Richard Cricchio, Author at Richard Cricchio's Hawaii Real Estate Blog

Back to Basics: What is the MLS?

The MLS is the Multiple Listing Service. It is the place were all of the real estate brokers and agents share all of their listings with all of the other brokers and agents who are members. It’s like a clearing house that makes it possible for an agent in one office with a buyer prospect to find a suitable home listed with another agent in another office. It’s a great tool!

Our Oahu MLS is operated by the Honolulu Board of Realtors and almost every real estate broker on the island is a member. It is a wonderful, up-to-date MLS that is so effective at matching buyers and sellers that today, more than 80% of all residential sales on the island involve two brokers and two agents who come together with a buyer and seller through the MLS.

At Help-U-Sell Honolulu Properties, we routinely put our listings in the MLS and make an attractive compensation offer to agents and brokers who may have a suitable buyer. We believe in the MLS and use it every day in our business.

But, there is down-side: it’s expensive. Think about it. You’re hiring an agent to list and sell your house. The agent works for a broker and both have to be compensated. But you’re also making allowance for that outside MLS agent and broker who may come in with the buyer – they have to be paid too. Ultimately that 6% commission has to be enough to compensate two brokers and two agents!

Of course, we don’t do it that way at Help-U-Sell Honolulu Properties. We charge our home sellers a reasonable set fee to list and market their property and to represent them through the process. We make allowance for the possibility that an outside MLS broker and agent will come in with the buyer, but if none is involved in the transaction, you, the seller, don’t pay for one!

It’s just one of the ways we are able to save our home sellers thousands of dollars in commissions. There are other ways, too. Truth is we save every seller thousands over what the’d pay an ordinary real estate broker no matter how their home sells. Before you pay $30,000 – $50,000 or more to sell your house, call us and let us show you how we can save you a lot of money without giving up anything.

Help-U-Sell Honolulu Properties is a full service real estate company that provides exceptional service while charging less than ordinary Realtors. We’ve been successfully helping buyers and sellers all over Oahu for more than 12 years and we’d be delighted to help you achieve your housing dreams. Contact us at (808) 593-8811, or visit our website.

The Supply of Homes For Sale on Oahu is Shrinking

There is an interesting metric used in the real estate business to evaluate the nature and health of the market. It is the ‘absorption rate,’ or the rate at which listings in inventory are absorbed by the pool of active buyers. It is calculated by first discovering how fast homes sold during the recent past – say, six months – and dividing that into current inventory. If we were averaging 50 homes sold per month over the previous six months and there are 300 homes in inventory today, that means that we have a 6 month supply of listings (300/50).

If all of that math makes your head hurt, don’t worry; to understand absorption rate you don’t have to know how to calculate it.

What does this mean to Hawaii home owners? The April 2016 absorption rate for Oahu fell by almost 12% over the previous year. In April of 2015 we had a 3.89 month supply of single family homes for sale. This April we had 3.48 month supply of homes for sale. I know the difference seems slight, but there is a trend here. Listing inventories have been slowly creeping downward for some time leaving us in a situation where there really aren’t enough homes on the market to satisfy the demand.

For condos, the decline is not so apparent: in April 2015 we had a 3.21 month supply and this year it’s 3.2 months. Condos continue to be an attractive and affordable option for new homeowners coming into the market as well as those seeking a more maintenance free lifestyle.

Here’s the thing: homes are selling, and fast. We have an inventory shortage; there are not enough homes on the market to satisfy the demand. In a ‘normal’ market, you’d expect there to be close to a six month supply of homes. Of course, here on Oahu, nothing much is ‘normal,’ so for us, four or five months would be pretty good.

For home sellers, this tight, low inventory market means that you have a good shot at selling for top dollar in a short period of time. ‘Top Dollar’ doesn’t mean overpriced. Even in the hottest markets, overpriced is still overpriced, and buyers rarely pay more than market value – or what an appraiser would determine the value to be – for a home. If you’ve been thinking of making a move, my advice would be to call in a professional – me – to help you determine what you are likely to get for you home today, and whether selling now is a good plan.

