Hawaii Randy's Real Estate Opinions: Randy L. Prothero - Hawaii REALTOR® (Century 21 Liberty Homes)

We all know that the lending industry is going through major changes.  The Federal government has stepped up and determined that states either have minimum licensing laws or create them for mortgage brokers.  If they don't, the Feds will step in for them.   This is known as the SAFE Mortgage License ACT.

The SAFE Act does several things as far as tightening up mortgage brokers and their interaction with the public.  In Hawaii this badly needed proposed licensing requirement for mortgage brokers includes education, testing and continuing education.  These requirements are already in place for real estate and insurance agents.  It looks like a step in the right direction.

Here is where the net still has a hole.  The SAFE ACT creates a series of stuff for employees of banks and credit unions.  It also exempts them from the state licensing requirements.

This is the part of my post that will anger a few loan officers at the banks and credit unions.  I completely disagree with exempting them for state licensing requirements period!  State licensing requirements could do a couple of things that the SAFE Act won't.

1. There is pre-licensing course and pre-license test.
2. All loan originators would be regulated by one state entity, giving the public a clear course of action when they have been harmed.
3. Continuing education requirements
4. A closing of the loophole that would prevent a mortgage broker who has a revoked state license form taking a job at an exempt bank or credit union and doing it again.

In the course of selling real estate I have dealt with more loan officers than I can count.  Most of the ugly situations I have seen came from the mortgage broker side of the industry, but not all of them.  Several have come from out of state banks, one from a local credit union and two of the very worst came from local bank employees.  In one case the loan officer had a license revoked by the State of Hawaii a few years back.  That loan officer was at that time employed by the second major bank since losing their license.  In that case it took me meeting with two vice presidents of the bank to resolve the problem.  In the end my client was still out time and money.  The loan officer was no longer with that bank and off looking for the another place to prey on the public.

No matter how you shake it, no one should be allowed to originate a loan unless they can demonstrate a basic knowledge of the business and laws.  There should also be a simple consistent way for consumers to file complaints anyone who originates a mortgage.  I know that many bank employees are getting ready to tell me how they are federally regulated.  Big deal!  How does that help the consumer who is trying to buy a home and is being taken advantage of?  File a federal complaint?  Get real!

If you are looking to buy or refinance a home in Hawaii, feel free to contact me.  I can give you the names of several professional, honorable loan officers that will give you VIP treatment.

Last evening I was contacted by someone pretending to be a well known blogger on Active Rain.  Apparently this person hacked into this real estate agent's Facebook® account and was sending instant messages from it.

In this case the culprit claimed to be my friend and was in London on vacation.  He said he was held up at gun point and hit in the head and needed cash wired via Western Union.  It took me a few minutes to realize this was probably a scam.  My first hint was the hard sell for me to move fast.  A big red flag in anything you do in life.  To test this person I kept finding other alternative solutions to sending the cash.  They had an excuse for each one, leaving only sending cash via Western Union immediately as a possible solution.  They also messaged me a new e-mail address to contact them with the instructions.  The e-mail address was somewhat convincing since they used his name in the address.

I called first thing this morning and reached my friend's wife to verify that he was not in London and to let him know his Facebook® account was hacked.

I just e-mailed back the scammer asking for the name of the hotel they were staying in and the phone number so I could call them.  If they respond, I will post the results here.

 Since getting on Facebook® and Twitter®, I have had my accounts hacked with a virus inserted.  It seems to be an easy thing for the bad guys to do.  The most common from it takes is the message with a bunch of misspelled works either telling you they have a video of you or you are a Dumb  A_ _  (misspelled).  If you click on the link they now have access to your account and it will start sending out those messages to everyone in your contact list.  It will also drop a virus on your computer.  In last night's case they seemed to have gotten access to his account and were operating from it.  My broker had the virus get into her Facebook® account and sent the Dumb A__ message to several local politicians.  In that case I did get a great laugh.  I am sure it wasn't the first time someone called them that.

If this happens to you, the first thing you should do is enter your account and change the password immediately.  Then get on your computer and scan for viruses.  The first time it happened, my anti-virus software let it right in.  I was using probably the number #1 selling anti-virus product at the time.  I have since changed to Kaspersky® and have found it to be a superior product.  Nothing has gotten through since.

If you are going to open yourself to the world via social networking, you also open yourself to some bad folks.  If they get into your account, they will be doing bad things to your friends, family and clients with your name on it.  You please remember to practice safe networking.

