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March 10, 2020

Mortgage Rates Hit All-Time Low

 

Last week, mortgage rates hit an all-time low. Maybe you’ve heard, it’s - big - news. On March 5th, 2020, the national average interest rate for a 30-year fixed mortgage clocked in at 3.29%. That’s the lowest recorded rate in the almost 50 years since Freddie Mac began keeping track in 1971. It's a momentous occasion—historic, even.

 

Before reaching the current low, mortgage rates began to fall during the global economic crisis of 2007-2008. Rates started 2007 well above 6% and averaged about 5% in 2008. By November 2012, they reached the previous historic low of 3.31%. After bumping back up to mid-3 and 4% in subsequent years, rates again began to drop in 2019. In a nutshell, buyers shopping for a mortgage have had it good for quite a while now.

 

Of course, there’s other, bigger news these days. The risk of global pandemic is wreaking economic havoc and pushing rates even lower. It goes without saying that these record-low rates aren’t exactly cause for celebration. Like the rate cuts that followed the Great Recession, today’s boon for borrowers follows another worldwide emergency. The novel coronavirus, or COVID-19, dominates the headlines. It’s impossible to avoid, and for good reason: in times like these, it’s best to stay informed.

 

In that vein, we thought we’d take a look at how the spring real estate market is shaping up. While we can’t predict the future, we are informed by indicators like historically low mortgage rates and the current state of the market.

Record-Low Mortgage Rates

Here’s the good news: When rates are low, both buyers and sellers win. Today’s all-time low average mortgage rates mean buyers can spend more on the principal of their loan instead of the interest. They can be approved for a larger loan, enabling them to buy “more house” with the same savings and income. Additionally, some would-be buyers who couldn't afford to buy an Oahu home may finally get the chance they’ve been waiting for.

 

  • $500,000 loan at 4.29%

    • Total cost of mortgage: $889,712

    • Monthly payments: $2,471

  • $500,000 loan at 3.29%

    • Total cost of mortgage: $787,328

    • Monthly payments: $2,187

 

As you can see, mortgage rates greatly impact both monthly payments and the total cost of a 30-year fixed-rate mortgage.

 

The benefits of today’s all-time low mortgage rates extend to existing homeowners and sellers as well. When more buyers are shopping with more money to spend, listings receive more interest and competition. That means better outcomes for sellers. Existing homeowners can win by refinancing. Analytics firm Black Knight recommends refinancing on any loan that’s at least 0.75% higher than the current average. There are some associated costs, but you’ll save thousands more if you can refinance to a significantly lower rate.

 

In a vacuum, reaching the historical low mortgage rate could be considered great for everyone. It benefits buyers, sellers and existing homeowners. But, unfortunately, there are extenuating circumstances to consider.

Enter Coronavirus: Disease and Unease

Unlike low mortgage rates, the effects of a possible global pandemic on Oahu real estate are a bit harder to guess. What we do know is that COVID-19 is very likely to spread further throughout the country. Fears will heighten, schools may shut. The ultimate toll that the virus might take on our country’s populace is unknown, but it is expected to be significant. The economy will also take a hit, and it already has.

 

Around the world, stock markets are plunging as business has crawled to a halt in some regions and industries. Despite lower rates, buyers whose down payments or reserves are in stock may actually have less buying power. If the virus spreads widely throughout the United States, the Oahu real estate industry may also slow. Open house events at Oahu homes for sale will be less populated during a pandemic. On the other hand, foreign investors are reportedly eyeing US real estate as an even safer investment than before the virus broke out. Call it a silver lining to a particularly grey cloud.

 

We also know that the Oahu real estate market has been largely unaffected so far. Buyers and sellers who are motivated by external circumstance (ie. a new marriage, new baby, new job, death divorce, etc.) are still participating in business as usual. The most affluent sellers or those who are in no real rush may elect to wait. If the disease fades away, things may stay the same. If the situation gets worse, they may change.