Buyers, I know it’s frustrating when the perfect home comes on the market and has multiple offers in a few days, but that’s what happens in a market like this. It is not a reason to withdraw from the process or to stop looking altogether. It is a reason to get your ducks in a row, your finances in order, your pre-qualification letter in hand, and be ready to move quickly when the right home appears. Prices will only be higher in another year and despite the competition today, this may be your best opportunity to own your dream home.

As always, we at Help-U-Sell Honolulu Properties are ready to bring the considerable talent, knowledge and creativity of our team of professionals to bear on your home buying or selling project. One of the things we do very well is to help people weigh the pros and cons of any real estate decision, and we offer that consultation to you with no obligation. All it takes is a phone call.

Make a Splash When Selling

Our Oahu real estate market is moving! Just when you thought homes couldn’t sell any faster, they do! March sales of single family homes were up more than 20% over last year. The same was true for condos. And prices continue to climb, though not at the astronomical rates we’ve seen in the past. Year over year median sale prices are up just under 4%. Clearly, your Oahu real estate is your best investment.

In this kind of market, it is important to think strategically when selling your home. You’ll want to sell quickly with a minimum of inconvenience and you’ll want to walk away with as much cash in your pocket as possible. How can you accomplish that? Some thoughts:

Know where you’re going. Understand that houses on Oahu sell quickly if they are properly priced. Right now the median priced single family home is taking less than 20 days to go under contract for sale! Closing can take an additional 30 – 45 days. In this environment, it is not wise to put your home on the market until you have somewhere else to go within 60 days.

Price properly. That means at market value. It’s tempting when homes are selling so fast to push the price up, ask for a little more, try to cash in big. But that strategy fails over and over. Home buyers have lots of tools today to spot overpriced listings and most avoid them. Your aggressive price will limit showings and encourage low offers. Instead, price at market value and then let the market set the price. What you’ll find is that a great home in a good location will produce offers over and above asking price. And wouldn’t that be a nice situation!

Prepare the property. The day your home goes on the market it becomes a product that has to compete with other similar products. Before you make your home available for showing, make sure it is breathtakingly clean, neat and staged. You want every person who sees your home to dream of living there and the best way to do that is to make the home dreamy.

Plan to make a splash. Sometimes it’s smart to create urgency and anticipation when selling. ‘Coming Soon’ signs prior to the actual listing period can accomplish this, but I sometimes suggest other strategies. Having the first day of showing coincide with a well promoted open house – a Grand Open House – can ensure that the largest number of potential buyers see the property on that first day. Sometimes I suggest that we hold off reviewing offers until the end of the first week. This creates a sense of urgency, a deadline, and sets the expectation that there may be a bidding war for the home.

Listen to your agent. When you hire one of the professionals at Help-U-Sell Honolulu Properties, you’re teaming up with a trusted consultant. We know this business and this market and there is no one better qualified to advise you every step of the way. Sometimes the emotion of selling can nudge you into poor strategic thinking. Our job is to help you stay focused on the business decision that selling a home should be.

Why Pay a % of Your Home’s Value to Sell? There is a Better Way!

For the most part, the ordinary real estate business exists in a percentage based universe. Real estate brokers and agents typically charge home selling consumers a percentage of the sale price of the property to sell it.

Stop. Think about that. Selling a piece of property is not alchemy; it’s not even mysterious. It is a fairly straightforward process of proper pricing, careful preparation and effective marketing. It takes a skilled technician to orchestrate this process, especially the very complicated contract-to-closing time frame, but like most jobs, it is a series of tasks, not neurosurgery.

So what does a percentage of your home’s value have to do with what it takes to sell it?

Here is the answer: absolutely nothing.

Percentage based pricing was conceived by the real estate industry almost 100 years ago, when selling homes really was a mystery to most people. It was a pricing system ‘plucked from air,’ or made up on the fly. Consumers didn’t question it because they didn’t understand what they were paying for.

If you fast forward through the decades, there have been huge changes in the real estate industry. Brokers began to cooperate with one another on sales and the Multiple Listing Service was born. The Internet matured and suddenly consumers had most of the information real estate professionals once controlled. Consumers became smarter and more savvy about the buying and selling process. Everything changed and the real estate industry began to travel at light speed.