Update:

I have had several messages back and forth with the scammer.  They are probably realizing that I was scamming them back.  After I insisted they send me the hotel's name, address and phone number they finall came up with an address that is posted on the internet as part of a known scam.

http://csrollyson.tumblr.com/     http://www.kenn.com/the_blog/?p=2518

They insisted I send cash via Western Union.  I told them I sent it via a special secured transaction that requires they go to a specific location and present their passport and reference my name.  The location I selected was a couple hours dirve away.  That is if they are really in London.  They kept insisting I send them the tracking number, which I said does not exist for this secured transmittal.

Here was our last few messages: 

Scammer:

• Name : +++++++
• Address : 224 Upper Richmond Road
• London, SW15 6TD
• United Kingdom
•  
• Sunderland hotel
• Hotel Number  +447024097949

Get back to me as soon as you have the money wired.can you have the money right away? how soon can this take you ?

Hope to read from you as soon as you have this done.

Thanks

Me:  I am having a hard time finding this hotel.  I have searched the internet with no luck.  Do you have the name and address of the hotel correct?

I have to go to bed it is really late here.  Hopefully we can resolve it in the morning before I leave for board meetings.  I can't do anything until Western Union opens.

Me:  The money was sent Western Union ($800.00 American).  I had trouble locating your hotel on the internet, I hope I found the closest Western Union location to you.

•             Western Union
•             SOMAGA AFICAN RESTAURANT
•             88-90 Bristol Street
•             Birmingham, B5 7AH

Because of your stolen IDs and credit cards, I used a secure transfer.  It cannot be tracked in the Western Union system to protect you from the folks who stole your IDs and credit cards.  The money can only be picked up at the location we wired it to.  Just show your passport and reference my name.  The money transfer will only be available for 8 hours and then it is automatically reversed back to Hawaii.  I hope you get this message right away.  What a mess criminals have made of our world.  I had a tough time making this happen.  Western Union was not very cooperative. It took me a couple of attempts to get it sent.  They claim it is due to new Homeland Security guidelines. 

Scammer:  Can i have the MTCN number.hope to read from you soon? Western Union told me to provide the MTCN number.Ok?    Thanks.

Me: You just caught me, I am running out the door for the rest of the day.

This one is a special transfer, you do not need a number.  You just go to the specified location in person and show your passport and use my name.  It should already be there.  Because it is secured, Western Union can't give out information on the internet or on the phone for this transfer. 

Scammer:  You are a lier.whats is the meaning of this ?try and understand me i need this to have the money pick up that is if you have wire it ok?

Me:  I send you $800 and you insult me?  Are you kidding me?  Did you go to the Western Union office I sent it to?

Scammer:  Go back there and ask them for the western union MTCN number   Ok?

Me: According to Western Union, you never showed up at the location with your passport.  Do you have an explanation?  If you are so desperate, why did you not show up?    Are you playing me?

--------------------------------------------

After that message early this morning it has gotten quiet. 

Today Celeste WooHoo Sally Cheeseman and I had the pleasure of having lunch with Washington DC well known Realtor® and blogger Patricia Kennedy and her good friend Dick. 

We had a wonderful time hanging out at The Shack in Mililani talking stink (story) about other bloggers here on Active Rain.  It was great to finally meet her in person.

Patricia has been writing about her time in the islands and I am sure she will be posting about today as will WooHoo Sally.  To satisfy my competitive juices, I went back to the office and posted this before they could get a chance to get near a computer.

If you are planning a trip to the islands, be sure to give me a call or WooHoo Sally.  It is always a lot of fun to connect with our internet friends in person.

Hau'oli Makahiki Hou (Happy New years in Hawaiian)

2009 was a tough year for many real estate agents.  We will soon find out how many stay and how many leave the business.

I and many of the area full time professionals seemed to have had a pretty good 2009, considering the challenges we faced with lenders and government tinkering.  Many others agents did not make enough money to cover their costs.  We will soon find out how many of those agents will to go back to flipping burgers or whatever they used to do before joining our profession in the search of easy money.

Being a real estate agent is not only a profession, it is a business.  Like all other businesses it requires a few basic things to succeed.

• Capital
  • It can be expensive to get a business off the ground.  It also takes a period of time to generate any income.
• Training
  • Real estate is a complicated business.  It requires a lot of training that never ends.  Even after being in the business a number of years and a repeat top agent in my company I still attend regular training classes.
• Business Plan
  • You need to have a comprehensive business plan that includes all of the items on this list along with a financial plan.  Both have to be reviewed regularly and adjusted to the market conditions.
• Marketing
  • You need to have a comprehensive marketing plan for acquiring clients along with a plan for marketing the properties you will be selling.  No marketing, no business!
• Customer Service
  • When a potential client comes to you, what will make them choose you over the other hundreds of agents in the area?  Once they become your client, what will make them refer family and friends to you?  Satisfaction is not enough, they need to be wowed!
• The Ability to Compete
  • Remember at all times there are hundreds of real estate agents in your area.  Within my county there are actually thousands.  To be successful in real estate you must be much better than average.