 

For now, Oahu real estate is still chugging along. Homeowners, buyers and sellers alike can take advantage of historically low mortgage rates. For those with an externally-motivated reason to buy or sell, that motivation hasn't changed. Those are good things. If you’re interested in buying or selling an Oahu home, or if you need a recommendation for a trusted Oahu lender, let us know. We’re happy to help. Most importantly, follow the CDC’s guidelines for disease prevention, and take good care of yourself.

Posted in Trends
Feb. 7, 2020

Five Oahu Luxury Home Upgrades for 2020

 

Whether you’re looking to buy your dream Oahu luxury home, spruce up your Oahu home for sale, or just browse what’s happening in Oahu luxury real estate, the new year brings some interesting trends in both form and function.

 

Some Oahu luxury homes feature out-of-this-world amenities like a movie theater, full gym and spa, or a vast wine cellar. However, adding a touch of luxury to your home doesn’t necessarily mean multi-million-dollar renovations. By reimagining a room with the latest in fine fixtures and finishes, you can add value and style to your existing residence at a relatively low cost.

 

In this article, we’ll explore some of the latest in luxury home design trends for 2020. Starting with…

Steam Showers

tophomedesign | CC BY-SA 2.0

 

A steam shower is two parts: first, the steam generator which heats water to produce the steam; and second, an enclosed shower stall which traps the steam inside. With the press of a button in your shower stall, the steam generator is activated to quickly heat water to a safe and comfortable temperature. The resulting steam is channeled through your shower system to fill the enclosed stall, resulting in a soothing and luxurious shower experience!

 

Installing a steam shower provides luxurious, high-end features and even health benefits to your Oahu home. Steam can clear stuffy nasal passages, soften your skin before a shave, open your pores, increase circulation and lower blood pressure. With adjustable digital controls for timing, temperature, and even music or scents, the modern steam shower is highly customizable. Additionally, steam showers are quite water-efficient and only use about 2 gallons of water for a 20-minute shower.

Designer Wallpaper

 

Through the years, wallpaper has gotten a bad rap. Now it’s back with a stylish vengeance. Gone are the days of tawdry, stuffy designs once smattered across Grandma’s kitchen walls. There’s a whole new industry of luxurious, fashion-forward wallpaper designs. For relatively little cost, you can redo a room or add a feature wall to spruce up your Oahu real estate.

 

With so many designers out there, who should you choose? If you’re interested in designer wallpaper, take some time to explore all the options. You’ll find hundreds and thousands of designs with a quick Google search, with many options easily available from online retailers like Houzz or big box stores like Home Depot.

Wine Fridges

Bill Wilson | CC BY 2.0

 

Nothing says luxury like a great selection of fine wines. Of course, any growing collection will require storage. Some Oahu luxury homes feature vast wine stockpiles, from spacious cellars of rich mahogany or chic glass displays with LED lighting. But since adding a full new wine cellar to your home is no small task, the next best thing is a dedicated wine fridge! It’s a luxurious solution to keep your cache of spicy reds and oaky whites in top shape.

 

A refrigerated wine cooler is the perfect way to ensure your wines are stored properly. Both built-in and free-standing units are available, ranging from just over $200 to $10,000 and beyond. A wine fridge is convenient, luxurious, and sure to impress your guests. When the time comes to sell your Oahu home, don’t forget to specify whether you will take the unit with you or include it in the sale.

Outdoor Kitchens

 

If you keep an eye on the luxury market, you’ve likely noticed a trend towards “indoor-outdoor” living. Many Oahu luxury homes feature large glass panels and sliding doors which serve to seamlessly blend exterior space with the interior. With more and more value placed on functional exterior space, why not make the ultimate upgrade and create an outdoor kitchen?

 

There are not many ways to better enjoy your backyard than cooking and lounging on a beautiful patio. High-end outdoor kitchens often include full installations of cabinetry, cooktop, grill and wet bar. Even if you’re not looking to drop tens of thousands on exterior improvements, installing a built-in grill with counter space can make a big difference towards entertaining friends and family.

