Real Estate Business Archives - Page 2 of 5 - Richard Cricchio's Hawaii Real Estate Blog

Investing, Hawaii Style

It’s been a wild week in the world of finance. The stock market has been in ‘correction’ mode and everyone is trying to stay calm. I don’t think the recent drop is a precursor to cataclysm, rather a reaction to prices climbing too fast, and I don’t think it will continue down to the depths. However it does make me think about money and where to put it.

The past five years have been stellar for the stock market. Take a look:

Even after last week’s drop, it’s a 65% gain over 5 years. Pretty good. Now, here are the previous five years of Oahu Single Family Home Average Sale Prices:

Unfortunately we don’t have the 2015 average yet, but I can tell you that Average Sale Price has fluctuated a bit this year but is currently running about 11% ahead of last year. This graph shows about a 25% increase between 2010 and 2014.

I know that looks like a strong case for the stock market, but consider this: The Dow lost 53% of its value from October 2007 to March 2009. That was the big financial crisis. During the same period, Oahu home prices fell just 13.8%.

Big gains in the stock market are very appealing but they come with a rather large level of risk. At any time, your investment can take a strong hit based on events occurring almost anywhere in the world. Meanwhile, Oahu real estate remains relatively steady. Since 1985 we’ve enjoyed an average appreciation rate of just under 5% per year. We have had downturns, but they have been relatively mild. If you are deciding where to put your nest egg, you need look no further than your own backyard. And when it comes to purchasing a property that will steadily grow in value, there is no better help on the island than Help-U-Sell Honolulu Properties.

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 DANGER Report

The National Association of Realtors is out with a serious report about the real estate industry that insinuates that huge change is coming soon. The study, prepared by an outside consulting group, compiles information gleaned from interviews with 70 real estate industry experts and insiders. The group’s predictions for the industry were so tumultuous that the report itself is entitled, ‘The Danger Report.’ While there were sobering predictions in a number of areas, a few jumped out at me, specifically:

Real estate commissions paid by American consumers are too high.

Because ordinary real estate commissions are usually a percentage of the final sales price of the home being sold, the size of commissions consumers pay their agents has increased to stratospheric levels. Consider that a typical Oahu homeowner selling a $950,000 home and paying an ordinary broker, say, 6% commission would pay $57,000 in commission . . . and I think the point is well made!

But, beyond that, here in the United States, our real estate commission percentages are out of step with much of the rest of the world. For example, in the UK, real estate commissions average 1%-2% of the sales price; in the Netherlands, 1.5% – 2%; in Austrailia, 2% – 3%; and in Germany, 3% – 6%. Here in the USA however, commission percentages hover between 5% and 6%.

Commission sticker shock was one of the things that led me to become a Help-U-Sell Broker way back in the late 90’s. I figured if I could find a better way to do the business that saved consumers money on commissions, I’d have a winner. The Help-U-Sell Low Set Fee pricing model proved to be that better way, and today, 16+ years later, we are still saving consumers many thousands over what they’d pay an ordinary broker.

The next item that caught my attention was this (and I’ll quote the headline directly from the report):

The real estate industry is saddled with a large number of part-time, untrained, unethical and/or incompetent agents. This knowledge gap threatens the credibility of the industry.

Real estate has always been a fairly easy business to get into. It requires completion of a course of study, the passing of a State exam, and a few hundred dollars in licensing fees. But knowing how to do the business and to look out for your customers and clients in their transactions is another matter. It is something you learn through doing with expert coaching on the side, not something you learn in order to pass the real estate exam.

I am proud to say the team at Help-U-Sell Honolulu Properties is full time, experienced and well able to deal with the problems that arise in any real estate transaction. . We have helped thousands of home buyers and sellers successfully navigate the difficult waters of a real estate transaction, AND we have saved them many thousands of dollars. We are education junkies and often find ourselves in classes aimed at increasing our knowledge and improving our skills.