As we come to the end of another year many thousands of real estate agents around the country will be faced with the tough choice of staying or leaving.  If they are holding on with the hope of accidently getting a sale next year; do yourselves and the public a favor and move on.  If they are planning to be a professional, continue to train and provide top flight service to your clients, than you are the type of agent the public deserves.

Good luck in 2010.  It will be a year of many challenges.

New federal law requires states to have licensing laws for loan originators or they will fall under a HUD back-up system.  Hawaii introduced a new state law to take effect July 2010 (Senate Bill 1218, SD2, Act 32).  It exempts Bank employees but covers almost everyone else.  A nice thought but a long way from what is needed.

In my opinion anyone who originates a loan in the state of Hawaii should have to be licensed by the state; banks included. 

• They should be required to complete an education process, pass a test and have continuing education requirements.   To have a license they need to demonstrate at least a basic understanding of the process and laws.
• They should be held to a standard of honesty.  No deceiving business practices allowed.
• Bank employees should be held to the same standards.  Even though they are federally regulated, consumers should have local recourse.
• Mainland lenders should have a loan officer or a broker with a state license and knowledge of our state laws.  When a consumer signs a contract, someone should be there to explain it that is knowledgeable and accountable.

I have seen way too many dishonest and incompetent loan officers out there.  It is like the wild west when you try to get a mortgage and that should no longer be tolerated.

I think a great starting point would be to hold mortgage loan officers to the same standards as real estate agents.  When a consumer has a problem with a real estate agent, they have several local courses of action they can take. 

• The local Board of REALTORS® has a few avenues if the agent is a member of the Board.
  • Professional standards complaint.
  • Mediation
  • Arbitration
  • Ombudsman service
• The state of Hawaii has a few more avenues through the Department of Commerce and Consumer Affairs.
• You also have the court system.

Real estate agents are required to have a basic knowledge of the process and laws before they are even eligible to get a license.  Loan officers have no education requirements in the state of Hawaii.  Many working at the banks or out of state lenders do not even need a license.  In many cases loan officers exercise dishonest practices while breaking no laws, leaving the public little or no recourse.  Our state license law for real estate agents on the other hand has specific language about honesty and disclosure.  When a more egregious instance with a bank loan officer happens, the consumer needs to file a federal complaint.  Wow that will slow you down.

Here are a couple of the practices I see on a regular basis that if something similar was done by a real estate agent, a consumer would be able to go after them locally.  In fact our own industry through the Board of REALTORS® would assist the consumer.

• Bait and switching.  Offer a ridiculously low interest rate to secure the client.  Then at the last minute when they do not have enough time to shop elsewhere stick them with a much more expensive loan.  (Higher interest, bigger down payment, much higher closing costs, and pre-payment penalties).  This practice is commonly used to steal clients from other lenders and brokers.
• Bogus loan approval letters.
  • Issuing a loan approval letter to a buyer that is not credit worthy.  The seller is then tricked into removing their home from the market.  The seller incurs costs such as surveys, termite inspections, repairs, carrying cost (mortgage payments, utilities, insurance, taxes, association fess, etc.) and escrow fees.  The buyer pays lender fees, appraisal and home inspection costs.  The buyer and seller have also made moving plans.   I have seen a few examples where the seller moved, sometimes out of state.   The loan officer then shops around trying to find someone to take this loan.  If they are successful they hit the buyer with any or all the things listed in item #1.  If they fail the loan officer walks away and leaves the buyer and seller devastated.  In a  couple of cases I have seen, the buyer now is without a home and has to scramble to keep from being on the street..
• Placing consumers in less than attractive loan programs.  Taking a client with excellent credit and placing them in a loan product that has higher closing costs and pre-payment penalties, because it is more profitable for the lender or the loan officer.
  • The one that makes me sick is where they take a buyer who is VA eligible and tell them they either do not qualify for a VA or they have a better program and put them in a very expensive product with hard per-payment penalties.  If the buyer is active duty and gets deployed or transferred, they are stuck!  I saw a case where they were hit with big pre-payment penalties on two ARM mortgages that the rates were climbing and they have no way of making the payments.  (The original interest rate and closing costs were much higher than they could have gotten from a local bank on a VA loan at the time). Nice way to treat someone defending our country!
• Having buyers falsify loan applications, allowing the loan officer to sell them a product they are not qualified to get.  (This one is getting some folks put in jail, thank goodness)

I am currently working with a couple of my area state legislators to introduce legislation this next session to begin to tighten these standards.  I am sure it will not happen in one session, but we need to start.

