Hawaii Randy's Real Estate Opinions: May 2008

Donna Shefcheck got her real estate license and joined us a little while back at Century 21 Liberty Homes.  She is an archeologist and wanted to learn our real estate business.  During her short tenure with our company, she assisted me with several of my transactions including holding open houses and keeping up the files.

I also had the privilege of helping Donna with her first transaction.  We found one of her archeologist friends a really nice deal for a condo.

Donna was offered a job in Alaska working on the BP Conoco Natural Gas line for the summer.  Her work will be part of the environmental study.  Our loss is Alaska's gain.

Donna will be joined by her loyal companion Lucky (her dog).  At her going away party today both her and lucky had the privilege of swimming on the north shore and being joined by a couple of sea turtles.  I am sure that will add to her memories of our paradise here in Hawaii.

If I were to get all of my information from the news, I would believe the sky is falling.

• Gasoline prices that are matching the price of milk in Hawaii.
• Mortgage companies closing their doors all over the country.
• Airlines raising price, filing bankruptcies, parking planes and closing their doors.
• Military troops in large numbers in harms way overseas.
• Auto sales way down
• Visitor counts off.

 Living in Hawaii, you would think the economy must be in the tank.  Well it isn't!

Our real estate industry has seen a slowing of sales volume since the peak of the hottest market in history.  Yet sales prices have remained surprisingly consistent in most areas.  You would never guess that reading the newspaper or watching the evening news.

In the last 4 weeks I personally have seen a huge increase in sales activity.  I am expecting this summer to set a new personal high for me.  How is that possible considering all the negative news?

First of all people still need a place to live.  We are not over developed on Oahu.  The supply and demand is still at a good balance.  Yes we have a lot of troops overseas, but the market adjusted a couple of years ago to the change in troop levels and we have had a few rotations since then.  Each troop rotation creates a lot of activity.

The drop in airline seats coming to our islands is a very recent thing.  We have not seen the long term effects of that yet.

The high price of fuels has made a few folks look at moving closer to their jobs.  That has actually created real estate activity.  I have two escrows with one client as we speak, who is selling in the suburbs and moving in town.  I also just closed an escrow with a client who did the opposite to take advantage of the housing values a little further out.

Since the decrease in real estate sales volume, many inexperienced agents who jumped in to take advantage of the hot market are jumping back out.  In this adjusted market, buyers and sellers are gravitating towards those of us who are recognized as top professionals in our areas.  The negative press has probably helped me gain market share.  Sellers are realizing that homes are not going to sell if they are not marketed and priced correctly.

If you are thinking of selling or buying real estate in a balanced like most areas on Oahu a challenged market like many parts of the mainland; get professionals involved.  This is not amateur night.  Get a top REALTOR® and if you are a buyer get a top respected loan officer, your REALTOR® can help you if you do not have a great loan officer.

$400,000 for this rarely available 2bed/ 2 bath split level townhouse with 2 car garage.  This home is a golf course frontage unit.

Sit out on you lanai and enjoy the many acre backyard (Mililani Golf Course) that some else cuts the grass.

It has an upgraded kitchen with custom Corian counter tops and stainless appliances.  The kitchen remodel included opening up the space.

This is end unit is one of the very few 2 bedroom split level units with a 2 car garage in the complex.

First Open House is this Sunday,  May 18, 2008 - 2:00pm to 5:00pm.

$500,000 for this Tropical Oasis - Possibly the Beat Value in Mililani!

The wonder property has many great features:

• Many mature fruit and plam trees
• Stone walkways
• Large koi pond
• Great BBQ/ Patio area
• Large hot tub

The home has some real nice features:

• Travertine flooring
• Large dining room
• Office/ Den
• Addtional family space for piano, etc.

Open House this Sunday - May 18, 2008  2:00pm to 5:00pm

 Did the title get your attention?  When asked by potential clients how long will it take me to sell their home; I respond I can sell your home in one day.

I am serious; I can sell any home in one day.  I am very good at what I do.  If you need your home sold in one day, I can do it.

OK, if you check the stats I have only sold a couple of homes in one day.  So how do I get off making that comment?  It is simple.  There is a price I can sell your home in one day.  The question for the seller is how close to that price do they want to be.

With the home properly prepared that one day price goes up.  If you do not need to sell it in one day we can raise the price higher.  Plug in my aggressive marketing, the price will go even higher.

Are you following the pattern?

The time it takes to sell your home is a direct reflection on how it is prepared, how it is priced and how it is marketed.

If the seller is living in the home the other factor is their tolerance for pain.  How flexible will they be for showings?  If an agent calls from down the street, will we let them see it, or do you require 24 or 48 hour notice?  Will they keep the home in showing condition?

When meeting with sellers we need to plug their needs in the equation. What are their priorities?

• Do they need to sell fast?
• Is getting top dollar more important?
• Do they have the resources to fix it up?
• Do they have tenants and need to give them a 45 day notice or whatever is required in your community?
• Are they doing a 1031 exchange?
• Do they need to be there until a certain date?

So if you need to sell your home in one day on Oahu (Honolulu County), please give me a call.  If you need to sell it, but have more than a day, I would be honored to build the appropriate plan for you.

Your home has been on the market for many days and it is just not selling.

Let's start with a few possible reasons:

• Hard to show (tenants or owners who restrict showing appointments)
• Dirty or in need of repairs
• Dated, could use upgrading
• Functional obsolescence - 5 bedrooms with only 1 bath for example.
• No curb appeal - lack of landscaping, etc.
• Messy or cluttered
• Insufficient or ineffective marketing
• Priced too high

The bottom line is that for whatever reason your price is too high.  The market has rejected what you are offering at that price.  Now the other items on the list may be bringing down the price, but none the less you are priced too high.

So what can you do?  You can lower your price or increase the market value of your home.  You can also do a combination of the two.

Increase the market value:

• Paint and carpet are relatively inexpensive and will help to raise the value.  If you do not replace the carpet, steam clean it.
• Clean the windows.
• Clean the exterior - cut the grass, pull weeds, pressure wash driveways, trim the hedges, plant some flowers.
• Make all minor repairs.
• De-clutter and stage the home to make it show at its best.
• Improve the marketing of your home.

In a changing market the real estate agent who charges the lowest fee, may not be the cheapest.  You need a professional who does superior marketing.  Find out who is selling homes in the neighborhood. Notice I said selling, not listing.  The agent with the most signs may be successful at getting listings, but not at selling the homes.

There are agents who do a great job of marketing themselves or offer extremely low commissions to get listings, but may not move the homes.  In a changing market you need to be on top of the game to be successful.  If the agent is working with lower commissions (marketing fees).  How will they pay for the increased marketing required to succeed?  Where will they cut the corners?

If you need open heart surgery do you look for the cheapest or the best?  Do you call a plumber or a surgeon?  Ok no nasty e-mails please.  I know selling homes is not heart surgery, but in most cases it is even more expensive.

If you are looking to buy or sell a home on Oahu, I would be honored to be interviewed for the job.

I have gotten more than a couple of offers lately that are becoming annoying to say the least. 

• Ridiculously low
• Insulting cover letters
• Incomplete paperwork
• Unsigned, weird contingencies
• Lists of everything they think is wrong with the home (two from folks who never saw the property)
• Contract forms from more than 30 years ago or from other states.
• Subject to mortgage
• No loan letters
• Inflated prices with huge cash backs

Believe it or not I received offers on two of my properties that required the contract to be returned in person (to a PO Box) or to telegraph the offer.  That is right; it was on a contract form that the best I can guess was from about 1980.

I have a large 5 bedroom house that is priced extremely competitively.  I received a series of low offers on it.  Two of them had long lists of everything wrong with the home and why it was only worth what they offered.  One came from an agent and a buyer who had never viewed the home.  The other one came from an agent who has yet to do his first transaction and is not from the area.

1. Two said it needed a new roof.  A new 50 year roof was installed less than 2 years ago, looks great and has a warranty.
2. Both cover letters stated that after reviewing sale prices in the neighborhood, they felt they were offering top dollar. ($30,000 & $40,000 below the median price for the area, for the largest home for sale in the neighborhood on a larger than normal lot, in above average condition).
3. Both mentioned all the repairs they needed to do. (This home has been well maintained.  The seller has complete records for maintenance and repairs.  Is including a home warranty, a Terminix termite program, warranties on the roof and appliances.  No known repairs needed at this time.

I am seeing this pattern of behavior more each month.  Possibly it is because I have more listings, possibly because there are more buyers who are reading the mainland news and think the sellers are desperate here.

I have to wonder do these agents and their buyers believe I over price my listings by 20 or 25%.  Are they calling me an idiot?  Are they telling the seller their property is worthless?  I wonder how successful they are running around insulting people's intelligence.

If you are going to waste our time at least make a reasonable effort. 

• Fill in an appropriate contract.
• Get the required signatures.
• Include a loan letter from a lender.
• Leave out the insults.
• If you are uninformed about the market value of the home, please do not try to fake it.  The seller and their agent took a lot of time and care to arrive at the asking price.

Because I see these types of offers more and more frequently, I prepare my sellers in advance.  I present all offers to my clients, but some days wish I didn't have to.

I just have to wonder if this tactic works.  I can't imagine any seller jumping that low.  If the seller was willing to go that low the agent could have sold it in one day or bought it themselves.

Have you ever gotten a loan approval letter from Bob's Mortgage and Hair Cutting Emporium?  You think I am kidding, don't you.  I did make that one up, but trust me some of the companies I have run across are just as crazy.

In the last couple of years it seems like every third person thinks they are a mortgage professional.  In Hawaii to be a loan officer all you need is about $100.  That will get you a license and a set of business cards.

Today I received a copy of the Governor's e-newsletter.  She spoke this week to the mortgage brokers association and said she is pushing for licensing reform and is asking for their support and help.

She is asking for tighter licensing requirements.  Hooray!!!

I will be one to testify at the legislature if that bill gets a hearing.  I will also be speaking to my area legislator asking for her to support it.

In the past I have advocated tighter licensing for loan officers and real estate agents.  We are talking about transactions for 100s of thousands of dollars.  The public should be better protected than they are currently.

Just me 2 cents worth.