Smart Features

 

Most Oahu homes these days have at least one or two smart devices. Maybe you wake up to Amazon’s Alexa playing your favorite song, or maybe you ask your Google Assistant to hit the lights when you hop into bed. In recent years, the Internet of Things has grown to include so many more appliances, you can now upgrade your home with a full suite of smart devices.

 

The modern smart home allows for easy control of temperature, lighting, security, entertainment, and more. From door locks to wifi to Spotify playlists, much of your daily life can now be smart-equipped for voice control and automation. Not to mention, you can do it all from thousands of miles away (if you so require). We think that luxury means more than extravagant adornments. It means functional ease and convenience. By that definition, outfitting your home with smart-controlled systems is the ultimate in modern luxury living.

Oahu Luxury Real Estate

As your trusted Oahu real estate experts, it’s our goal to provide guidance, insight, and understanding for anything real estate related. Whether you’re looking to buy a Kailua home, sell a Honolulu home, or you’re happy with the home you’re in, we hope these friendly articles offer you some insight into the world of Oahu real estate.

 

For more information about the Oahu real estate services we offer, reach out to start the no-pressure conversation. We are always happy to lend our expertise to explore your options.

Posted in Trends
Jan. 29, 2020

In a Rush? 8 Tips to Sell Your Oahu House Faster

 

To sell your Oahu home fast demands intelligent, informed strategy and precise execution. There are many reasons why an Oahu homeowner may want or need to sell, but unfortunately not all come with the luxury of time. Maybe you are relocating for work. Maybe a death or divorce in the family has forced an abrupt decision. Maybe you need funds for a new home build, or maybe your financial situation has changed and you can no longer afford your current home. In any case, you must make the most of the time you have to make your sale successful.

 

If you’re in less of a rush to sell your Oahu home, don’t click away just yet! Our tips for quickly selling Oahu real estate are still important for you to follow. After all, what seller wouldn’t want to both maximize their sale price and minimize their days on market? While the stakes may be higher if you’re crunched for time, it always pays to do things right. So, whether you have two weeks or two years to sell, read on for our top recommendations for a speedy and lucrative sale.

 

1. Don’t Overprice

We’re not the sorts who beat around the bush, so let’s get the big one out of the way: By far, the most important factor that can determine the speed of your sale is how much you’re willing to take for it. You’ve heard a home’s value is all about “Location, Location, Location!” But when it comes to closing a sale, it’s really “Price, Price, Price!”

 

As we covered in our article on the dangers of overpricing, pricing your home too high can have disastrous effects. An overpriced listing garners less interest from the very buyers who might otherwise make an offer. After languishing on the market, you may elect to make a price reduction; but a home priced right the first time is on stronger grounds to negotiate with buyers later. On the reverse, pricing your new listing at or below market value will lead to more buyer interest, busy showings, better offers, and a faster sale.

 

Some distressed homeowners opt for the extreme. House flippers and “We Buy!” street signs have long lured sellers with the promise of a cash offer and a quick closing. Without the necessary time or support to prep their homes for market, a seller might acquiesce and take the low-hanging fruit. It’s a sad tale, given that there is almost always a better option! Working with an experienced Oahu real estate agent can help you get a better offer, without having to deal with lowballing or scams.

 

So it’s abundantly clear (maybe even painfully obvious) that a lower-priced home sells faster. That’s just how selling things works, right? Then, what are some concrete steps a seller can take to increase both the price and expedience of their sale?

 

2. Look Superb From the Curb

They say not to judge a book by its cover, but that doesn’t hold as true when selling Oahu real estate. The proverbial “cover” of your home is its curb appeal, and it leaves a strong and lasting impression. Make it a good one, and you’ll sell faster and for more money.

