Hawaii Randy's Real Estate Opinions: January 2008

Yesterday (Saturday afternoon) I got stopped in the parking lot of my office by a gentleman was wondering when my office would be open.  When I asked what he needed he said wanted to get a blank purchase agreement form.  I will stop here on what happened, because that is not relevant for this discussion.

His request really made me think.  He was obviously planning to buy or sell a piece of property on his own.  The fact that he only needed a purchase agreement tells me he is over his head.  Our purchase agreement forms are 12 pages long.  Most purchase contracts I draw up average 20+ pages.  There are addendums in almost every sale.  Depending on the age of the home you have to deal with lead based paint.  If there is a 1031, a VA loan or one of a ½ dozen things that may come into place you have addendums.

If he didn't know that, how qualified is he to deal with the timelines, disclosures and contingencies?  Buying or selling real estate is not amateur night.  You need a licensed professional.  If you have the buyer and seller and have agreed on the price you still need a licensed professional.  If not a REALTOR®, get a good real estate attorney.  Someone needs to be responsible for drawing up the documents correctly and seeing that your rights are protected throughout the process.   Someone needs to be sure that the transaction requirements are met on time.  In the end, without a license and insurance, you may be in the cold if something is done wrong.

Here are a few of the groups of folks I run into who try to do it on their own:

• For sale by owner
• The We Buy Home / Subject to Mortgage buyers.  Not having a licensed professional in the transaction makes it easier for them to take advantage of the sellers.
• Friendly sale between family members or friends.

I can give many examples of horror stories where they tried to be amateur experts and things went south.

My advice to everyone who tells me they are going it on their own, get a professional.  If not a REALTOR® than get a good real estate attorney to be sure it is done correctly and your rights are protected.

I attended the Certified Luxury Home Designation Class in Waikiki the last two days.  The class is being taught by the mother / daughter team of Active Rain guru Sharon Simms and daughter Tami Simms-Powel. The class was a great investment of time for those of us in the business that look to differentiate themselves from the pack; when focusing on the luxury homes market.  The class is made up of about 28 top agents from Hawaii.

A good part if day one has been spent studying demographics and market trends and tactics for the luxury homes market.  I found it quite enlightening when we spent time trying to identify characteristics of millionaires, their lifestyle traits and their buying habits.

Day two focused on marketing tactics and strategies when working with high end luxury homes.

Our lunch discussions were quite stimulating.  We had a great group attending the class.  Everyone was quite open and willing to share with the others.

I would list some of the wonderful things I learned in the class, but will not steal Sharon and Tami's thunder.  I will just say, I had a great time, learned a lot and made some new friends from the neighbor islands.

If you either sell luxury homes or are planning to move your business in that direction, I recommend you attend one of the classes taught by Sharon and Tami.

Next week I will be attending the CRS Sell-a-bration.  It will also be at the Hilton Hawaiian Village.  Monday evening Celeste "Sally" Cheeseman and I we will be hosting the Active Rain gathering.  If you will be in town and wish to attend please RSVP to either Sally or I.

Yesterday, while going through my e-mail I had a message from a really great client who found me through Active Rain.  Towards the end of his message he stated: 

"It seems business is good based on your blog. I still read it regularly. Keep up the great stories, especially the ones about the bad agents. Makes me feel all the more appreciative I found a good agent when I bought my place!"

The public is reading our posts.  Why should we be writing about bad agents and posting it publicly?  Some may say we are airing our dirty laundry.   Some may say you are hurting the reputation of the profession.  I feel it is just the opposite. I have sure written more than my share of posts about this and similar topics.

In this post I have decided to list some of the benefits of posting these topics publicly.  Do we do it to say how great we are?  Or is there a much better reason? 

Here are a few of the benefits I that come from writing about bad agents or bad business practices.

1. We start a discussion among professionals that help us all learn and improve our business practices.
2. It is a vehicle for new agents to learn their trade through the experiences of other agents.
3. It is a wonderful way of educating the public so they know what to watch out for when dealing with those in the real estate profession.
4. It keeps these issues top of mind with agents when they are conducting business.  Hopefully helping them from repeating others mistakes.
5. It provides the public with questions to ask of any real estate professional when interviewing them.
6. The more open we are, the more the public can trust us.  We will also be dealing with more educated clients.
7. It is a great way for potential clients to check us out and learn more about our business practices.
8. Hopefully we are helping to raise the level of professionalism in our trade and the level of expectations from the public.

That last one may get a few questioning me.  Why would you want to raise the level of expectations from the public?  The answer is simple, we as professionals take pride in what we do and know that an informed public will gravitate towards us and avoid those who are not so professional.  Education for both us and the public is a good thing in my mind.

In the future I will continue to write about professional standards, ethical business practices and bad agents and bad business practices.  I will also right about the good agents and good business practices.

