Hawaii Randy's Real Estate Opinions: October 2007

OK, here is the one you were waiting for.  If I were King For a Day what changes would I make to the real estate industry in the area of real estate agents and realty companies to better protect the public?

I have read thousands of news articles and blog posts, sat through hundreds of hours of training classes and meetings and participated in many real estate transactions.  Through these experiences, I have formed some very strong opinions about changes I would love to see in our industry.  This blog post is the final one of a small series of articles that pick on several parts of the real estate industry.

As in the other segments I would insert more accountability into the process. 

If I Were King, These are a Few Things I Would Change:

• Real Estate licensees must be full time professionals. (This one will get a lot of responses.  If I am King that is how it will be.)
• The NAR Code of Ethics would be enforceable by the state regulators on even those who are not members of the NAR.  The Code will only be a starting point.  (I would add a few more.  That will be a post of its own.)
• Errors and omissions insurance will be required for anyone with a license.  Currently it is not required in our state, only by most brokers.
• Increase the educational requirements to get a license.
• Increase both the hours of continuing education and quality of the classes to renew a license.
• Not allow real estate licensees to do mortgages, home inspections, sell home owners insurance, do escrows or appraisals. (Dual services on a transaction will be illegal)
• Real estate Companies can not own or be owned by:
•        -  Escrow Company
•        -  Mortgage company or lending institution
•        -  Home owners insurance company
•        -  Home inspection company
•        -  Termite inspection company
•        -  Appraisal company
• A real estate agent can not use a spouse or any relative 1^st cousin or closer for any of the above service in one of their transactions.
• Any kick backs from service providers is a jail able offense.
• Outlaw dual agency.  To make this a doable thing, designated agency would also be law in every state. (In Hawaii we do not have designated agency.  So every deal that two agents from the same company are involved is a dual agency)
• Require all agents to return phone calls.
• Not allow agents to post listings in the MLS without pictures.
• Posting false information in the MLS will be a jail able offense (just kidding, well maybe not.  If I am King I might do that).
• Peak-a-boo view (standing on a chair in the upstairs back bedroom) does not count as a view
• Needs paint and carpet and the termites holding hands are holding the roof up is Not Excellent Condition!
• The side of a cliff is not a gentle slope.
• If you have to ask or you are not sure about it, it should be disclosed.
• If you can not use a computer, properly fill out a contract or use the fax machine your license will be taken away. (sorry if this hits home with anyone)
• If you charge a fee and do not provide proper service you loose your license. (If you are not sure if you are providing proper service your client will know when they do not get it, otherwise check with the King for a Day.)
• If you are servicing a transaction you are required to follow the timeline.  Not work at your own pace.
• Designations would be a minimum expectation.  GRI within the first two years would be mandatory to keep your license.
• All companies will provide agent training whether done in house or hired out.
• Create a job training program for those who should not be in this industry to teach them how to cut hair or flip burgers. (Since I will never be King, this one will never happen.)

I run into many REALTORS® and real estate agents who are non-REALTORS®, who have no idea what is legal or ethical.  Just like in the lending side there is a large number of agents running around with absolutely very little training and have no idea what they are doing. 

The one good thing is there is recourse for the public.  If they use a REALTOR® the public can go through the local Board with a grievance.  Most REALTORS® such as me carry Errors and Omissions Insurance.  In Hawaii they also have state regulatory agencies and a state recovery fund to go after if they have exhausted all other legal avenues. 

We are speaking about folks who are handling the biggest purchase in most people's lives.  They need to be held to the highest standards.  If they are not comfortable with that concept they really should find another line of work. 

I am a REALTOR® and I am good at what I do and take pride in my profession.   I have very little patience or respect for anyone in this line of work that does not conduct themselves in a professional manner.

Other King For a Day Posts:

• King For a Day Series - Mortgage Industry
• King For a Day Series - Handymen
• King For a Day Series - Home Inspectors
• King For a Day Series - Escrow Officers
• King For a Day Series - Real Estate Clients

If I were king for a day what changes would I make to the escrow industry to better protect the public or remove stress from the process of buying and selling real estate? 