 

Boosting your curb appeal has the valuable effect of enticing buyers inside to explore your home. If your exterior looks old and dreary, a fresh coat of paint and revitalized landscaping can make a stark and immediate difference. For a relatively low price compared to large-scale renovations, exterior updates will spark interest in prospective buyers and passers-by. You won’t sell fast if no one wants to come inside to see more! Don’t hamstring your sale from the outset with an unappealing facade.

 

3. Make it Pretty and Presentable

When you’re getting ready to list your home, try to view it through a buyer’s eyes. Is it warm and inviting, or cold and cluttered? Your goal should be to create an attractive space in which buyers can blissfully envision their future selves. We recommend and help our clients to use a professional staging service to get their home in selling shape. If for some reason that doesn’t work for you, though, there are still some things to keep in mind.

 

Before you hit the market, make sure your home is clean, decluttered, and depersonalized. It may be obvious to clean up your trash and dirty dishes, but what about your Tom Brady bobbleheads? Certain items like sports memorabilia, religious decor or political knick knacks should be packed away. Make your home appeal to the broadest possible segment of buyers, not just those who share your tastes and views. That extends to paint colors and other decor, too. Neutral color schemes in a clean and tidy space will make your home more appealing to more buyers.

 

4. Show the World!

You’ve cleaned and painted and prepped. Now it’s time to show it off! As soon as your listing is live, buyers who are looking for a home like yours will be notified through platforms like the MLS and Zillow. Their eyes will be drawn to your photo gallery first, so it’s important to have quality images.

 

Even if you’re something of an aspiring Ansel Adams yourself, it’s still a good idea to use professional photography services to sell your Oahu home. Yes, your smartphone can take some decent photos. No, they’re probably not as good as they could or should be. After pouring your time and effort into prepping your home for sale, why stop there? Hiring an experienced real estate photographer will ensure that your home is shown to the world in its best light (literally and figuratively).

 

5. Show Often and Get Feedback

Now that you’re on the market, it’s important to make your home available for agents and prospective buyers. Showings are easier if you’re not still living in the home, but your situation may not allow for that. Either way, your home should remain in a show-ready state at all times. Keep things tidy and personal items out of view. If you’ve already moved out, then your agent might set up a lockbox system to let agents show the home any time.

 

After a showing, make sure to get feedback from the buyer’s agent. Whether good or bad, it’s incredibly valuable to hear what their clients thought of your listing. Some agents may reach out on their own, but it also never hurts to ask those who do not. Armed with buyer and agent feedback, you can make the right adjustments to make your listing more appealing to the next group of visitors.

 

6. Set an Offer Deadline

If you’re in a rush to sell, then setting a deadline for incoming purchase offers will show buyers that you mean business. Make it clear in your listing that you will only accept offers until a specific date. You don’t need to specify exactly why that date has been set or even that you’re trying to sell quickly. Just set the date and let the offers roll in!

 

7. Get a Bridge Loan

Even if you feel you must sell immediately, there’s a secret weapon that can completely change your timeline: a bridge loan! A bridge loan is a short-term loan that leverages the equity from your current home to provide the funds you need to make an offer on a new one. With a bridge loan, you can move where you want and when you want to, but wait to sell your current home until the time is right.

 

Instead of scrambling to sell on short notice, a bridge loan gives you the breathing room to make well-informed and strategic decisions. Forced to relocate for work during the holidays? A bridge loan means you can wait to sell during the busy spring season when more buyers are browsing the market. Whatever your reasons for selling quickly, a bridge loan can change the whole equation and and alleviate the pressure on your schedule.

 

8. Choose Your Agent Wisely

Selling your Oahu home can seem overwhelming. The good news is that you don’t have to do it alone! By hiring an experienced and trustworthy Oahu real estate agent, you’ll get the guidance and support you need to maximize your sale. At Hawaii Realty International, we have years of experience working in your neighborhood. We know the market, and we are well-regarded by our peers. We leverage our extensive professional network to find you the best deal possible on a timeline that meets your needs.