For the next week I may not be as active here.  The next two days I will be taking the Luxury Homes Designation Course (CLHMS) in Waikiki with Sharon Simms and Tami Simms-Powel.

Next week we will be hosting the CRS Sell-a-bration in Waikiki at the Hilton Hawaiian Village with many of the top REALTORS® in the country in town.  Tied to that event will be the Honolulu Active Rain Gathering on Monday evening 1/28/08.  We have room for a few more people so please contact either Randy Prothero or WooHoo Celeste "Sally" Cheeseman.

I am amazed how many times I come across and another agent who has been in the business for a long time (over 35 years in this case) and still does not seem to know what they are doing.

I had a somewhat frustrating one last week.  After showing my buyers many properties over a few days of looking we found the one they wanted.  The seller's agent informed me they were expecting two other offers.  We put together a clean offer with no extra contingencies.  They are using a VA loan and the lender is picking up the non-allowables, leaving no extra costs to the seller.  I sent a VA Addendum and a cover letter explaining that to their agent with our offer.  I also called him on the phone and went over it with him to be sure there were no misunderstandings.

The next day their agent called me. 

• Other Agent: Because of the extra costs to the seller associated with the VA loan they decided to counter the other offer. 
• Me: Excuse me?  What additional costs are you talking about?  Our lender is picking up all of the VA non-allowables.
• Other Agent: Well that covers the extra lender fees, but what about the rest of the closing costs?
• Me: What additional closing costs are you talking about?  It was clearly stated in writing and in our phone conversation that there would be no additional costs to the seller.
• Other Agent:  My understanding is that the seller has to pay all escrow fees.
• They were not willing to pick up those additional costs.
• Me:  I am confused.  Did you not get in writing that the lender will be picking up all non-allowables, which includes the additional escrow fees?  Was I not perfectly clear in our phone conversation that there are no additional costs to the seller?
• Other Agent: You may want to check on it again, because that is not how I understand VA loans work.
• Me:  I the last 3 or 4 years I have been involved with many transactions with VA loans and not one time has a seller had to pay those fees.  Also this is the first time I had an agent misunderstand this.

That sad part is this agent works in close proximity to several military installations and I am sure he has probably done huge disservice to several of his clients in the past and may continue to do it in the future. 

I guess it is hard to teach an old dog sometimes.

Well not maybe half over, but I have gotten a lot done.  How you start your day will set the pace for how productive will be.

In the past I was an evening person.  Unfortunately I married a morning person.  After 13 years of marriage my wife Darnelle is finally changing me.

By 4:45am she has the lights on, TV turned to the news and the hair blower going.  If that is not enough she will begin to quiz me about the day's schedule.  No chance of going back to sleep at that point.  So what to do?

Many of you know that over the last year I lost a ton of weight.  The follow-up to that is now I am hitting the gym on a regular basis.  What better time to work out than 5:30 in the morning.  The phones aren't ringing.  I am already up and the gym is practically empty, giving me my own private work out area.  So off I go.  The most important part of this is that I don't have time to make excuses, I just take my vitamins, slip on my gym shoes and head to the YMCA.  So the end result is I have finally found a benefit of being married to a morning person.  Thanks to my morning person wife, weight lifting and cardio training has become a way of life for me. 

After my trip to the Gym, I still have time to shower, dress, eat breakfast and return messages by 8am.  I even get some posting on Active Rain in by then.  That may not be a half a day's work, but its a great start.

During this week I spoke to 3 different struggling agents who were discussing their challenges with me.  When I asked about their marketing, the responses were the same.  Money is too tight to spend on advertising.  I asked all three the same question.  So how's that working for you?  In one case I spoke to that agent at least two other times in the last three months and gave several ideas for generating business that would cost little or no money. To date not one has been tried.  You can predict the results without a crystal ball.

Last evening I was in the Rec. Center where I run the community chess club.  My car was parked in front with my Century 21 signs on the sides and my website address and slogan "Not Just Another Pretty Face" lettered on the rear window.  (My wife's vehicle is adorned with the same signage.)

Shortly after arriving a young couple walked in and introduced themselves to me.  The wife was a REALTOR® who I had not met before.  She saw my car with the slogan and pointed it out to her husband and said that is the guy with the big mall signs.  After we introduced ourselves to each other, she asked if my marketing was working.  I almost started laughing.  It made them want to meet me, didn't it?  Instead of my usual wise crack response, I said it was.

• Struggling Agent: How are you surviving in this terrible market?
• Me:  I think the market is pretty good.
• Me:  How long have you been in the business?
• Struggling Agent:  5 years.
• Struggling Agent: I hear about 30% of the agents locally are getting out of the business. 
• Me:  There must be a ton of new agents, because our Board membership seems to be up.  Me:  What kind of marketing are you doing?
• Struggling Agent: Oh, I am doing my own thing. 

From her comments and the fact I have never heard of her, we can assume it is not working.

I have told this story many times, so if you heard it before I apologize.  My older brother told me something very profound over 25 years ago when I was new to the islands and having trouble finding a good job.  He asked how many job interviews I went on that day.  I said three.  He said not enough.  He asked how many hours a day did I plan to work when I get a job.  I answered at least eight.  He then said something I have applied to many situations.  If you are not employed, you have a job; it is finding a job.  If you spend eight hours a day job hunting how long will it take to find a job?  The answer is obvious, not long.  I got a great job a couple days later.

If you do not have clients, your full time job is getting clients.  If you spend eight hours or more a day on your marketing how many clients do you think you can get in a month?  On the other hand if you sit home and complain about how bad business is, you should start planning your next career.

If you are a struggling agent; dust yourself off, plan your 8 hours a day and stop by and tell us what happened.  It is not easy, but with good planning and hard work you will succeed.

One of the unique things about Hawaii is our openness.  We have what is called the sunshine law.  Most government meetings have to be open to the public.  All hearings and any sessions that have voting at the legislature and our County councils are open to the public to attend.  Most are televised on public TV.  It is one of the more civilized parts of our local government.

Being here on an island we have a saying, "everyone knows everyone here".  That is also true of our elected officials.  Many of us know our State Representative and State Senator personally.  I and most of my friends knew the Governor before she was elected to the position.  I am sure that if you are from New York or California you be lucky to have even shaken their hands let along know them personally.

In Hawaii we have a tradition of the public visiting the capitol on opening day of the legislature.  There will be a floor session for both the House and Senate followed by an open house of their offices.  Most of the elected officials will have out a spread of food and some even entertainment.  I have attended probably about 10 out of the last 12 opening days.  If I can sneak away today, I will be there again.

One of the things that make our Capitol Building unique is that it is wide open.  The courtyard in the center is open from 2 sides.  You can walk up from the street and hit an elevator button or take the stairs.  Does all of what I said mean our politicians are any better than those in other states? (The answer is NO).  It does mean that we in the public have much more access to them and the process.  If they mess up we probably know not only know them but also their family.  We can always call mom to help straighten them out.

I see many new  agents come and go in our industry.  As the market changed in the last two years many inexperienced and weak agents began to find themselves lost.  On Oahu our market is much stronger than most in the country, yet we have seen a decrease in the number of closings.

I have lost count of how many struggling agents have spoken to me in the last year asking advice.  Most were not willing to follow the advice.  Several of them have either left the industry or have stopped doing business all together.

Here is my advice to struggling agents.

• If what you are doing is not working, do something else.
• Increase the number of hours a day you spend on your business.  Be prepared to work many more hours.
• Get all the training you can get.  Get your designations.
• Team up with a productive agent.
• Market, market, market.
• Be creative
• Have fun
• Be sure you are in the right office for you.
• This should be first.  Have a business plan!

There is a common denominator between most struggling agents.

• They work less than part time.
• They are doing exactly what they were doing a year ago, no changes or adjustments.
• They spend none or next to no time or money on marketing.
• They do not go after designations and do not take training classes.
• They have no business plan.
• They are not having fun.

My departing tips to remember:

• This is not an easy business, you must have a plan.
• You have a lot of competition; you need to differentiate yourself from the others.
• There is no substitution for training and hard work.
• When deciding whether you are cut out for real estate, you need to consider whether you are willing to do what it takes to succeed in this industry.

Aloha and have a great 2008!

Single Family homes sales in Wahiawa/ Whitmore have shown increases. Average sales prices of single family homes are up over 9%, year to date from over the 2006 levels.  Sales volume was within one sale of the 2006 levels.  It still appears to be a nice 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 of a little over 3%, while sales volume is down 25% year to date from last years numbers.  Buyers are still finding a good selection and low interest rates.

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

Currently Active for Sale (January 15, 2007): 

•  29 Single Family Homes
•  26 Condos/ Townhouses

Currently in Escrow (January 15, 2007): 

•    6 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/

Salt Lake Area (tax map key 111, includes Moanalua, Aliamanu, Mapunapuna and Airport Area)

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

Single Family homes sales have softened. Average sales price of single family homes have continued to climb, while sales volume is down from last year.  Inventory levels are fairly low, so prices may hold strong in Salt Lake for the near future at least.

Condo and townhouse sales are another story.  Inventory continues to remain low.  Average sales prices have seen a nice jump over last year.  The Salt Lake area is still in a seller's market for condos.

Current Active for Sale (as of 1/15/08): 

• 18 Single Family Homes
• 43 Condos/ Townhouses

Currently in Escrow (as of 1/15/08): 

•   4 Single Family Homes
• 17 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/