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MLS Listing Descriptions – A Super Grain of Salt

February 3, 2013 by Michael Borger

We Buy Houses in Hawaii

Reminder: If you need to sell your Hawaii house for cash, then know that Oahu Home Buyers buys houses for cash in Hawaii statewide – condo or house, talk to us today. Visit the link above or call 808-333-3677.

Now to the blog post….

My Real Estate Listing, My Choice

I noticed something last week as I was helping teach a FortuneBuilders class for new real estate investors who want to get into flipping houses in Hawaii. We were running some comps on recent MLS listings and sold single family houses on Oahu. We went over all the basic info that both homeowners and real estate agents use when running comps, such as:

  • Size of the house (living sqft)
  • Lot size (sqft)
  • # of bedrooms / bathrooms
  • Sold date
  • Proximity to target property
  • Condition

Of course, there are other factors, but these are commonly considered the most important ones when calculating the value of a house. I remember one property in particular — I believe it was in Kaneohe or Kailua — with the condition noted as “Above Average“. For those who aren’t aware, there are predefined categories of house condition from Excellent to Tear Down from which the listing agent is supposed to choose and assign to her listing. This “Above Average” house had a kitchen that needed at least $15,000 in renovations — unless you think red is all the rage and the 1970s are about to make a comeback and take over Better Homes and Garden magazine.

The room had a laugh but it brings up an important point — so much of real estate is subjective, from home value to the actual information on an MLS listing, ex. condition and agent remarks. Sometimes you really need to take it all with a super grain of salt.

Now, in my experience, most condition category choices are usually on the mark, but there’s a lot of liberty one can take when choosing between “Above Average” and simply “Average”. I’ve seen some homes listed as Above Average that were, in my opinion, well deserving of an Excellent rating.

What is Above Average?

After all, what does “Above Average” mean? It ought to mean better than most of the homes on the market, but instead it’s commonly used to refer to any house that’s been recently modeled or needs few, if any, further upgrades. Sometimes these definitions match up, but not always and that’s where one can be misled.

I’ve learned to take the extra step when running comps to look at all the photos (knowing that itself doesn’t beat visiting the house) instead of just scanning the stat sheet for the condition label. I go back to the red kitchen — without looking at the photos I would have assumed, via the Above Average label, it to be a recently upgraded or built home. Instead, the photos clearly indicate some money’s going to have to be sunk in the property to bring it up to modern Hawaii housing market condition (unless it’s going to be featured in the next Austin Powers flick).

So take it from me — nothing beats doing plenty of homework and legwork before buying a house in Hawaii or anywhere else. Seeing with your own two eyes and trusting your own instinct and inner judgment are the best methods for both making your home search efficient and, ultimately, successful.

Filed Under: Buying & Selling Tagged With: comparative market analysis, Hawaii real estate, MLS

How the Fiscal Cliff Affects Homeowners

January 7, 2013 by Michael Borger

Aloha, friends. Apologies for the time away, but holidays call and yours truly got engaged(!). But time waits for no one and there’s much to discuss. The biggest news upon us now has been the dreaded fiscal cliff that we narrowly avoided. President Obama was in and out of Hawaii, alternating between vacationing with the First Family in Kailua and presiding over some of the most delicate negotiations to hit Washington in quite some time. And when it appeared that we were all about to go over the cliff like Thelma and Louise, the elephants and donkeys of Congress cut a deal.

But where does the Fiscal Cliff deal leave Hawaii’s homeowners?

Great question. The biggest advantage that many people are talking about is the one-year extension of the 2007 Mortgage Forgiveness Debt Relief Act, which was set to expire December 31 2012. To recap: when a house is sold as a short sale, the difference between the sale price and the mortgage balance is called the deficiency. The banks will normally waive the deficiency to help facilitate the short sale (and avoid a costly foreclosure). However, the IRS considers debt forgiveness to be income, so while the homeowner will largely be off the hook for the deficiency, they would still owe taxes on that amount according to their tax bracket. The 2007 Act allowed the short selling homeowner to waive that tax liability as well, essentially making a short sale free.

The looming fiscal cliff threatened to let that policy expire and, with it, the hopes of many homeowners with underwater mortgages who weren’t able to close a short sale before the end of the calendar year. Now, with the extension through 2013, anyone closing a short sale this year will still be able to take advantage of the tax waiver on their deficiency. That’s THOUSANDS OF DOLLARS in savings when you look at the average deficiency of a mortgage for a short sale in Hawaii! I’ve personally spoken with owners who have been underwater over $500,000. Do the math on the tax savings, even at the lowest bracket, and you’ll see the impact of extending the policy another year.

However, it’s not just about over-leveraged mortgages. The fiscal cliff deal did not really address the nation’s growing debt load which continues to steadily rise. Nor did it help from another tax angle — payroll taxes. You may have noticed this already. Furthermore, the deal postponed any discussion on spending cuts for another two months.

So while a crisis may have been averted, it’s safe to say that there’s more work yet to be done.