 

From setting a price to coordinating improvements and staging, we will be your trusted advisor and make sense of the process. If you’re thinking of selling your Oahu home, don’t hesitate to reach out and start the no-pressure conversation. We’ll discuss your options and present a detailed strategy to optimize the sale of your Oahu home.

Posted in Selling a House
Jan. 10, 2020

Are Oahu Realtor Fees Worth It?

Oahu Realtor Fees and Commissions

Are Oahu Realtor fees worth it? Well, it depends on the value and quality of your Oahu Realtor. But as a general rule of thumb in Kailua and Honolulu real estate, like in all things, you tend to get what you pay for.

 

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It’s a new year, and the Oahu real estate market is waking from its seasonal slumber. Dozens of homes are shedding their decorative holiday coats in favor of neutral staging decor. Neighborhoods soon will swell with eager buyers on the hunt for their dream homes. If you’ve been thinking about selling your Oahu home, now is a great time to get down from the fence and find an agent to list it on the market. But which agent should you choose, and how much should you pay them?

 

Across the country, the standard commission rate that a seller pays their listing broker for helping to sell their home tends to hover between 5 and 6%. According to data from the National Association of Realtors®, the average commission in 2019 was roughly 5.7%. Since real estate commissions are not officially regulated, it’s up to the seller and their agent to settle on a fair fee. Therefore, it’s important for sellers to know what they’re getting in return for the agent’s cut. So what does your commission get you?

Doing the Commission Splits

The first thing to understand about commissions when selling your Oahu home is how that money is divvied up. Say you agree to pay your listing agent 6% of the selling price. That 6% does not go straight into your listing agent’s pocket. In fact, he or she will likely only receive a fraction of that amount, maybe around 25 to 40%. That’s because, as the seller, you are actually paying both the listing agent and the buyer’s agent. But wait, there’s more! Let’s explore how a standard real estate commission breaks down.

 

First off, your 6% commission goes to the listing agent’s side. Per your listing agreement, the listing agent denotes what amount of that 6% they will pay to the buyer’s agent for making the deal happen, usually around 2.5 to 3%. Of course, the buyer has their own costs to worry about, from appraisals to inspections to insurance and more. However, they don’t directly pay their agent to help find them a home. Instead, the buyer agent gets about half of that 6% from the listing agent when the transaction is closed.

 

What’s more, agents on both sides of the transaction pay a substantial portion of their earnings to their parent brokerage. From the 3% portions designated for the listing agent and the buyer’s agent, up to half of that may end up going to their brokers. So, instead of 6%, or even 3%, the agents might walk away with 1.5% apiece from the total sale price. While that’s not necessarily a meager sum, as homes routinely sell for hundreds of thousands or millions of dollars, it’s a far cry from the glaring 6% that turns the stomach of many prospective Oahu home sellers.

 

Services Rendered

So your listing agent doesn’t necessarily get a big 6% payday out of your closing price. Even so, if you receive poor, inattentive service from your agent, then any amount will feel like too much. What should your agent do to earn their pay? And what expenses does a listing agent accrue in the process of selling your home? Most marketing practices involved in listing a Kailua or Honolulu home for sale do incur costs out of the listing agent’s pocket.

 

Successfully selling Oahu real estate in this digital age requires a keen eye for web-based marketing. By 2017, up to 95% of buyers were using online search to find a home, and it’s only increasing. That means that professional media including photos, videos, social media and email marketing now play a critical role in improving your home’s visibility to the prospective buyers. Your listing agent should provide marketing multimedia which portrays your home in its best light, and your commission helps to pay for those professional services.

 

Of course, the “new school” of marketing hasn’t replaced the “old school.” Your Oahu real estate agent should include print and mail marketing in their plan. Postcards, flyers and brochures all remain relevant marketing tactics to let the neighborhood know that your home is for sale. And each of those methods costs money for printing, postage, design, and so on.