First, I know several were waiting for me to pick of real estate agents.  That one is coming.  Secondly the reason I chose to write about escrow officers is that they are an extremely important part of this process and probably the most forgotten among industry experts and the news media. 

A few years back my wife and I bought the home we are living in. I apologize of the story gets long winded.  At the time I was not licensed to sell real estate in Hawaii, but was many years before and disclosed that on our Purchase Contract (known at that time in Hawaii as the DROA).

The entire escrow process was a mess.  I have written about it before in other blog posts.  It was the reason I got back in the industry.

So let's focus on the escrow side of it.  First of all almost every document I received from escrow was riddled with errors.  The escrow officer blamed everyone else for the mistakes.

Here is a list of some of the errors:

• My name spelled wrong.
• The wrong address for the property.
• The wrong sale price.
• Missing credit from the seller to the buyer.
• Had me listed as the buyer instead of the seller.
• Wrong tax map code.
• The HUD statement was a mess.  It took 3 days and several revisions to get it right.
• Wrong closing date.

How hard is it to pull this information from the Purchase Contract?  It was correct on the contract.

To complicate things even worse, my wife and I were at the closing table with no loan officer and no real estate agent.  I forgot to mention my red pen and an escrow officer that did not want to be there.  After three attempts and a forced extension on our closing we finally got in the home.

The escrow officer never answered her own phone and we got a different assistant every time we called.  None of them seemed to have any knowledge about our transaction.

I am sure we can all tell several other stories about transactions that have taken strange turns due to things happening at the escrow company.

If I were King Here Are a Few Things I Would Change:

• Not allow real estate companies to own escrow companies or visa versa.
• Require escrow officers to return phone calls.

Ok I know many were disappointed.  This list was short and I took it easy on escrow officers.  I think the escrow companies are already heavily regulated so I am not sure of any further needed regulation is needed, at least here in Hawaii.  I can also say that most of the escrow officers and escrow companies I have worked with are really good at what they do and are extremely professional.  I rarely have a complaint.  Any problems at all are immediately addressed in most cases. 

There are however a few, very few escrow officers and companies that I find absolutely scary.

Other King For a Day Posts:

• King For a Day Series - Real Estate Agents
• King For a Day Series - Mortgage Industry
• King For a Day Series - Handymen
• King For a Day Series - Home Inspectors
• King For a Day Series - Real Estate Clients

If I were king for a day what changes would I make to the handyman industry to better protect the public?  Now I am sure that many are asking; is there a handyman industry?  Not an organized one, but handymen play a big part in our business and at least in my state can be a big source of problems or help.

This is the 3^nd in a series of blog posts I am writing about how to better protect the public and improve the real estate industry.  After selling many homes and being intimately involved in the process of working with the public in buying and selling residential real estate I have formed some very strong opinions about changes I would love to see in our industry.

As is a common theme in these articles I would insert more accountability into the process. 

There are absolutely no standards in Hawaii to be a handyman.  This leaves the public wide open for harm.  In my previous post I mentioned that only thing required to be a home inspector was business cards.  I have met many handymen who don't even have them.

I know if you read the first two posts in the series many of these ideas will be redundant.   

A few things I would change:

• Require insurance.
• Require a license, not necessarily require a test, but at least fall subject to licensing and state oversight to give the public a place to file complaints and to check for previous violations or complaints. (No license in Hawaii required)
• Change the state handyman law to allow handymen to do repairs up to $2500. (in Hawaii if the bill goes over $1000 you have to have a licensed contractor..  The problem is no licensed contractor will take a job under $2500)

I am not looking for educational requirements or a license exam.  I do think a license and required insurance is not asking too much for someone who may cause harm to the client or their property.  Along with adding a little bit of basic requirements to the handymen, I would like to see the price limit in our state raised to be more practical for everyone.

