March 19, 2015
There is an issue that comes up all the time when a property is in escrow and someone asks me what it sold for. First of all, it’s not sold; it’s in escrow. It’s only “sold” when escrow closes and the title transfers from the seller to the buyer. Second, it’s against the law for the listing agent to divulge to ANYONE what price the seller accepted from the buyer. There is nothing to stop the buyer and seller from telling, but an agent could lose his or her license for doing so. I sometimes get the feeling that people think I’m making this up but I’m not. The purpose of the law is to protect the seller’s best interest. If everyone knows that the seller took $50K less than the asking price, and the buyer backs out of the transaction for any reason, what chance will the seller have of getting more money when the property is re-listed? As an example, let’s say it was listed for $400K, but the seller accepted a price of $350K. The listing agent tells every other agent in town. But it turns out later that the buyer can’t get financing. The deal is said to “fall out of escrow”; that is, the escrow is cancelled. Now what? The seller wants to put the property back on the market for $400K, but every agent in town knows it was under contract for $350K. The seller finds out this happened and files a grievance against his agent and that agent is fined and has his license suspended or revoked. The deal is, if no one knows what the accepted price was, the seller can put the property back on the Market at $400K and this time he might get $375K. That’s the bottom line; to protect the customer’s best interests. It’s called a “fiduciary responsibility”; the agent is responsible for his client’s financial wellbeing.
March 19, 2015
What is Escrow? Some of you from States like New York or Virginia may not be familiar with what an escrow is. In escrow states like Hawaii, large companies have been set up to facilitate the transfer of property from one person to another. Most of these companies have been set up by title insurance companies, but not all. These companies are bonded and insured to protect the clients funds deposited with them. This way you don’t have to give a hefty deposit to a seller and trust that he will transfer the property into your name. The seller doesn’t have to trust that the buyer will come through with the rest of the cash after title transfers. The escrow company also sorts and organizes all the paperwork and notifies all the parties when certain things are due, like a termite report or a survey. They also distribute funds from the deposits they have collected to pay the termite inspector, home inspector, condo association, surveyor, etc. They also make sure that attorneys draft all the deeds and conveyance documents for recordation at the Hawaii State Bureau of Conveyances on Oahu. There is a fee to the both the buyers and the sellers associated with the escrow, so in effect, the escrow company is working for both the buyer and seller. At the end (called “closing” in Hawaii), a breakdown of all the monies collected and disbursed is provided to all parties.
January 25, 2015
I have a hard time explaining just what the UPdate is. There are about 1,000 agents on this island. There is a company called Hawaii Information Service that’s been around for about 30 years that began amassing a data base of all the property tax records on the island when they were first incorporated by the Kona Board of Realtors. Also, for a fee, they allowed agents to fax (when fax machines used continuous rolls of a funny type of paper) them their listing data and they would transcribe it into a big book about the size of a 2″ think phone book.
Over the years they separated from the Kona Board, formed their own corporation and branched out to include the Hilo Board and the Kauai Board. This was the first Big Island MLS (Multiple Listing Service). Maui and Oahu have their own MLS. As the digital age progressed they began to post the listings online; first in black & white, later in color (no more books). So now you have about 1,000 agents posting and updating their listings from their own computers every day; new listings, price changes, back on the market & sales (also expired & withdrawn listings, but I don’t copy those).
All the activity that gets inputted from midnight AM to midnight PM is posted as an update at 12:01AM that morning. The activity for the previous 24 hour period only appears on the UPdate first thing the morning after. The next day, all the listings that have appeared before the last 24 hour period, are still in the data base, but they must be accessed by a regular property search (Custom List), and will not appear on the UPdate again unless, and until, something changes with a particular listing.
You may have noticed some Back On the Market listings have DOM’s (Days On the Market) of two or three hundred days. That’s because they have been in the data base for months as Active listings, then as Contingent or Under contract listings, until something went wrong and they came back on the market. There are thousands of listings in the data base either still Active, Contingent or Under contract.
Like I said, only when something changes with one of those listing will that listing appear on the Daily UPdate the next day. When I re-read this it makes sense to me, but I work with the data base every day and have done so for 25 years. I mentioned last week, that if you want to see listings that match your parameters (set of criteria), you must send me those parameters so I can create a Custom List for you. The Custom List will have all the listings in the data base, that match the criteria you have given me, regardless of the date they were listed. I hope this has shed some light on the subject.
November 11, 2014
There is considerable misunderstanding of the concept of a lease with an option to buy. People seem to think you can just rent a place and then buy it later any time you want. You can actually lease a property and buyer it later, but there is more to it than that. First, you have to offer some “option money”. Option money is usually $10,000 to $20,000 held in an escrow account. The amount of time is usually one year. At the end of the year, if the renter/buyer decides buy the property, the option money becomes part of the down payment. When the renter/buyer decides to buy the property it is said that he/she has decided to “exercise” his/her option. If the renter/buyer decides not to buy the property, then he/she forfeits all of the option money to the seller/landlord. In addition to the option money there is monthly leaserent. What happens to the leaserent is a matter of negotiation. All of it can go to the seller/landlord, or buyer and seller may agree that a portion, or even all, of the leaserent will also go toward the down payment. That is if the buyer decides to exercise his/her option. If the buyer doesn’t exercise his/her option, then all of the lease rent remains with the seller/landlord.
June 7, 2014
Number 3, price per square foot, is especially interesting to me. The advice doesn’t go far enough. The problem is, price per square foot is a number people can relate to; it’s something tangible, so baring any other factors they can understand, they fixate on price square foot. But there are so many variables that negate the usefulness of this figure. How much did it cost for site prep? If a huge hill had to be moved or a huge hole had to be filled, the cost of site prep could have been bumped way up and is included in the price per square foot. Likewise the cost of the land. Site prep and the lot price have nothing to do with the quality of the house. Another factor is the quality of the materials. Roofing, flooring, fixtures, countertops, doors, windows, hardware, even the material used for the interior and exterior walls; they all run the gamut from low to high quality. If a person rejects a home with a high price per square foot, they may be rejecting a high quality home and end up with a low quality home. So what to do? Go by the CMA, the Comparative Market Analysis. See what similar homes in the area sold for within the past 6 to 12 months. That’s the best way to tell if you are paying the right price. An appraisal is even better. If you are getting a loan your bank will order an appraisal and you will be able to tell if you are getting a deal or paying too much. If you are paying cash, the extra $500 to $700 for an appraisal could save you from making a grave error or buy you some comforting peace of mind.
February 25, 2014
I want to thank all those loyal UPdate members who have referred their friends to the UPdate over the years and in the last few months. I can’t adequately express how much this means to me!!