 

Most of all, your agent’s commission pays for their time and expertise. Hosting open houses, managing marketing campaigns, coordinating vendors like staging and inspections—if done right, each of these aspects of selling a home takes considerable time and effort. A good agent will also spend the time to field your questions, devise a strategy for success, negotiate on your behalf, and ensure that you are comfortable and informed at every step.

 

You Get What You Pay For

As with any profession, there are good and bad apples among Oahu Realtors. Just because John Q. Agent charges 6% doesn’t necessarily mean he’ll do a good job of selling your Oahu home. However, from a purely mathematical perspective, an agent who provides a “discount” service is simply unable to provide the personal care and professional marketing required to make your sale a resounding success.

 

Choosing an agent based on a low fee, or choosing to sell on your own (known as FSBO, or “For Sale By Owner”), is much more likely to backfire than it is to save you any money. In 2017, FSBO sales accounted for 7% of homes sold nationwide. The average FSBO sale price was $200,000, compared to $265,500 for homes listed with an agent. While it’s not a perfect apples-to-apples comparison, the difference of over 32% is still quite jarring.

 

So here’s the big takeaway: when you’re thinking about selling your Oahu home, there’s a number of criteria you should look for. “Lowest commission,” frankly, shouldn’t be that high on your list. You should choose your agent based on their competence and experience. Their honesty and reliability. Their track record. By how well their personality and schedule fit with your own.

 

A great Oahu real estate agent is worth every penny. Lucky for you, we happen to know some of the best. We have dozens of happy client reviews, years of experience in your neighborhood, and a veteran team of dedicated admin and marketing staff. If you’re thinking about selling or buying a home in Oahu, or if you just want to discuss the current Oahu real estate market, get in touch to start a no-pressure conversation. We’re always happy to hear from you.

Posted in Selling a House
Dec. 20, 2019

Hidden Costs of Luxury Real Estate

Oahu Beach - Luxury Real Estate on Oahu

Oahu Luxury Real Estate

Oahu luxury real estate is impressive, extravagant, and, of course, expensive. That should come as no surprise; it’s right there in the name! Luxury is defined as “conducive to sumptuous living, usually a delicacy, elegance, or refinement of living rather than a necessity.” But even if you’ve got the cash to buy a sprawling, lavish estate, there is more than the listing price to keep in mind. In this article, we’ll cover some of the hidden costs of owning a luxury home.

 

While you may have the resources to buy a luxury home in Kailua or Honolulu, it’s important to be aware of externalities. Much like starting a family, it’s only prudent to be prepared before shouldering a new bundle of responsibilities. As your trusted real estate advisors, a crucial part of our job is to ensure that you’re as informed as possible. So let’s explore some examples of the expenses that come with buying a luxury home.

More Than You Can Chew: A Case Study in Luxury Homes

Sixteen years ago, rap artist and former beverage mogul Curtis James Jackson III, aka 50 Cent (Fiddy), purchased a grand Connecticut estate. Nestled 80 miles north of the wealthy town of Greenwich near NYC, the residence at 50 Poplar Hill Drive boasts 52 rooms across 50,000 square feet. Some of the property’s opulent features include a nightclub, two private pools, both indoor and outdoor basketball courts, and a recording studio (naturally). The home is larger than others in the area, which didn’t help when it was later listed for sale.

 

Fiddy bought the estate in 2003 from another famous face, one Mike Tyson of boxing fame. The sale price then was $4.1 million. After a few years of owning the property, Fiddy listed the home for sale at $18.5 in 2007. At such a dramatically increased price, the listing did not sell and was taken off the market. By 2015, Fiddy again listed the home for sale. This time, the price was $4.995 million, but again the home did not garner the asking price. Finally, he sold the property in 2019 for $2.9 million to Florida businessman, Casey Askar. That’s an 84% price drop from his 2007 asking price of $18.5 million.