Other King For a Day blog posts:

• King For a Day Series - Real Estate Agents
• King For a Day Series - Mortgage Industry
• King For a Day Series - Home Inspectors 
• King For a Day Series - Escrow Officers
• King For a Day Series - Real Estate Clients

If I were king for a day what changes would I make to the home inspection industry to better protect the public?

This is the 2^nd in a series of blog posts I am writing about how to better protect the public and improve the real estate industry.  After selling many homes and being intimately involved in the process of working with the public in buying and selling residential real estate I have formed some very strong opinions about changes I would love to see in our industry.

As will be a common theme in these articles I would insert more accountability into the process. 

For a start I would require that each and every home inspector must be licensed in any state they do business and require a minimum set of standards that each state. Hopefully they will go even tighter.   In Hawaii home inspectors are not required to be licensed, have insurance and any experience.  For the price of $19.95 to buy some cheap business cards, you too can be a home inspector in Hawaii.  If they mess you up, they can just get on a plane and go to another state with the same lack of standards and start all over.  Or they can just stay here and keep doing it.

A few more things I would add to the list:

• Require errors and omissions insurance.
• Have a state agency oversee the licensing and complaints. (No license in Hawaii required)
• Require minimum standards to get a license.  (Experience, school)
• A license exam to prove they have the required knowledge.  (Do they know the building or fire code for example?)
• Add continuing education requirements to renew a license.
• Nationally recognized designations, letting the public and others in the industry know if that inspector has professional development.
• Not allow home inspectors to sell homes, mortgages or home owners insurance.

I would also have a standard industry report form for doing residential inspections and list of items that should be required for a proper inspection.

I know there are association groups within the home inspection industry.  I would like to see them be more recognized and more active with the states to better assist in the creation of licensing laws and industry standards. 

A gentleman came in my office one day a year or so back and gave me his business card.  It was a new home inspection business.  He looked real familiar.  He used to be the on the local evening news. 

He has no inspection of construction experience.  He took a training class in another state that sold him a franchise of some type and gave him some software for creating reports.  Now I am sure that the teacher in Nevada or wherever he took the two or three day class has no clue about our building or fire codes in Honolulu County.  He probably never crawled under a house, stepped on a roof, checked plumbing or electrical and may or may not have insurance.  It is not required here.

Can you see why the public needs more protection?

Other King For a Day Posts:

• King For a Day Series - Real Estate Agents
• King For a Day Series - Mortgage Industry
• King For a Day Series - Handymen
• King For a Day Series - Escrow Officers
• King For a Day Series - Real Estate Clients

If I were king for a day what changes would I make to the mortgage industry to better protect the public?

I have read thousands of news articles, blog posts and sat through many hundreds of hours of training and meetings through our industry.  As a result I have formed some very strong opinions about changes I would love to see in our industry.  I have decided to write a small series of articles that will pick on several parts of the real estate industry.

First I would insert more accountability into the process. 

For a start I would require that each and every lender and loan officer must be licensed in any state they do business and make a minimum set of standards that each state needs to require.  In Hawaii we have out of state loan officers and lenders doing really bad stuff and then vanishing.  No accountability for the mess they make.

A few more things I would add to the list:

• A Code of Ethics.
• Require errors and omissions insurance.
• Simplify the process for filing complaints against loan officers.
• Add educational requirements to get a license. (In Hawaii no educational requirements)
• A license exam to prove they have the required knowledge
• Add continuing education requirements to renew a license.
• Nationally recognized designations, letting the public and others in the industry know if that loan officer has professional development.
• Not allow loan officers to sell homes, home owners insurance or do home inspections.

Maybe this one would be hard to enforce, but I would give all loan officers a sense of urgency.  I would also require they return phone calls on a timely basis and follow the purchase contract timeline.

A good start would be if the lending industry had something similar to the Association of REALTORS® that gave the public an avenue for filing grievances and a set of industry standards that would be a good start.