As dark as The Danger Report seems to be, I am excited and proud of where Help-U-Sell Honolulu Properties stands relative to it. We are the low cost alternative to the ordinary real estate model – a model undergoing tremendous upheaval as it works to become more like . . . well, us!

Preparation For Selling: What To Do Before The Sign Goes Up

At Help-U-Sell Honolulu Properties, we help people get ready to sell every day. We usually walk through the property and make suggestions about what will help it show well. That’s very important! It’s hard for homebuyers to fall in love with a house that looks . . . well . . . lived in. W make lots of suggestions, but if I could boil it down to a few important, broad categories, it would be The Five D’s:

Depersonalize. It’s important that you take remove the ‘home’ from your ‘house.’ Anything that might stand in the way of a potential buyer visualizing his or her family living there should go: family pictures, kids’ art, collectibles, toiletries and tell-tale signs of pets (toys, food, etc.).

Declutter. Crammed closets and cluttered rooms suggest a lack of storage! Go through every room and closet, dispassionately sorting into three stacks: throw-aways, things to box and go to storage, and things to donate. This step may take a week or two!

Deep clean. Whether you do it or hire it done, a top-to-bottom cleaning is what’s required. Kitchens and bathrooms come first and deserve special attention (don’t hesitate to use a toothbrush if you need to). Next tackle living and sleeping areas. And don’t forget closets and cabinets!

Detail the landscaping. Trim shrubs, edge the lawn, touch up the mulch and repair any defects in decking, fencing or the like. Wash the windows and – as a final touch – add a planter of blooming flowers.

Do the repairs. Start with deferred maintenance. A homebuyer might not spot that you’ve not changed your furnace filter in awhile, but a home inspector (who will be part of the process) will. Then move on to cosmetics: paint if necessary, clean blinds, fix leaky faucets, caulk tubs and think about upgrading lighting.

Of course, if you are thinking of selling, we at Help-U-Sell Honolulu Properties would be happy to walk through and give you a more detailed, no obligation consultation.

What Percentage Do Real Estate Agents Charge?

If you are thinking of selling your Oahu home, you should watch this short video first!

How We Un-Bundle Fees to Save You Money

Un-Bundling is a term often applied to service industries. We un-bundle services so that consumers may pick and choose what they want without having to pay for extras. Your cable bill is an example: you may choose only to purchase the television option or you may take the full bundle: phone, TV and Intenet.

But today, instead of talking about un-bundling services, I want to talk about un-bundling fees, because that’s what we do at Help-U-Sell Honolulu Properties.

You see, when you agree to list your home for sale with an ordinary real estate company, you are agreeing to a bundled fee. It is a fee designed to compensate multiple entities whether they are involved in the sale or not. That 5% or 6% or even 7% commission you are agreeing to pay (the one that seems so very high) is designed to compensate not one, but four different people: your listing agent, and his or her office, the selling agent (the one who comes in with the buyer) and his or her office. That’s four commissions.

When you list your $600,000 home with your friend who works for Acme Real Estate and agree to pay 5% of the sale price as commission (he gave you a deal because, after all, you are friends), that does not mean he is going to pocket $30,000 when the home sells. It means he will get part, his office will get part, an outside agent who works with the buyer will get part and so will that agent’s office. AND, you’ll be paying that full $30,000 whether an outside agent or broker is involved or not!

At Help-U-Sell Honolulu Properties, we think four commissions is too much to pay! So we un-bundle the fee.

If there is no outside broker or agent involved in the sale, we don’t charge you as if there was. Even after we put a listing in the MLS, even after it is shown by agents from all over the area, if the buyer is not brought in by an outside agent and office, our sellers don’t pay the un-bundled fees to those outsiders. We charge based on how the house actually sells, not on some arbitrary, one-size-fits- all system.

This kind of un-bundling makes sense for consumers. They pay for the services that actually produce a sale – not for those that don’t – and the end result is that they save thousands over what an ordinary broker would charge.

