Buying Real Estate in Hawaii February 1 st. 2011

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1 Buying Real Estate in Hawaii February 1 st If you are in the market to purchase a home in Hawaii this article is for you. Regardless if you are just beginning to conduct your research into Hawaii s Housing Market or you are currently running about on Sunday s Open House Day, this article will explore the most important aspects of purchasing Real Estate in Hawaii. Using the Internet An overwhelming majority (87%) of recent home buyers in the US say they used the internet as an information resource during their home-buying process, and nearly one-third say they first learned about their newly purchased home from an online website, according to a study from the National Association of Realtors (NAR). Local metropolitan multiple-listing-service websites are the most popular internet information resources, consulted by 60% of buyers, followed by Realtor.com (48%), real-estate company sites (46%); real-estate agent websites (?%); forsale-by-owner sites (19%); and local newspaper sites (11%). There are two kinds of websites a buyer can search for a home: 1) A Real Estate Website where you must sign into with a log-in and password which is given to you after you register. 2) A Real Estate Website where no personal information is required to search for properties and research home purchasing. 1

2 My 11 years of Real Estate sales have taught me that most home buyers prefer not to leave personal information on a Real Estate Website mostly because they have a fear of being pursued by a Real Estate Agent who is utilizing their personal contact information in an effort to establish a relationship with the prospect (you). When beginning to explore the multitude of websites in search of Real Estate information most buyers simply are not ready to deal with an Agent. If you are like many buyers you may want to use the following websites: Yahoo.com Realtor.com Google.com Trulia.com These National Real Estate Websites are easy to use and informative; however, they have out-dated information. National Real Estate Websites receive their Multiple Listing Service (M.L.S.) from Local Real Estate Boards across the Nation. Local Agent and Brokerage sites also receive their information from the Local M.L.S. If you want non-threatening websites to research property in Hawaii I recommend you go to the sources of all National Real Estate sites and that is the Local Real Estate Boards and Associations Websites. At these sources you will find the most up to date information to research property for any Island in Hawaii. Within the State of Hawaii there are a total of 6 Boards: Honolulu Board of REALTORS (Oahu) The Local Listings (M.L.S.) and Research for the different Island s Boards below can be found at: Hawaii Island Board of REALTORS (Hawaii) REALTORS Association of Maui (Maui, Lanai) Molokai Board of REALTORS (Molokai) West Hawaii Association of REALTORS (Kona) Kauai Board of REALTORS (Kauai) 2

3 For the best Research sites: NAR - National Association of REALTORS or HAR - Hawaii Association of REALTORS is the State (Hawaii) entity HBR - Honolulu Board of REALTORS is the Board for the Island of Oahu in the State of Hawaii How to use The Honolulu Board of Realtors Website: (Finding Property) 3

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5 Navigating the Hicentral.com website is easy and once you get to the screen above you simply click onto the area you are looking for and the next screen will ask for Single Family Home (S.F.H.) or Condo, size, bedrooms, price range, etc. You are then on your way! You will love this site! I am assuming that if you are investigating the market to purchase a home that you have already seen a Mortgage Broker or Lender of your choice. Failing to do this absolutely necessary first step, is absolutely a waste of time because you will not be looking, armed with the knowledge of what the lenders will qualify you for in terms how much a loan and monthly you will qualify for. Do not expect any competent Real Estate Agent to help you without first Pre-Qualifying for a loan as they will send you back to this all important First Step before attempting to work with you. This may sound arrogant but it is simply in the Buyer s and Agents best interest, so that they will not waste each others valuable time. Prequalifying is a must. Another important consideration in looking for property and obtaining a Pre-Qualification from a lender is the ability to actually cut to the quick and be able to decide if a S.F.H., Condo, Town Home and what Neighborhoods you will qualify to live in. This process will greatly reduce your time in looking for the right home. You will be happy you took this First Step. If You Are Looking for a Loan Upon the Welcome page of just below where you look for homes For Sale is another link titled: Current Mortgage Rates. This page will have up to date Mortgage rates from Lenders doing business in Hawaii, terms, contact information and more. Start here before proceeding to look at 5

6 homes. Take the leap. Find out how good or how bad your Credit Score is in terms of qualifying for a Mortgage. This is not like the anticipation you may feel by going to the Dentist and it will only take 10 minutes over the phone to find out what you will qualify for with a Lender. In the above example I had clicked onto Kailua on the final Oahu Map (above) when I had selected a region to explore for my home search. I had chosen S.F.H. s instead of Condos, number of bedrooms, minimum and maximum purchase amount and Fee Simple instead of Lease Hold. 6

7 Finally, you will arrive at these types of pages when you choose which home to take a closer look at. I think you should understand how to use the site now and you can investigate to your heart s content. At some point you should be ready to take the plunge and contact an Agent. What Agent? What Company? Who do I trust? 7

8 Mike Gallagher, Broker in Charge, Abe Lee Realty Ethics Complaints Review Committee Member, Honolulu Board of Realtors Would You Trust This Guy? I would not trust this guy! Not by just looking at him. Look at those small beady eyes and sly smile! Besides that, he looks like an Old Guy! (Nothing against Old Guys) Statistically, most prospective buyers and sellers alike will choose an Agent by asking their Family and Friends who they purchased or sold their homes with. This makes perfect sense. Whom do you trust the most? Family and Friends are who you trust the most. Another Way to Find An Agent If you want to find an agent on your own, I would go to a few Open Houses and speak with agents who are sitting the Open House and see who is an expert on the Market. Find an agent you can connect with. Someone you feel comfortable with. Take your time in finding an agent and see who follows up with you if you have given any agents your contact information. In The End In the end always ask to see the agent s sales report when getting down to the final decision on whom to use for your agent. This report will quickly tell you how many transactions the agent has had since their first sale, where they sold the homes and when. An agent s Sales Report will definitely give you something to measure the agent s experience level to your needs. Below is an example of partial Agent s Sales Report: 8

9 Where to buy? It has been an interesting year in terms of sales numbers and while not knowing how the year 2011 is going to finally perform, I recommend taking a look at the differences in the following End of Year Sales numbers: 9

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11 Recap: (See below for Red Question Mark-Inconsistencies in Reporting H.B.R.) 2007 S.F.H. Median Sold Price: $640,000? 2007 Condo Median Sold Price: $325, S.F.H. Median Sold Price: $620,500? 2008 Condo Median Sold Price: $325, S.F.H. Median Sold Price: $575, Condo Median Sold Price: $305,000? 2010 S.F.H. Median Sold Price: $592, Condo Median Sold Price: $$305,000 In Short: The year 2009 was a total disaster for Real Estate on Oahu. The market turned in December Nobody thought anything was wrong in year By the time year 2008 rolled around, everybody knew we were in trouble. Year 2009 got a little better and year 2010 we saw more improvement built on top of year 2009 results. However, in large part, these Median Prices rose due to large quantities of higher priced listings that came to market in year

12 January '10 to December '10 Units Listed by Price Range $0-$99,999 $100,000-$199,999 $200,000-$299,999 $300,000- $399,999 $400,000-$499,999 $500,000-$599,999 $600,000-$699,999 $700,000-$799,999 $800,000-$899,999 $900,000-$999,999 $1,000,000-$1,499,999 $1,500,000-$1,999,999 $2,000,000+ Oahu SFH January '10 to December '10 Units Sold by Price Range $0-$99,999 $100,000-$199,999 $200,000-$299,999 $300,000- $399,999 $400,000-$499,999 $500,000-$599,999 $600,000-$699,999 $700,000-$799,999 $800,000-$899,999 $900,000-$999,999 $1,000,000-$1,499,999 $1,500,000-$1,999,999 $2,000,

13 Oahu SFH January '10 to December '10 New Listings by Price Range $0-$99,999 $100,000-$199,999 $200,000-$299,999 $300,000- $399,999 $400,000-$499, $500,000-$599,999 $600,000-$699, $700,000-$799,999 $800,000-$899, Jan. '10 Feb. '10 March '10 April '10 May '10 June '10 July '10 Aug. '10 Sept. '10 Oct. '10 Nov. '10 Dec. '10 $900,000-$999,999 $1,000,000-$1,499,999 $1,500,000-$1,999,999 2,000,000+ Oahu Condo January '10 to December '10 Units Listed by Price Range $0-$99,999 $100,000-$149,000 $150,000-$199,999 $200,000-$249,999 $250,000-$299,999 $300,000-$349,999 $350,000-$399,999 $400,000-$499,999 $500,000-$599,999 $600,000-$699,999 $700,000-$799,999 $800,