Filed Under: Financing, Foreclosures, Hawaii Tagged With: economy, Hawaii real estate, Market Analysis

West Side Oahu Rising? A Story of Numbers

November 26, 2012 by Michael Borger

green box with random colored numbers

Do you know your numbers?

I love numbers. You know what I love more? Watching people use them incorrectly. Ok, ok, I don’t really love that, but I’m always amused by how numbers can be used misleadingly or inappropriately to tell a story that’s not really there. I used to be in the geography field, and there’s a wonderful book called How to Lie With Maps that illustrates this very same concept.

The October home sale numbers just came out by the Honolulu Board of Realtors. And while the overall message is promising, it’s important to tease out the important data from the statistical noise. For example, the post states that the Ewa and Kapolei area rose 30% from last year (October 2012 vs. October 2011). The rise was specifically the number of recorded sales, from 35 to 46.

So last month there were 11 more recorded sales in that entire region compared to the same month a year before. I’m admittedly not breaking out my statistical z-score formulas right now as it’s now 6:00am and I’ve been up for 2 hours as I’m fighting jet lag having just come home from Thanksgiving in Philadelphia, but that increase of 11 sales, while encouraging, doesn’t seem to be too much beyond statistical noise (random fluctuations). However, it is encouraging.

The flip side? Median prices declined by 4 percent (itself potentially just noise). So what’s more telling to you – more sales or a dropping price point? It’s not a rhetorical question – you likely have different needs or intentions as they relate to real estate and will, therefore, be influenced by different criteria than your neighbors. I’m just illustrating some of the challenges in making sense of data instead of just taking the spin. We gotta be analytical. Take it all in but focus on the numbers that relate more to your objectives, even if they’re counter to current sentiment.

Let’s bounce over to the windward side where in Kailua and Waimanalo, sales rose 85% from 13 to 24. That’s a large percentage increase and is likely indicative of true market uptick, but it’s such a small sample set that you have to at least curb your enthusiasm somewhat. The number to latch onto more is that that the median price for single family homes rose 40%. Even with a small set of only 24, that’s a substantial increase.

Now the report doesn’t mention if distressed properties (short sales and REOs) are included, but I’m assuming they’ve been weeded out. If not, then it’s a giant asterisk of Mark McGwire proportions (baseball fans know what I mean).

I agree that October appears to be a good month and concur with my real estate colleagues that we seem to be entering into healthier times. I just like to be a bit conservative when looking at numbers because they can often incur emotional reaction that clouds judgment and more required analysis.

By the way – if you have a cure for jet lag, then please share below!

Filed Under: Hawaii, Market Analysis Tagged With: Kailua, Kapolei, Oahu, statistics

NEW Short Sale Guidelines in Effect TODAY

November 1, 2012 by Michael Borger

Do you need a short sale but don’t think you’re eligible? THINK AGAIN! Starting today, November 1 2012, NEW guidelines go into effect to allow homeowners to start a short sale — even if they’re current on their mortgage!

The traditional criteria for short sale included a hardship and having missed a certain number of mortgage payments. This is not unknown to Hawaii. Well before the 2011 moratorium on non-judicial foreclosures, Hawaii was ranked 11th in the state in foreclosure rates. No doubt this is welcome news for many underwater homeowners here in the islands.

Now, let’s be clear as to new guidelines. After all, you still need to qualify. This is not a free pass for anyone to rocket a short sale through the system and come out the other side all sayonara, never to be seen again.

NEW Short Sale Guidelines

1. This is ONLY for Fannie Mae and Freddie Mac issued loans. If you’re not sure, talk to your mortgage servicer. This will constitute a large percentage of borrowers, but I wanted to make sure you understood this first and foremost. Fannie and Freddie only.

2. You still must have an eligible hardship. Just because your payments are high isn’t going to cut if if you have the income to still comfortably make the payments. However, “eligible hardship” is a loosely-defined term. You might be able to…uh…. get creative on this one. Death, divorce, etc. If you have to relocate 50 miles away for work, you’re in like Flynn.

3. Reduced paperwork. Short sale realtors rejoice.

4. Fannie and Freddie will, in some cases, waive deficiency judgments in lieu of a cash contribution at closing or promissory note. Case by case basis.

5. If you’re in our military (salute, salute) and get a Permanent Change of Station (PCS), this works for you.

6. Up to $6,000 to cover junior lienholders (second mortgages). Believe me, this is huge for some of the short sales I’ve seen here in Hawaii. Your junior lienholder can be a real stick in the mud and completely sabotage your short sale if they don’t want to play ball. This helps feed them a bit at closing.

Click here for the official guideline document.

If YOU need a short sale on your property, then I want to earn the opportunity to help you. When you sell your house as a short sale, you’ll need a buyer. Guess what? That’s me. Let me put one of my top realtors on it (the bank will pay your realtor and closing costs) and let’s get this done to help you move forward.

Just CLICK HERE to get started on your FREE short sale.

Filed Under: Buying & Selling, Foreclosures Tagged With: short sales

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