So the choice is yours. If you need to sell, you can agree to pay four commissions no matter how your house actually sells, or you can call Help-U-Sell Honolulu Properties and never pay full commission again! It’s a great system!

What to Look For in Home Owner’s Insurance

Homeowners’ Insurance is a very important aspect of any real estate purchase. Lenders generally require mortgagors to carry a policy to cover them – and pay off the mortgage – in the event of a total loss. It is wise to consider more than just lenders’ coverage when shopping for insurance because your home’s value and replacement cost are usually far greater than what the lender will require. Here are a few shopping tips for homeowner’s insurance:

Know What Your Policy Covers

A typical policy will pay for damage to your property and your possessions from storms, fire, theft or vandalism. It will usually provide liability coverage if someone gets hurt on your property and decides to sue. Often there is coverage for temporary housing, so you don’t have to face hotel bills if you’re temporarily displaced from your house.

Sometimes homeowner’s insurance can protect belongings outside the home, too. If something is stolen from your car, auto insurance won’t cover it—but your homeowners policy may. Many times there is coverage for your items when travelling. For example, if you were to leave your laptop in a diner, it might be covered by your homeowner’s policy.

Know What Your Policy Doesn’t Cover

A standard policy has exclusions, including earth movements (landslides, earthquakes, sinkholes), power failure, war, nuclear hazard, government action, faulty zoning, bad repair or workmanship, defective maintenance and flooding. Windstorms are typically covered, including tornadoes, although insurance companies sometimes exclude tornadoes or hurricanes in high-risk areas.

Water damage is tricky. As a rule of thumb, water from above (rainwater or a burst pipe in an upstairs apartment) is usually covered, but water from below (backed-up sewers or ground flooding) generally isn’t. In areas where flooding or earthquakes are possible, supplemental coverage is usually available.

Actively Work To Reduce Premiums

It may sound like common sense to have a working smoke detector, but did you know that it might also help you land a lower insurance quote? The same goes for a burglar alarm. According to industry experts, you can sometimes reduce your premium by about 5% if you install something as a simple as a deadbolt, and up 15-20% for a burglar alarm system.

Insurance companies price your premium based on how much risk they foresee, so you can reduce the premium by reducing your liability risk, thanks to some smart preventive measures.

Replacement Cost or Actual Market Value?

There are two key distinctions that every homeowner should know: “replacement cost” versus “market value.” Replacement cost covers repairing or replacing your entire home. Market value is how much someone would pay to buy your home and accompanying land in its current downtrodden condition.

When you’re considering the type of coverage to take out, a policy that’s based on market value is typically less expensive but will pay less in the event your home is a total loss or substantially damaged. A good compromise between the lower coverage of a Market Value policy and the higher premiums of a Replacement Cost policy might be a Replacement Cost policy with a high deductible, IF you have a good emergency fund in place.

File Claims Promptly

Many policies have a time limit for reporting certain kinds of claims, especially if the problem is made worse by waiting. For example, if you see a water problem and decide to take care of it yourself rather than report it and a month later mould sets in, you might have difficulty filing a claim. Always ask what time limits apply for reporting claims.

Keep Good Records

If you experience a loss, become obsessive about keeping track of the details. Keep every receipt, every note and document the steps you took to mitigate the damage. Every time you have a conversation about the claim, write down the date, time, person with whom you spoke and the gist of the conversation. Photos of the damage and the repair process can also be helpful.

Watch Out For Jewelry – Art, Too

Often limits for coverage on jewelry are different than on other items. If you have expensive pieces be sure that your limits are at least at their value. It would be a shame to lose, say, $8,000 worth of jewelry and then discover that your jewelry limits are set at $3,000! The same is true for art. If you have original pieces that are very valuable, they may require a special rider or separate policy. These are the kinds of things about which you must talk with your insurance agent during the purchase process.