What didn’t change? The way real estate brokers charge consumers! It’s the same tired, old percentage based model that made no sense in 1956, and makes even less sense in 2016. Dozens of tools have appeared that make it easier to sell real estate, but ordinary agents and brokers – due to ever rising home prices – have actually gotten a raise – a big one!

Consider Honolulu. In 1985, the median sale price for a single family home was $158,600. An ordinary Realtor charging, say, 6%, would generate a commission of $9,516. In 2015, the median was $700,000 and that same 6% commission would be $42,000! That’s a 341% raise in 30 years! By comparison, median household income in Hawaii in 1985 was $28,961. It is projected to be about $71,000 for 2015 (the exact figure will be released in September) – which is a 145% increase over 30 years. In other words, real estate commission have risen more than 2.3 times as much as median household income. That’s quite a raise!

I made the decision more than 20 years ago to become Help-U-Sell Honolulu Properties because it made sense. It made sense from an operational standpoint (we run our office very differently than the ordinary real estate brokers down the street.) It made sense from a service standpoint (we deliver the same full service other brokers offer – and actually , more – but we also save our home sellers significant money in real estate commissions). And it made sense from a pricing standpoint.

We charge consumers a Low Set Fee to sell their homes. The fee is based on what it costs us on average to sell a properly priced listing plus a reasonable profit. We charge the family in the $600,000 the same thing we charge the family in the $900,000 home. Everybody pretty much pays the same thing!

Our goal is always to sell the property, make enough money for it to be worthwhile (it is), and Save Consumers Thousands over what they’d pay an ordinary real estate broker. In fact, we get just as excited about the money our clients save as we do about the fees we earn!

Time to Refinance?

With mortgage interest rates stumbling and slipping a bit, lots of home owners are scrambling too refinance. Current rates are so attractive, we are in a bit of refi-frenzy. In fact, the number of mortgage applications nationwide rose 8.2% last week over the week before. 64.3% of those applications were for refinance purposes, up more than 3% from the week before.

The reason for this increased activity is a bit of a hiccough in interest rates. All of the experts expected rates to rise slowly this year – and most still insist they will – but here in March we have a dip. Today’s 30 year fixed rate is in the neighborhood of 3.8% and for a 15 year mortgage it’s just 3.1%.

Assume you have a $500,000 30 year mortgage at 4.25%. Your principal and interest payment would be about $2,460. Refinancing at 3.8% would reduce your payment by $130 a month, to $2,330. And, if you wanted to be bold and jump over to a 15 year mortgage, your new payment at 3.1% would be $3,477. I know $1,000 a month more looks like a lot but you’d be building equity much faster, your house would be paid off in 2031 instead of 2046, and you’d be saving about $250,000 in mortgage interest over the life of the loan.

My point is, if your current mortgage interest rate is more than 4%, this is an excellent time to take a look at refinancing. It may be right for you, and maybe not. The only way to know is to talk with someone who can give you the figures, the savings, the pros and cons. Of course, the best way to find an expert is to contact the professionals at Help-U-Sell Honolulu Properties. We’ve been helping Oahu homeowners build wealth and maximize their housing investments for decades!

Save When Selling Your Oahu Home

At Help-U-Sell Honolulu Properties, we are all about savings. It is our identity: we are the guys who will save you money when it comes time to sell your home. And, it’s not something we do grudgingly; we get just as excited by the money we save consumers as we do by the fees we earn.

We’ve learned over time that the more we can save home sellers while providing the best service in the industry, the more they will brag about us; and the more our business will grow. That flies in the face of what ordinary real estate agents have done for decades, which is to rely on personality and pressure exerted on friends and family to build business.

Here is a typical Help-U-Sell Honolulu Properties listing, sold and closed at the end of 2015:

RC2 It is a great home in Hawaii Kai, with 4 bedrooms and a little more than 2,800 square feet and an indoor swimming pool! We listed it for $1,238,000 in late September, and had it sold and closed for full price in early December, just 75 days after the listing went active. With a lot of effort, we were able to get it closed before the end of the year: no small feat considering the latest round of transaction slowing legislation impacting the industry.