14 Oahu Condo January '10 to December '10 Units Sold by Price Range $0-$99,999 $100,000-$149,000 $150,000-$199,999 $200,000-$249,999 $250,000-$299,999 $300,000-$349,999 $350,000-$399,999 $400,000-$499,999 $500,000-$599,999 $600,000-$699,999 $700,000-$799,999 $800,000+ Oahu Condo January '10 to December '10 New Listings by Price Range $0-$99,999 $100,000-$149, $150,000-$199,999 $200,000-$249,999 $250,000-$299, $300,000-$349,999 $350,000-$399,999 $400,000-$499, $500,000-$599,999 $600,000-$699,999 $700,000-$799,999 0 Jan. '10 Feb. '10 March '10 April '10 May '10 June '10 July '10 Aug. '10 Sept. '10 Oct. '10 Nov. '10 Dec. '10 14 $800,000+

15 But Then Again, Who Can You Believe? NOTE THE MEDIAN SOLD PRICE OF CONDOS YEAR 2009 IN BOTH OF THE REPORTS BELOW IS IT $302,000 OR $305,000? 15

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17 OR CHECK OUT MEDIAN SOLD PRICE YEAR 2008 $624,000 OR IS IT $620,500? 17

18 OR CHECK OUT MEDIAN SOLD PRICE YEAR 2007 $640,000 OR IS IT $643,500? 18

19 Would You Believe the Board s Numbers are Correct for Year 2006? Once you have finally figured what numbers to trust, we can then proceed to looking for areas that have suffered the least amount of downturn from Year 2008 to Year 2010: Mililani S.F.H. Median Sold Price + Less Than 1% Mililani Condo: -12% Kaneohe S.F.H.: +12% Kaneohe Condo: +19% Kailua S.F.H.: -2% Kailua Condo: +3% Hawaii Kai S.F.H.: -1% Hawaii Kai Condo: +13% Waikiki Condo: +9% Ewa S.F.H.: -5% Ewa Condo: +11% Makakilo S.F.H.: -11% Makakilo Condo: -7% It is primarily the West side of the Island that has taken the largest hit in their Median Sold Price dropping. I recommend you stick with areas that have very little chance of adding new inventory and have well under 6 Months of Supply of inventory. Stick with buildings with as low as Monthly Maintenance Fees as possible and if you do not need a Swimming Pool as a necessity in your Condo complex, drop all such buildings from your searches. Swimming Pools drive up the Monthly Maintenance considerably. Water and Electricity are at all time high costs to consumers. Also there is the added cost of insurance for Swimming Pools. Always select a Condo or Town Home with a view. Choose higher floors and on premises live-in Building Managers. Make sure the building has secured entrances and well lighted Laundry facilities if washers and dryers are not located within the unit. Please remember to shop for Fee Simple Only. Remember that one of the keys to finding the right property for yourself is to shop by the price you can afford. This will give you the Neighborhoods and the Condo / Town Home Complexes to choose from. Always work with a C.M.A. before visiting any property so that you know what the property is really worth. Always work with the Tax Map Record of the property before visiting to determine if the Seller has any negotiation room left on price. They may own a mortgage that is very close to the For Sale Price. 19

20 It is my sincerest hope that you have enjoyed this Report. I love Real Estate and meeting new people and of course making them Happy. If you need an Expert Realtor/ Broker then please consider me. I will provide you with more Real Estate knowledge than most agents on this Island and with over 100 sales I have made a lot buyers and sellers very happy. Mike Gallagher, Broker in Charge, Abe Lee Realty Ethics Complaints Review Committee Member, Honolulu Board of Realtors. mikeg@hawaii.rr.com Oceanic Cable. 20