Special Caution for Condos and Other Multi-Family Situations

Water damage is a particularly sticky issue in most multi-family housing units. Leaks are so common that many insurers limit what they will and won’t cover. Make sure you are covered should your upstairs neighbors’ leak affect your unit. Also make sure you are covered when your leak affects the units below you. Of course, the key issue is often whose leak is it? Generally speaking, if the leak is in the wall, it belongs to the HOA and repairs are their responsibility. If the leak is in a fixture – a faucet, feed line, toilet, tub drain, and the like – it is generally the homeowners’ responsibility.

The overall structure of your multi-family unit is usually covered by a policy paid by the HOA. It is important that you know what limits and deductibles apply on that policy before you buy. If your building is inadequately insured, you may end up with a big problem in the event of a loss.

A good checklist to use when talking with your Insurance Agent is located HERE.

Bad Pocket Listings and Good Ones

The real estate industry is at it again: focused on the wrong issue at the wrong time for the wrong reasons!

To begin, let me make it clear that we are talking about ordinary Realtors, here – ‘Them’ – not ‘Us’ (Help-U-Sell). We operate differently.

In the ordinary real estate world, there is a thing called a ‘Pocket Listing’ that occurs occasionally. It is a listing that is held out of the MLS by the listing agent, giving that agent an opportunity to sell the home without the help of outside brokers or agents. Ordinary agents sometimes take Pocket Listings so that they don’t have to share their big percentage based commissions with others, so that they can keep it all for themselves. If the home is priced properly and is in a desirable neighborhood, it is possible, even likely that a ready, willing and able buyer will contact the listing agent directly and purchase the property. Since there would be no outside broker involved, the listing broker would keep all of the 5% or 6% or 7% commission the seller agreed to pay.

For example, assume we have a $900,000 listing at 5% commission. If it is a successful pocket listing, held out of MLS, the listing broker would gross $45,000 on the sale (I know. Sit down, take a breath, get a sip of water. That’s a lot of money). If the listing goes into the MLS and an outside brokers brings the buyer, the listing broker would gross half that much $22,500. I think you can see why the concept of the Pocket Listing might be appealing to an ordinary agent!

There is a variation on this theme that has begun to show up in Hawaii. It is the ‘Coming Soon’ listing. You’ve probably seen them: the for sale sign is in the yard with a rider sign attached that says ‘Coming Soon.’ The listing agent is not simply letting the world know that this home will be available for sale at some future date. Think about what happens when a buyer who has been looking in that neighborhood for a house like this one sees that sign. Of course! He or she calls the listing agent directly. Again, no outside broker, no reason to split the commission – and the listing broker makes more money!

Years ago, before the Internet, before Zillow and Trulia, the real estate industry created the Multiple Listing Service (MLS). Listings placed into the MLS were fair game for any member broker or agent to sell with the assurance that the listing broker would share the commission with them. Thanks to the MLS, today, more than 80% of all residential sales transactions involve an outside selling broker in addition to the listing broker. It is one of the reasons ordinary percentage based commissions have remained so high: they usually have to be shared by so many people that the industry would likely collapse if sellers paid less!

The industry is saying that Pocket Listings are bad because they don’t receive the full exposure MLS listings get, that when a listing agent holds a home out of the MLS he or she is doing a disservice to the seller. I suppose that could be true in some tough markets or for some hard to sell listings – situations where it is important to pull out all the stops to find the right buyer. But we are in a new real estate world today. The Internet has provided vast channels for the distribution of listing information and the notion that nobody will know that your home is for sale without the MLS is simply not true.

My problem with Pocket Listings is who benefits and who chooses.

Pocket Listings are bad when the decision is made largely by the agent so that the agent can make more money; and honestly, that’s how and why this little gambit goes down . . . most of the time.

But at Help-U-Sell Honolulu Properties, we are different. We sometimes take what the industry would call ‘Pocket Listings’. The difference is, with us, if there is no outside broker involved, THE SELLER PAYS LESS! We don’t charge them to compensate an outside broker if no outside broker is involved. We don’t make more money on a Pocket Listing and they don’t pay for services that didn’t factor into the sale. If the listing is located in a desirable area and is priced properly, we sometimes suggest that the seller hold it out of the MLS for a time to see if our own Help-U-Sell marketing program (which is extensive), can produce a buyer. If it does, we can usually save that seller many thousands of dollars – like $10,000, $15,000 or more. Our out-of-MLS listings benefit the seller, and sellers sometimes choose this option to maximize their savings.

Of course, even when our listings sell through the MLS, even when our sellers have to compensate an outside broker and agent, they still save thousands. That is the whole point with Help-U-Sell Honolulu Properties: Savings. We’re going to get the job done quickly, efficiently, with a minimum of trouble and inconvenience and save you thousands of dollars over what an ordinary broker would charge.

Note: real estate commissions, whether set fee or percentage based, are not set by law and are always fully negotiable between the consumer and the real estate broker.

15 Year? Or 30 Year?

One of the decisions home buyers usually make is what type of mortgage to to use for financing. The old standard 30 year fixed rate mortgage is still king, but many are taking a long look at the upstart 15 year fixed as well.

Choosing the mortgage starts with qualifying. It is important to first understand how much house payment the lender will allow you to have and then to understand your comfort level for that payment. Many people, understandably, qualify for a payment higher than their comfort zone allows. A decision must be made on a target payment and then, based on that and the amount of down payment, the target price range.

The 30 year mortgage is often chosen over the 15 year because the payments will be lower, enabling a higher target price range. Sometimes an adjustable rate mortgage is chosen over the 30 year fixed rate for the same reason. But sometimes the best decision is to reduce the target price range and opt for the 15 year mortgage. Let’s look at an example.

Assume you are buying a $500,000 home, putting $100,000 down (20%), mortgaging the remaining $400,000. You are qualified for a much larger mortgage but you’ve selected the $400,000 target because the resulting payment more closely matches your comfort zone.

First, let’s deal with that Adjustable. Yes, you could save a couple of hundred dollars a month to start and for the first five years. But it is an Adjustable mortgage, and it will adjust – possibly up, possibly down – in five years. Because the rate will change, you really have no idea what the total of payments will be or how much interest you will pay over the life of the loan. Still, this has been a viable alternative for homebuyers who are stretching to buy the maximum house for the minimum payment, especially in situations where they are fairly certain they will not remain in the house more than five years. If $2,000 was your target payment, the Adjustable would enable you to take on $50,000 more mortgage, boosting your target price to $550,000.

The big comparison is between the 3o year and 15 year fixed rate mortgages. True, the 15 year costs $1,000 MORE each month, but . . . your home is paid for in 15 years and you will have saved over $200,000 in interest! Still, that $1,000 looks large . . . but maybe if you reduced your target price by, say $50,000 – which would drop the payment to $2,440, it would be worth the extra money each month! Or maybe, since you reduced your target payment closer to your comfort zone, you could regard the higher payment – for which you qualify – as a kind of forced savings plan. Paying $1,000 more each month on your mortgage accelerates your accumulation of equity and facilitates the rapid development of a strong financial asset: your home!

The point is this: a mortgage is a critical piece of your financial life. It is a tool to be used to help you accomplish your financial goals. When making mortgage decisions it is important to get expert advice; and that’s what we offer you at Help-U-Sell Honolulu Properties. If you are weighing a mortgage decision, we’d be delighted to help you evaluate your options.

Where Re-Sale Houses Fail: What’s Apt to Break

I saw an interesting advertisement this week for American Home Shield, the home warranty company. The ad was specific to California but has lessons for Hawaii too, I think.

American Home Shield is one of the larger Home Warranty companies. They provide policies to homeowners – usually people just closing on a home – that cover the failure of various systems in the house during a specific period. Normally you’d get a home warranty if you were buying a resale house that had a few years on it so that you’d have some protection if the air conditioner failed during the first year.

Last year, AHS spent more than $40 million fulfilling service requests from its California customers. What is interesting is what the money was spent repairing. Here’s the breakdown:

Appliances – $13,063,685 32.3%

Plumbing – $10,414,745 25.7%

Air Conditioning – $ 8,178,977 20.2%

Heating – $ 4,550,396 11.2%

Pool/Spa – $ 2,717,506 6.7%

Electrical – $ 1,286,154 3.1%

Other – $ 237,548 .58%

I think it is interesting that almost a third of the money spent on claims goes to repair or replace appliances. Of course some appliances are built in: dishwashers, disposals, some stoves and so on, but many are not attached to the house and are therefore something to be bargained over during purchase: refrigerators come to mind. The point is this: if you are buying a house including appliances and DON’T plan a kitchen remodel, check them out thoroughly. Ask for owner’s manuals and any existing warranties. And before you walk away from a home you really want because the seller won’t throw in a ten year old refrigerator . . . well, maybe you don’t really want that refrigerator at all!

Number two is plumbing. This is a biggie and makes a Home Warranty an important part of any home purchase. So many unseen events can compromise plumbing – things even a home inspector won’t find – that having a little protection is a good idea. And plumbing repairs – whether it’s digging up a drain clogged by tree roots or dealing with the water heater that fails and floods – can be expensive. I am struck by the fact that 25% of the money spent on claims was for plumbing issues!

The rest of the list probably doesn’t bear much dissection. There are two things, however:

Just 6.7% spent on pools and spas. The low number is because there are relatively few pools and/or spas and because Home Warranty coverage of these things is usually an option at an additional cost.
And just half of one percent spent on items other than the six that preceded ‘Other.’

I think, if you are buying a home, you now have six major systems you need to examine closely. If there’s going to be a problem, it is probably going to be here. The best way to do this is to hire a professional home inspector to go through the home with a fine tooth comb. Make sure the resulting report covers the big six.

As an aside, there is a great truth about home inspections: they are very valuable AND they always turn up something. Don’t expect your home inspection to result in a ‘clean’ report. There’s no such thing. When you get the report, go through it carefully and rationally. Most items will be minor and not worth even addressing. If there is something major it can become a negotiating point between you and the seller.

Finally, we’ve been looking at information from American Home Shield, one of several reputable Home Warranty companies. I always recommend a warranty on a resale property. The last thing you want your first year in your dream home is a costly repair bill for an unforeseen problem! Warranties usually cost between $300 – $500 and can cover one to two years. Often they are extendable.

Q & A: All About Help-U-Sell

How Does Help-U-Sell Work?

We’re a real estate company, but our business model is very different. The difference is largely behind-the-scenes and our clients usually don’t notice any difference between what we do and what they are used to from a great real estate company. The truth is: we do everything any other real estate company does – put your home in the MLS, market extensively, prepare virtual tours, feature your home all over the Internet, and much more – but instead of a BIG percentage commission, we charge a Low Set Fee. The Fee is a lot less than what others charge and it works for us because we organize and run our office differently than other real estate companies.

What is a Set Fee and Why Do You Charge For Your Services This Way?

A Set Fee is exactly what the name applies: a dollar amount commission that is Set: everybody pretty much pays the same amount regardless of sale price. Other real estate companies charge a percentage of the sale price – say, 6%* – so the family in the $450,000 home would pay $27,000 to sell and the family in the $550,000 home would pay $33,000 for the same service. Of course that makes no sense at all.

We know what it will cost to market a properly priced listing on Oahu and it doesn’t vary much by price range. So we add a reasonable profit to that figure and that’s our Set Fee. The fee is slightly higher for very expensive properties because time on market and marketing expense are usually greater, but the bottom line is the same: Everybody who sells through Help-U-Sell Honolulu Properties saves thousands over what they’d pay an ordinary real estate company.

Do I Have To Do A Lot Of The Work?