I run into many loan officers who have no idea what is legal or ethical.  A large number of loan officers are running around with absolutely no training and have no idea what they are doing. 

For example I have gotten loan approval letters on several occasions for buyers who are not qualified at all.  I have also gotten and heard of many offers on listings that would have been mortgage fraud.

We are speaking about the folks who are dealing with the funding of the biggest purchase in most people's lives.  What happens here will have a giant impact on the financial future of these buyers.  Not to mention the harm they do to sellers who have taken their homes off the market for a buyer who may not be qualified to buy their home.

In recent blog posts I read from others how some of the primary lenders are now tightening their standards for brokers who do business with them.  Some thought that was a bad thing.  All I can say is:  It is about time!

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PS:  I did delete a couple of responses from this blog post.  One from an individual who wrote his own blog post much longer than this one, in what appeared to be an attempt to hijack my post.  Another from some unidentified person who appeared to be him or a friend of his that posted a long continuation of his comment.

For those detractors who seem to protest the loudest about adding professionalism and added protection for the public; I have only one thing to say.  You do protest much too loud.  If I were King For a Day, these changes would happen!

Other King For a Day blog posts:

• King For a Day Series - Real Estate Agents
• King For a Day Series - Home Inspectors
• King For a Day Series - Handymen
• King For a Day Series - Escrow Officers
• King For a Day Series - Real Estate Clients

Single Family homes sales in Wahiawa/ Whitmore have shown increases. Average sales prices of single family homes are slightly up year to date from 2006 levels.  Sales volume is slightly down year to date.  Current inventory levels have gone down in the last couple of months making it a more balanced market for both buyers and sellers.

Condo and townhouse sales in Wahiawa/ Whitmore are another story.  Average sales prices have shown a slight drop from 2006 during the same time period. Inventory levels are fairly low, as long as interest rates remain low it will continue to be a nice balanced market for both buyers and sellers.

The below figures include both fee simple and leasehold properties.  These are only the totals and averages.

Currently Active for Sale (September 25, 2007): 

• 44 Single Family Homes
• 25 Condos/ Townhouses

Currently in Escrow (September 25, 2007): 

• 12 Single Family Homes
•   2 Condos/ Townhouses

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

You can find out more about real estate in Hawaii at: http://www.hawaiirandy.com/

Or at: http://www.localism.com/

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

The Mililani real estate is still moving strong.  We are still seeing good real estate activity in the Mililani area.  With low interest rates and a little more inventory, buyers are still able to buy the home of their dreams, while sellers are beginning to see properties moving again.

A few dynamics in the area:

• Castle and Cooke is almost finished with new home construction in Mililani Mauka.
• We have seen a large number of troops returning to Schofield Barracks from Iraq.
• The rental side of the market has dried up.

The above items should put additional pressure on the sales of resale properties.

Single Family homes sales volume was off on the Mililani Town and the valleys, but has increased in Mililani Mauka.  Sales prices in Mililani have leveled year to date from 2006 numbers.  With mortgage rates remaining low, buyers and sellers will find it still a good time to make a move in Mililani.

Condo and townhouse sales are still looking strong.  Sales volume is down from 2006 numbers, but prices have held and even shown a slight increase year to date from 2006.

Currently Active for Sale (October 25, 2007): 

• 57   Single Family Homes - Mililani Area
• 44   Single Family Homes - Mililani Mauka
• 104 Condos/ Townhouses - Mililani Area
• 28   Condos/ Townhouses - Mililani Mauka

Currently in Escrow (October 25, 2007):

• 11   Single Family Homes - Mililani Area
• 12   Single Family Homes - Mililani Mauka
• 36   Condos/ Townhouses - Mililani Area
• 12   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.