Please don't tell about bad real estate agents as a defense for not improving mortgage licensing laws.  I have always been an advocate of tougher standards for real estate agents and have written many times about that topic.  I feel that if you are going to represent a consumer in the most expensive purchase of their life, you need to be competent, honest and held to the highest standards.  In other words you should be a professional.

In Hawaii we do not see the extreme winter slow down as in parts of the mainland.  The weather is nice year round here.  But even with that said the holiday season usually sees a lull in real estate activity.

This year may see the trend bucked a bit.  The last couple of months, inventory in some of the communities I service have dropped considerably.  Interest rates with discount points at local lenders, are bouncing between 4.5% and 4.75% on a 30 year fixed.  Add to the mix federal tax credits of $8000 for first time buyers and $6500 for repeat buyers.  You may be seeing the forming of a perfect storm.

Buyers are finding homes at great prices and attractive financing.  They are however finding less of them to choose from each day in many parts of the island.  We are also seeing prices beginning to climb for the first time in awhile in some parts of the island.

My normal advice to sellers is to wait until the beginning of the year to put their home on the market.  This year the conventional wisdom may possibly be out the window.  December looks to be a good month for both buyer and sellers.

Buyers, who were going to wait until after the first of the year, may want to start their search now.  Sellers who are getting their home ready for sale may think about jumping in the market now.  The lack of inventory in many areas will put them in a more favorable position.

If you are thinking of entering the real estate market on Oahu, please contact me for a free consultation.

This Mililani sales report covers zip code 96789 which covers both Mililani Mauka and Mililani Area (which includes Mililani Town, Launani Valley and Waipio Acres).

Mililani real estate is beginning to pick up again.  We are still seeing good real estate activity in the Mililani area.  The market is beginning to shift back to a seller's market for the first time in awhile.  Inventory levels are a fraction of what they were even a few months ago.

A few dynamics in the area:  Castle and Cooke has finished selling new homes in Mililani Mauka.  We are continuing to see troop movements at Schofield Barracks, which is contributing to the movement of inventory in Mililani.  Many troops returned for Iraq and Afghanistan putting pressure on the rental market and entry level property sales.

Single Family Homes (resale): Average sales prices in Mililani Town and the valleys stayed are down from the same time last year. Although we are seeing things pick up within the planned community of Mililani Town, the valleys are still sluggish. Mililani Mauka has seen average sale prices begin to increase the last couple of months.  The inventory levels have dropped lower than we have seen in a long time in Mililani Mauka and in Mililani Town, which are putting pressures on the prices. 

Buyers will find this to be a great time to get in the market.

• Prices have stabilized and are seeing pressure to increase.
• Interest rates are at historic low levels.
• Federal tax credits have been extended for first time buyers and are now available to all buyers that meet the income requirements (most buyers)

Sellers will find this a great time to list their home.

• Inventory levels are low giving them less competition.
• Buyers have incentives to buy now.
• Prices have stabilized.

 Condo and Townhouses (resale):  Sales volume and average sales prices in Mililani Town and the Valleys are picking up.  Although they are down from this time last year, with the lowered inventory levels we are seeing things picking up the last 3 or 4 months.  The valleys are not seeing as much activity as within the planned community, but as the inventory levels have dropped in Mililani Town and Mililani Mauka buyers are beginning to look in the valleys again for value. 

Currently Active for Sale (November 17, 2009): 

• 31 Single Family Homes - Mililani Area
• 12 Single Family Homes - Mililani Mauka
• 55 Condos/ Townhouses - Mililani Area
• 15 Condos/ Townhouses - Mililani Mauka

Currently in Escrow (November 17, 2009):

• 24 Single Family Homes - Mililani Area
• 23 Single Family Homes - Mililani Mauka
• 39 Condos/ Townhouses - Mililani Area
• 16 Condos/ Townhouses - Mililani Mauka

 *These numbers were taken from the Honolulu Board of Realtors MLS system and are deemed to be accurate, but not guaranteed.

©2009 Randy L. Prothero

This may sound like e-mail 101, but I am seeing common mistakes daily.