This was a brave home seller. He could have succumbed to the pressure to list with a friend or neighbor working for an ordinary real estate company and charging, say, 6%. If he had, he would have paid more than $74,000 in commission – assuming they were able to get a full price offer.

Instead, he did the smart thing: he listed with Help-U-Sell Honolulu Properties and agreed to pay our low set fee of $8,000. As it turned out, the buyer was represented by an outside MLS agent and so the seller had to compensate that agent and company as well: an additional $30,950 (2.5%). So this seller paid $38,950 in total commission to sell, as opposed to $74,280 had he chosen to list with an ordinary company: a savings of $35,330.

Do you suppose this seller was delighted to sell quickly for full price and save more than $35,000 in real estate commission? You bet! Do you think he will tell his friends, neighbors and co-workers how well his transaction went and how much he saved? You bet! And so, our business grows.

We promote our successful sales and the money our sellers save because that is what we want Oahu residents to know about us: we will sell your home quickly, for a good price and save you thousands over what an ordinary broker would charge. When it comes time for you to sell, don’t succumb to the pressure to do it the way it’s always been done. Be smart. Choose Help-U-Sell Honolulu Properties.

Your Oahu Real Estate Piggy Bank

Hawaii Home on Noela Drive — *We sold this home on Noela Drive last year*

It’s true: Oahu is home to some of the highest home prices in the nation. Outsiders visit, are stunned by the prices and can’t imagine how anyone can possibly afford to live here! The answer is, with good real estate and mortgage professionals, people find a way.

But why? Why do people go out on such a limb of debt to own a home on the Island? Of course there are a lot of reasons, but the most compelling may be our historic rate of appreciation. Anyone buying real estate on Oahu today can be reasonably confident that their property will be worth more and more as time goes by. Take a look at the chart from the Honolulu Board of Realtors. It shows historic appreciation rates going back to 1985. I understand that the type is small and may be hard to read, but if you’ll click on the chart, a version will appear that will allow you to zoom in.

As fascinating a the chart is, what’s important is this:

The median price of single family homes on Oahu has risen 341.4% since 1985, an average increase of 4.91% per year. If you’d bought that median priced home in 1985 for $158,600 (which at the time seemed HUGE), your property would be worth more than $700,000 today! That’s a pretty nice increase in equity!

Add to that the tremendous tax deductions available to homeowners (notably mortgage interest and property taxes) and you can understand why home buyers pull out all the stops to acquire their own little piece of our Island Paradise. Honestly, if you’re going to live here, it’s the only thing that makes sense!

The key is in the first paragraph of this post: you have to find a way. At Help-U-Sell Honolulu Properties we’ve been helping home buyers find a way for almost 20 years. It’s gratifying to help our clients build their nest eggs and even achieve wealth while enjoying a little Heaven on Earth. If you are just moving to Oahu or are still renting, let us help you find a way to own a home. As you can see from the data, every year you wait makes it more difficult.

What is a View Worth?

Honolulu View Right up front, let me point out the obvious: We live in one of the most view-rich places on Earth. Almost anywhere you might live on Oahu has the potential to produce an outstanding view of the ocean, the mountains, the rainforest or the city. But, what is a great view worth? How much value can a view of crashing surf add to your property?

There is not doubt that views are valuable. In the ranking of most desired amenities, home buyers put an unobstructed water view at number two, just behind a waterfront location. And while being able to see water is most desired, great city views and mountain views are not far behind.

However, attaching a monetary value to a view is hardly scientific. A view is worth whatever a willing
and able buyer will pay in addition to the value of the house to have it. Logically, if you could find two homes that are identical, one with view and one without, that both sold recently, you’d have your answer. But that situation is very rare in the world of real estate. Oahu View

Almost forty years ago, an appraiser working on his Masters Thesis, chose 94 vacant lots that had sold recently in three separate developments and considered them on a variety of criteria including lot shape, location and view. In some cases, the view contributed as much as 50% to the value of the lot.