Mililani Links:

• Mililani Town Association: http://www.mililanitown.org/
• Mililani Drug Free: http://www.Mililanidrugfree.org/
• Mililani Chess Club: http://www.mililanichess.org/
• Mililani Real Estate: http://hawaiirandy.com/
• Mililani, Hawaii Real Estate Sales Activity for April 2007

Mililani Blog Posts:

• Welcome to Mililani - Part 1 the Shopping Centers
• Welcome to Mililani - Part 2 the Planned Community
• Welcome to Mililani - Part 3 the Surrounding Communities
• Mililani is Pet Friendly 
• Mililani, Hawaii Directory of Schools
•   
• 12 Great Reasons to Buy a Home in Mililani, Hawaii
• Mililani - Q1 2007 Real Estate Sales Activity of Existing Homes
• Mililani, Hawaii Real Estate Sales Activity for May 2007
• June 2007 Real Estate Sales Activity for Mililani, Hawaii
• Real Estate Sales In Mililani Seems to be Picking Up
• Real Estate Sales Activity in Mililani
• Mililani Townhouse Sales are on Fire!
• Mililani, Hawaii - A changing market, many opportunities
•   
• Mililani Chess Kids are Still Flashing Their Stuff
• Mililani Middle School Brings Home State Chess Title
• Mililani High School Cheerleaders Take Their First State Title
• A Sunny Day of Chess and Real Estate in Hawaii
• Mililani HS Wins OIA Softball Title
• Are You Involved in Your Community? If Not, Get to It.

September 2007 numbers are in.

Single Family Home Sales set a new record high for the median price in June and came back down a little.  From this time last year the median price has shown an overall modest increase.

Condominium Sales matched the record high for the median price that was set in June 2007, which is up from last year at this time.  Sales volume was down a little. 

With interest rates remaining low and a nice selection of inventory, buyers and sellers can still enjoy this market.

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

You can find out more about real estate in Hawaii at: http://www.hawaiirandy.com/

Or at: http://www.localism.com/

September  2007 numbers are in.

Single Family Home Sales have shown decreases in volume from last year in all of the counties except Maui.  Median prices of homes decreased on the neighbor islands, while Oahu (Honolulu County) showed a modest increase over the same time in 2006.

Condominium Sales have also seen declines in Hawaii and Kauai in both volume and median price.  Maui had an increase in volume and a large increase in median price.  Oahu (Honolulu County) while having a decrease in sales volume had a consistent climb in median price.

*These numbers were taken from area MLS systems and Title Guaranty Escrow. The information listed here is deemed to be accurate, but not guaranteed.

You can find out more about real estate in Hawaii at: http://www.hawaiirandy.com/

Or at: http://www.localism.com/

This topic comes up regularly.  How do you decide on venders like home inspectors or loan officers to give your clients?

The most common school of thought among agents I have spoken to over the last few years is to give a list to your clients.  I have such a list and freely share it with clients.  In a recent regional meeting of the Honolulu Board of REALTORS®, the attorney for our Board said that giving a list may not minimize your exposure to potential future law suits.  He said that whether you refer one or ten names to your client, if something goes bad you may be on the hook.   By giving more names you may actually be increasing your odds of trouble.  I may be better to give a referral with just one name you trust completely than a few names of people you are not as sure of.

You better trust and have faith in the person or people you refer them to.  As a business decision I try to work with a least three different venders in each category id possible.  That gives me the ability to have someone who we can trust if the other one is not available or if they and the client do not hit it off. 

In the case of loan officers, some loan officers are great for certain types of loans and some are better at others.  For example I do a lot of transactions with VA financing and gravitate towards those who also specialize in that direction.  My favorite home inspector gives a military discount and is one of the best I have met.

I have read a few posts and sat in with agents who say they do not give vender referrals because of the liability.  There is something to be said for that.  I on the other hand have made a business decision that in order to properly service my clients I have to take on some liability.  Hopefully by performing in a professional manner and on giving referrals to top professionals I can minimize that exposure.  After all we want all of our clients to love us.

Mike Janquish wrote a good blog post as a follow-up to this topic: Cary and Raleigh, NC, Real Estate: Vender Referrals. Don't we owe it to our clients to take on some Liability?