There is a thing called BCC (Blind Carbon Copy).  When sending to a large list, use it.  Unless there is some reason to share the e-mail addresses of everyone on the list to each other.  This is a common mistake that is among the most annoying.  If you are reply to a message like that instead of using "Reply to All", hit "Reply" unless everyone on that list needs to see your response.

I get messages from real estate agents and loan officers that are spamming me.  They CC a million people and of course everyone on that list now has the complete list.  So as you may have guessed, several are annoyed by the spam and "Reply to All" to voice their annoyance.  I now have received a dozen Spam messages and responses.  A few others see this big list and think SHAZAM!  They now have a great list to send out information on their business.  So now a few of them use the same list to also Spam us.  Out of that group because they hit "Rely to All", the complete list appears again and the cycle continues.

Even more aggravating; there are those on the list who now believe I have some relationship with one or more people on the list that the original sender included.  If someone on the list is now sending vulgar stuff you are now part of their group.  They may have even added more names to the list.

When responding back and forth between more than one individual; be careful not to send the wrong stuff to the wrong person.  I got an e-mail this morning from a real estate agent I am in a transaction with.  In the confusion of all the back and forth messages the agent replied and inadvertently sent me a string of messages with their client.  I now have information about the client and the transaction that their client that was never intended for my eyes.  If that information were later used against their client, could get the agent in a ton of trouble.

So be careful what you send via e-mail and how you send it.  Also be careful what you say when you post a reply.  Everyone will be able to read it.

Last week I heard multiple news reports about the drop in property values in Hawaii since last year.  The reports stated that we have the biggest drop in value in the nation of all major markets.  According to the reports you would think we were in a freefall compared to the same period last year.

What the numbers show is that the neighbor islands did take a pretty big hit, but Oahu (Honolulu County) which accounts for a majority of the sales activity held is values much better.

Here are the numbers posted by the Hawaii Association of REALTORS® per the MLS systems.

2009 JULY HAWAII REAL ESTATE MARKET REPORT:

Single Family Homes

Units Sold

Median Sales Price

--------------------------------------------------------------------------------

Condominiums

Units Sold

Median Sales Price

*Information provided by Hawaii Association of REALTORS® and Title Guaranty is deemed to be accurate, but not guaranteed.

I get calls from buyers whose real estate agent told them to call me to see one of my listings.  Their agent can't make the appointment or show the property because they are at work (their real job).

If that buyer finds a property they like, their agent is not qualified to write the offer.  They did not examine the property for potential issues and needed addendums.  Many times they can't even be reached to get the offer written in a timely manner.  You can almost guarantee they do not know the market or are even proficient in contract writing.   

If they work a regular job elsewhere, they may not be available to attend the home inspection or the escrow signing.  In my experience they will not be attentive to the escrow process, will blow the time-line and will be impossible to communicate with.  Yet somehow they feel they will have earned a commission.

When working with me, buyers and sellers get an agent who does not cut corners. answers the phone, knows the market and truly cares about my clients and will always put your needs first.

Here are a few of the things I consider standard service.  Very few agents in my area are offering these services to their clients.

For my sellers:

• Quality pictures including wide angle.
• Your home posted in the MLS and many websites (too many to list).
• Color flyers and brochure box in front of listing (where allowed).
• A pledge of services.
• A website with a domain name and sign with the web address.
• Virtual tour.
• Regular Sunday open houses.
• Broker's open houses on the monthly date for the area.
• An electronic lockbox that tracks everyone who enters the home.
• Regular communication with sellers including comparable market reports.
• Print ads.
• The property promoted at regional REALTOR® meetings.
• E-mails to top producers in the area.
• Benefit of the market knowledge of one of the top, full time licensed brokers in the area and his support team.

For My Buyers:

• Free buyer's representation.
• I will schedule and accompany you when you preview homes and point out potential red flags.
• Market analysis and public records check of any property considered for an offer.
• Prepare all documents and explain them in detail.  You sign nothing you do not understand.
• Negotiations by an experienced licensed broker.
• Manage the entire escrow process.
• Help with referrals of other professions such as inspectors, loan officers, etc.
• Accompany you to the escrow and mortgage signing.
• I continue to work with you after the transaction if any issues or questions pop.

Many agents have not done well in the market and have cut back on expenses.  That is the reality.  The problem is clients are buying and selling the most expensive thing own or will own.  Why should they entrust it with an agent who does not have enough money to properly market their home or have the time to properly represent them? 

I will finish this with a statement I have made many time in the past.  Real estate is a full time profession.  You cannot sell real estate part time and do it well.  Theoretically it is possible, I am just not seeing in real life.