That has been informally verified by the estimates of real estate experts who seem to agree that a view – say, of a mountain – seen from a lower point – might add 1% – 4% to a property’s value. The increase in value goes up as does elevation, so a hilltop view looking down on a panorama might add 6% – 12%. Truly magnificent views – the ocean, the city from above – can add up to 50% and sometimes even more.

Strip View You can test this idea yourself without selling your property. The next time you take a vacation to a popular destination, be it a city or a resort, ask the hotel about the increase in room rate depending on view and floor. In Las Vegas, for example, a Strip-view room located at the 20th floor or above will fetch a startling premium over one on floor five, facing a wall.

The best help you can get for assessing the value of your view is right here at Help-U-Sell Honolulu Properties. We’ve been selling homes on Oahu for almost twenty years and have carefully tracked the progress of prices for homes with and without views. When you ask us for a free, no-obligation opinion of value, we will come with all of the data on what similar homes have brought and our own informed point-of-view about what an ocean, city or mountain view can add.

Sold! With Help-U-Sell Honolulu Properties! Seller Saved $$$

At Help-U-Sell Honolulu Properties, we are all about savings. It’s who we are, what we do; it is our identity. Home sellers listed with Help-U-Sell Honolulu Properties save thousands over what they’d likely pay an ordinary real estate broker.

We get just as excited about the savings our sellers achieve as we do the fees that we earn. We’ve learned over time that the more money we can save home sellers, the more they will sing our praises to family, friends and co-workers – and that’s how we build our business.

Here’s an example:

eva

We listed and sold this great Ewa Beach home at the end of last year. It has 4 bedrooms, 3 baths, over 2,000 Square Feet and features a first floor master bedroom. We listed it for $695,000 and got the seller a full priced offer.

Had this seller listed with an ordinary broker charging, say, 6%, he’d have paid $41,700 to sell! We charged a low set fee of just $5,750. As it turned out, the buyer was represented by an outside MLS agent and so the seller had to compensate that agent and office as well, an additional 2.5%: $17,375. But even after paying the outside agent, the seller still saved $18,575 over what that 6% broker would have charged! And that is very exciting to us!

If you are interested in selling your property – and this is a great time – you really should find out how easy it is to sell for top dollar, sell quickly and save thousands on real estate commissions. The place where all of that comes together is Help-U-Sell Honolulu Properties and we’d love to talk with you.

Hit the Home Ownership Jackpot!

Later today there will be a PowerBall Lottery drawing worth almost $1 Billion. Of course, Hawaii is one of six States that doesn’t participate in that National Lottery, so it is a bit of a moot point. However, there is a completely legal way you can hit the jackpot and cash in big right here in the islands: buy a house!

powerball Most people stay in a house 5 – 7 years before they sell and move on. So let’s take a look at where you’d be today if you had bought the Median Priced single family home on Oahu 6 years ago.

The price would have been about $740,000.

Today, the median priced home is worth about $950,000

That’s an increase of $210,000!

Your home would have grown in value 28%! An average of 4.67% a year!

In addition, you’d have paid about $190,400 in tax deductible interest on the mortgage over that period of time (that’s after a normal down payment). Assuming you are in a 25% tax bracket, that means you’d have possibly paid about $47,600 LESS in Federal taxes! pwrhse

Not even considering State tax savings and other benefits, you can see that between Federal tax savings and appreciation, you’d probably be ahead by more than a quarter of a million dollars if you’d bought that home six years ago!

The people on the mainland buying PowerBall numbers this week have a better chance of being struck by lightning while being attacked by a great white shark than they do of winning the Lottery. If you buy Hawaii real estate, your big payoff is almost assured. So stop procrastinating! Prices continue to rise and soon, your dream home may be out of reach.

Help-U-Sell for Home Buyers

Sometimes people make the mistake of thinking that Help-U-Sell Honolulu Properties works only with home sellers, that we have nothing to offer home buyers. Of course, that’s not true at all! We are full service real estate company and offer a full array of services for home sellers and buyers! In fact, there are some important advantages we have to offer home buyers that ordinary real estate organizations don’t. If you are thinking of buying you really should watch this short video: