapture rate.

Summary of the rules under §121 amendment
• Sale of residence that was formerly investment property – the taxpayer is entitled to only a prorated portion of the $250,000/$500,000 exclusion.
• Non-qualified use prior to January 1, 2009 is disregarded, except for purposes of meeting the 5 year rule under HR 4520, if applicable1
• Gain resulting from depreciation is taxed and is disregarded for purposes of determining the prorated amount of the exclusion

Taxpayers selling a principal residence after January 1, 2009, which was formerly used as an investment/rental property should consult with their tax or legal advisors regarding the application of the amendment to §121 to their particular situation.

Significant content for this blog entry was provided compliments of:

Julie would be glad to answer any questions you had about exchanges, so contact her today…Thanks Julie, for the information….Aloha, Jon.

Now that the Congressional financial bailout plan is now law, the credit spigot will start flowing again, banks will resume lending, and an economic recovery can begin, right?

No so fast, my friend.

Some experts say the most important thing that needs to happen before the $700 billion bailout even has a chance of working is that home prices must stop falling. That would send a signal to banks that the worst has passed and it’s safe to start doling out money again.

The problem is the lending freeze has made getting a mortgage loan tough for everyone except those with sterling credit. That means it will take several months or much longer to pare down the glut of houses built when times were good — and those that have come on the market because of soaring foreclosures — before home prices start appreciating.

Housing is a critical component to the U.S. economy and by extension the availability of credit. Roughly one in eight U.S. jobs depends on housing directly or indirectly — from construction workers to bank loan officers to big brokers on Wall Street. A turnaround in housing prices would boost confidence in the wider economy and, experts hope, goad banks into lending again.

Although the housing industry usually leads the economic receovery, banks are still cautious that the economy is going to get worse before it gets better. Still, the government hopes that by scooping up billions of dollars in bad mortgage debt and other toxic assets, banks eventually can clean up their shaky balance sheets, crack open the vaults and send money washing through the system again.

The rescue plan also raises the federally insured deposit limit from $100,000 to $250,000, a move that could boost banks’ reserves and further grease the lending wheels.

We shall see. Some concerns exist.

To begin with, even when the Treasury starts buying bad assets, some banks may hoard the cash they receive in return until they see how the plan pans out. That has the potential to make the lending logjam worse. It also creates a vicious cycle: No trust means no lending; tight credit means it’s harder to buy a home; the more difficult it is to buy or sell a home, the further home prices will fall; and the further prices drop, the more foreclosures there will be. Basically, the very same problem we are dealing with currently.

As of now, U.S. home prices are down 20 percent from their peak in July 2006, yet still have further to fall, and must hit bottom before demand picks up. The long-awaited bottom in prices could be a year or more away on the national level.

Jobs are another big concern. The stranglehold on credit has choked companies big and small that depend on regular inflows of borrowed money to pay employees and stay afloat. Local jobbes losses here on Oahu have been significant in 2008.

The Labor Department said Friday that employers cut 159,000 jobs in September, the fastest pace of losses in more than five years. Experts say that number will grow as the effects of the credit gridlock course through the economy in coming days and weeks.

The nation’s unemployment rate is now 6.1 percent, up from 4.7 percent a year ago. Over the last year, the number of unemployed people has risen by 2.2 million to 9.5 million.

The unemployment rate could rise to as high as 7.5 percent by late 2009, economists predict. If that happens, it would mark the highest since after the 1990-91 recession.

Boosting employment is critical to kick-starting lending because if jobs are growing, then incomes are a growing, and if incomes are growing then people are consuming.

The bailout does not adequately address the three main reasons for the economic mess….too much debt, too much spending, and too much greed……It will, however, most likely, positively affect the recovery of the housing industry and the outlook for employment….and hopefully each individual person will look into themselves and address the debt, spending and greed issues prevalent in out modern American economy/society……In my opinion, that is…….Aloha, Jon.

Note: Some content for this blog entry was para-phrased from an article by AP business writer By STEVENSON JACOBS.

……I say this with tongue firmly planted in cheek…..But given the last two weeks we have had on Wall Street, I wouldn’t mind a little stability for my investment capital…..And, for the first time in three years on Oahu, home prices for Buyers are starting to look much better.

For the first time in three years, median home prices on Oahu fell below $600,000.

After holding fairly steady for much of the year, Oahu home prices tumbled last month, down 9.2 percent for single-family homes and nearly 12 percent for condos.

The median price for Oahu homes in September was $590,000, down from $635,000 in August and $650,000 the previous year. It was the first time the median price fell below $600,000 since 2005.

Condos fell to $296,000, down from $328,000 in August and $335,000 a year ago.

Transactions also fell, with 215 home sales recorded last month, down from 255 a year ago. Condo sales tumbled 26 percent, from 414 sales in September 2007 to 305 this year.

So, call me once you have sold those stocks and I will share with you why “CASH IS KING” in real estate and how I can help you get a great deal……(really)…….Aloha, Jon.