No. We do everything. However, you can save even more if you find your own buyer. So – if you’d like – you are welcome to do a little promotion on your own. Some of our listed sellers take flyers to the office or distribute them to friends and neighbors and find their own buyers this way. Others hold their own open houses. But none of this is required. We can do it all for you and you’ll save thousands over what others charge. Our competitors often say we are a For-Sale-By-Owner company and our sellers have to do everything. That couldn’t be further from the truth! We are a full service real estate company and we do everything other real estate companies do, but we also allow for money saving options for our home sellers.

What Am I Giving Up?

Nothing. We are not like a discount store where you get a good price but lose a lot of the nice amenities that go along with shopping with a major retailer. We are like the major retailer, with all the frills, bells and whistles. Our difference is in how we run our office.

What Does It Cost Me To List With You?

Nothing. We don’t charge an up-front fee. Our fee is due at closing; so if your home doesn’t sell (which is very rare for us), no fee is due.

Why Doesn’t Everyone Do It This Way?

There has been little change in the way real estate companies run their businesses in more than 50 years. So many people have to be paid out of that big percentage based commission they charge that it would be almost impossible for them to charge differently. We’ve changed all that. We run our office differently and market more efficiently. And, we pass the savings on to you, the consumer. Help-U-Sell Honolulu Properties is the NEW way to sell your home, and save.

See What Our Clients Say About Us

*Real estate commissions, whether percentage based or set fee, are not set by law, custom or Realtor consensus. They are fully negotiable between the consumer and the broker.

Costco, Sam’s Club & Help-U-Sell

Interesting reading recently about Costco and Sam’s Club. Sam’s is failing while Costco is soaring like an eagle. They are both membership warehouse retailers offering a similar consumer proposition: pay an annual fee and buy in bulk for less. So why would one succeed and the other fail?

It’s all about the business model.

Sam’s Club is Walmart’s attempt to emulate Costco; but they have the emphasis on the wrong syllable. Walmart opened Sam’s intent on making hefty profits selling things to consumers. In other words: they simply duplicated the model they had in place at Walmart and applied the discounts afforded by buying in bulk.

Costco did that, too, but that wasn’t the point; not really. The profits made by selling goods were secondary to something else: Membership. Costco makes 75% of its Operating Profit on Membership Fees. They enjoy incredible customer loyalty, achieving a 90% renewal rate. The chain has paid bonuses to managers who find ways to charge members LESS for goods. No item is marked up more than 15%, which is remarkable when most retailers employ a ‘Keystoning’ strategy that starts with doubling an item’s cost.

Costco makes its money by growing happy, even enthusiastic customers. They do it by:

Keeping prices low and NOT planning to make a lot of money on the items they sell
Creating their own ‘Kirkland’ branded items that, unlike most store brands, are usually of superior quality
Offering the best free progressive buffet lunch in town (wink)
Allowing anything they sell to be returned for any reason
Appealing to upscale consumers (Meanwhile Sam’s Club/Walmart openly acknowledges that cuts to public assistance could adversely affect its bottom line!)
Paying their employees generously (as a result, their employee retention is outstanding)

Put plainly: Costco wins because it employs a better, more consumer focused business model.

Which is not at all unlike the Help-U-Sell Honolulu Properties.

We make money selling real estate just like the other guys. But our goal is to create such a great real estate experience that our customers return to us over and over again. We accomplish this by:

Charging much less than our competitors. We do make money when our listings sell, we just don’t make a killing
Staffing up with the most savvy and intelligent folks we can find and then rewarding them for their contributions
Offering a program to consumers that makes perfect sense and requires no smoke and mirrors to explain
Orchestrating the most effective marketing program in the industry

This is why we have dozens of testimonials from happy clients. This is why the lion’s share of our business comes from former clients and the friends and neighbors they send to us. Often, people tell me they came to us initially because of the savings they would achieve. But they stay with us again and again because of the outstanding service we offer.

Which is not at all unlike Costco.

We join Costco because we like the idea of saving money. But we shop Costco first because the shopping experience is so positive.

The better business model always wins.

For more information about our superior model, call today at 808-593-8811, or you can simply click here.