Hawaii Randy's Real Estate Opinions: February 2008

On one of my new listings that went on the market this last week, I had an agent show it twice and call to tell me they were coming in with an offer.  I did expect this one to sell fairly fast, so I wasn't surprised by the immediate interest. 

I just closed escrow on a condo just down the street that had almost the same floor plan and was a few square feet smaller built by the same developer.  It recorded the day before and went in escrow in just a week after putting it on the market.

She said she would be e-mailing the offer that evening (Friday).  I just received the offer today (Sunday morning).  The offer was far below any comparables in the neighborhood and far below our asking price which was the lowest in the sub-division.  After telling us an offer was coming Friday to have it show up on Sunday; leaves the seller disappointed.  Fortunately I did warn them when we signed the listing that they may expect silly offers.

Here is the rub on an offer like this.  If the buyers are actually interested in the property they have just sensitized the sellers.  Their best chance to get a good deal was their first offer.  If they had made an offer closer to reality the seller would have either accepted it or at the worst countered it.  At this point they have an offer. (I almost forgot to mention, no pre-approval or pre-qual from a lender). It is a silly low offer that they probably will not even counter.  Today's open house will bring more interest and hopefully a real buyer (which this one may or may not be).

I do not know whether this offer was driven by the buyer or their agent.  The lack of communication and the lack of a pre-approval letter I lay on the shoulders of the agent.

I will present this offer to my client.  I will printout an updated comparable report for them to compare this to.  I will also get back to the other agent immediately after my client gives their response.  That is what professionals do.  If my client decides to counter this offer, I will highly recommend they also require a pre-approval letter from a funding lender and to clean-up a few housekeeping issues on the contract.

As agent we can do our buyers a big service by writing clean offers, getting our clients pre-approved with a reputable lender and communicate properly with the other side.

The corner home is in new condition.

• Central A/C
• Large Garage plus 3rd parking stall
• Covered lanai
• Short walk to pool

Ewa Gentry is one of the newest communities offering wonderful value to buyers.  Located between Pearl Harbor and Barber Point, and just below Schofield Barracks, makes Ewa Gentry's location quite convenient for those stationed oir working on base.

The new marina at Ocean Pointe is going in and there are several golf courses in and surrounding the community.

Just above Ewa Gentry is a bicycle trail that runs along Pearl Harbor.

Price Reduced to Move Fast!

This one is ready to move in.  It is located next to Schofield Barracks and Wheeler Airfield.  One exit away from Mililani and Wahiawa in the other direction.

Launani Valley is quiet and peaceful.  there are several recreation activities available.  Swimming pool, playgrounds, BBQ areas, tennis, basket ball and running trail.

This home is appropriately priced to sell quickly, easy to show and will make someone a great new home.

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
• 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.

This wonderful charming home sits on the hills above Honolulu and sports nice ocean and mountain views.  The original owners have resided there since it was built and have shown great pride of ownership.

The kitchen and bathrooms were remodeled and the homes have been painted throughout.

It's location is convenient to both the airport and downtown Honolulu.  Avoid the commute and move into this wonderful home.

Yesterday I attended an awards luncheon.  On of the things that got my attention was the venders who were at the event.  There were a couple of lenders present, who were owned by other real estate companies.  First of all I would never use or recommend their services, period.

I am real glad my company does not own a mortgage company, an escrow company or any other service company.  The conflict of interest is too tremendous.  If I ever leave the company I am with I would not consider an office that also owns and promotes their own lender or escrow company.  I can not imagine any added benefit for the real estate agents, just a lot of additional liability.

I know many will disagree with me on this subject.  That is OK there are companies just right for them.  For me selling homes is enough.

The problems in the mortgage industry has caused the last year to be a rough ride for many in the country and looks to be possibly an even rougher ride for many more next year.

Those who played by the rules will be paying for the unethical and unprofessional behavior of others.  We have all read stories about loan officers, real estate agents and appraisers who have conspired to inflate prices and pull out cash or take kick-backs on real estate transactions in various parts of the country.  Those who did that should be made examples of.  Loss of license and the right to ever practice in the profession along with serious prison time is definitely in order.  The profits gained by their illegal activity needs to be seized by the government, just like they would do for a drug dealer or anyone else who has ill gotten gains.

It makes my blood boil every time I read a story about how greedy, dishonest people inflate prices of homes to line their pockets with cash.  They stick it to everyone around them.  By inflating the sales prices of properties they have injured many folks for large sums of money.  They have artificially inflated values of properties in the area; causing buyers to pay more than they should for their homes. The lenders they cheated will now be taking huge losses as a result.  Investors and future buyers will all be paying more and having to meet even higher standards to get their loans, thanks those responsible for past transgressions.  Those victims who have since purchased at inflated prices, lost valuable equity thanks to their fraud.

On a human side they have injured the reputation of their professions.  Those of us who conduct ourselves in an ethical, professional manner will be paying for what the small minority of dishonest and less than professional have done.  Their actions have caused a loss of the public's trust and now leave the ethical professionals to clean up the mess they left.

In my practice I do not see the problems anywhere near the extent we read about in other parts of the country.  It still impacts us all; because the mortgage money is affected everywhere as a result of what happens in one part of the country.  New laws and restrictions will negative impacts on future borrowers.  First time buyers will face many new obstacles. 

I wrote a blog post yesterday that asked the question why these problems seem to be more prevalent in other parts of the country:  Why Does Hawaii Have Fewer Foreclosures?

I sat in a Broker's Forum last week.  One of the speakers was the economist from Bank of Hawaii, Paul Brewbaker.

He said something I did not expect to hear.  Well let me start by sharing a little background for my surprise first.  For the last year or so, bankruptcies have been up nationwide in most markets.  Hawaii has consistently been among the lowest.  In my practice I rarely see buyers doing sub-prime, ARMS, stated income/ stated assets, 1% negative amortization or such.  I assumed that in Hawaii we had fewer foreclosures because we write less subprime loans.

After sharing his statistics and projections for our market Paul made a comment that blew my mind.  We in fact have as many subprime mortgages as the other markets.  We have even more than some parts of the country, that the most foreclosures.  That blew my mind.

So why is that?  Is it cultural?  Are the people in Hawaii just better at paying their bills?

When you consider:

• The average wage in Hawaii is lower than many parts of the country.
• The median price of a home is higher than all but a couple of markets.
• The cost of living is among the highest.

What else could it be? 

• Possibly we do a better job of putting people in loans they can afford
• We match up our buyers with the appropriate loan program.
• We have less mortgage fraud.
• Our appraisals are closer to reality.
• We are not as influenced by bad practices from other places, because we are so removed.
• Our local lenders are better at what they do.
• We have less out of state loan officers doing long distance hit and run lending.

So the next question:

Is it fair to our buyers that they will have fewer mortgage products and stricter lending requirements because of the abuse from other parts of the country?

One of the things that give our real estate profession a bad name is agents who are just too pushy. 

Have you ever heard someone try to compare REALTORS® to used car salesmen?  I have and it really got under my skin. That opinion came because of how unprofessional an agent was that they had interaction with.  Now I have a potential client who has a low opinion of our profession.  Thanks to a less than professional agent.

You hear of physicians making a hard sell for their services or any other top professional for that matter?

I feel that there are few reasons why an agent might be too pushy.

• They do not know their market or they do not offer superior service.
• Not very successful and are desperate.
• Inexperienced and not properly trained.
• Greedy
• Lacking social skills or class.
• They may just be in the wrong line of work.

The good news is that they are a tiny minority of those in our profession.  Hopefully they will get better trained or move on to a more appropriate line of work.

For the public:

If you run into an agent who is far too pushy, that should be a red flag for you.  A professional will never try to push you into a decision you are not comfortable with.  Their job is to provide you enough information so you can make the proper informed decision.

In our broker's forum today we got an update on the soon to be coming electronic lockboxes.  The target rollout date for the Honolulu Board of REALTORS ® for electronic lockboxes if August 1, 2008.

The product and system selected by the Board is the SentriLock, REALTOR® Electronic Lockbox.  The company has developed a new product to meet our needs in Hawaii.  The new box is not pictured on their website yet. The key box is larger than those in other boxes to support the various types of keys and cards for elevators, gates etc., along with the standard door keys.  The box is made of materials that will resist things like salt air and mold or mildew.  The new box is also smaller and lighter than their current model.

Today I got to handle the new box and was quite impressed.  It has several features that make it exciting to me:

Some of their features that I am looking forward to are:

• Ability to take manual codes along with electronic smart card
• Up to 9 different 1-day codes
• Contractor codes
• Illuminated key pad
• Agent showing statistics
• Metal non-rusting case
• Durable replaceable cover
• Replaceable battery and low battery warning
• Internet based administration
• The ability for the seller to disable it when they are home
• The ability to preset showing hours, turning it off during odd hours
• The key uses an inexpensive smart chip technology.

With this model of lockbox we will be able to implement them without requiring everyone to participate.  The ability to operate in both electronic and manual makes this box quite desirable.

Strong words?  I don't think so. 

I have spoken to many Military folks who were steered away from using their VA benefits when buying a home.  When a mortgage broker or an out of state lender tells someone with VA benefits that they have a better deal; it is probably better for the loan officer, not the borrower.  Here are a few reasons why some loan officers have consistently pushed vets away from using a VA Loan:

1. They are not set up to do VA loans.
2. They can not charge the junk fees.
3. They do not make as much money on them.
4. They are not trained in VA mortgages.
5. They are dishonest.

On a rare occasion a year or two back I did see some loan programs that came close to VA, but none recently.  I have a client who showed me his mortgage on a new construction home he bought 2 years ago.  He was put in an ARM at a rate that was about the same as a 30 year fixed VA at the time.  It has since gone up considerably.  He had to come in with over $15,000 at closing; with VA it would have been less than $1000.  He had mortgage insurance and a hard pre-payment penalty.  With a VA he could have gotten in without a pre-payment penalty or mortgage insurance.  Of course the developer did not allow him a real estate agent without having to pay for it out of pocket and they used the developer's lender.

In Hawaii the VA cap is $625,000 for 100% financing.  The BAH (Basic Housing Allowance) is generous enough that most active duty soldiers can buy something with out tapping into their base pay or COLA (Cost of Living Allowance).  Several of the loan officers will pick up the non-allowables so that the seller has no added costs.

One feature of a VA loan that is rarely mentioned is that it is assumable.  VA and FHA loan are among the few types of loans that have this feature.  Why is that important?  If mortgage money tightens or interest rates climb in the future, properties with VA or FHA mortgages will be marketable when others are not.

So please remember if the loan officer says they have a better deal than VA, there is a strong chance that they are lying.