 

Such a drastic decrease begs the question: Why did Fiddy sell? The answer is in the hidden costs. Reportedly upwards of $70,000 each month, the upkeep and maintenance costs of the lavish estate were simply too much for Fiddy to handle. From the 50,000 sq ft of 52 rooms, to the lawns and the pools, the estate at 50 Poplar Hill Drive required constant effort from groundskeepers and staff. Not to mention utility bills to keep the residence warm throughout the winter, or cool in the summer. In just five years, that monthly cost would add up to the total that Fiddy paid for the original sale, and he could no longer justify the expense.

A Luxury Home Takes a Village

If you’ve watched the popular period drama Downton Abbey, then you are one step ahead of ol’ 50 Cent in knowing that running a palatial estate is a team affair. There’s the estate manager, the household manager, the butler, the chef, the cooks, the gardener, the gameskeeper, the stewardess, the chauffeur, the parlormaid, the chambermaid, housemaid, laundrymaid—the list goes on. But while the costs are steep, they do come with perks: keep your house in order and you may even be graced by a visit from the Queen!

 

In all seriousness, your home need not be a sprawling estate to be considered “luxury.” In the simplest sense, a luxury home is one that is valued well above the average in a given market. In many US cities and metro areas, a price of $1 million is often considered the starting point for luxury homes. In markets like San Francisco and New York, where prices are substantially higher than the national average, luxury is said to start around $4 million.

 

On the bright side, you do get more for the higher price tag. Luxury homes, whether a charming San Francisco Victorian or a giant midwest mansion, tend to come with more square footage and fancier features than the average home. But of course, there’s a hidden cost there, too. For a large luxury property, simple tasks like cleaning your gutters or mowing the lawn become a considerable expense. Want to upgrade to smart devices and appliances? It’ll cost a pretty penny to do so across your whole home. While you may have the money to cover these additional expenses, it's important to be aware of them when planning your home purchase.

Luxury Mortgage and Tax and Insurance, Oh My!

Let’s take a look at another famously fancy luxury home with hidden costs. When Yuri Millner, a Russian-born tech investor, bought his Silicon Valley home in 2011, the sale price of $100 million broke records in California and Santa Clara County. The Bay Area estate sits on 11 acres with structures of roughly 25,000 square feet, and includes a ballroom, a theater, a spa and a gym.

 

Interestingly, the taxable assessed value of the home has marked around $50 million by the Santa Clara County Assessor, just half as much as Milner paid. Yet that still means Yuri is on the hook to pay over $600,000 each year in property taxes. If Yuri has a mortgage, his payments will be whoppers as well. If he financed the home using a standard 30-year fixed conventional loan with 20% down and $80,000,000 in principal, his monthly payments would total nearly $400,000.

 

Of course, a Russian oligarch or any other billionaire likely is not concerned with middling expenses in the mere hundreds of thousands. But the fact remains that, as a home price grows, so too do its associated costs. Getting insurance for a $100 million home is nigh impossible, but insurance on a $5 or 10 million home is just plain expensive. From the tax man to your loan officer, you’ll be paying the pipers by the truckload.

Your Oahu Luxury Experts

Home ownership always comes with additional costs. But despite the increased expenses, buying a luxury property on Oahu can be incredibly rewarding. The stunning views, the lavish spaces, the fixtures and finishes each provide a magnificent setting for your modern, island lifestyle. We love matching our clients with the perfect home to fit their tastes and their budget. If you’re looking to buy or sell a luxury property, get in touch to start the no-pressure conversation and explore your options.

Posted in Buying a home
Dec. 6, 2019

The Dangers of Overpricing Your Oahu Home

Overpricing leaves your listing high and dry.

 

The dangers of overpricing your Oahu home are very clear: It just won’t sell. Simple enough, no? Well, if you’re still curious, then read on to explore the reasons that pricing your home too high for the Oahu market is perhaps the worst thing you can do when trying to sell.

 

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Say you love the old tile smattered over your unique floor plan. You feel the pool you installed for six figures was an excellent investment. Your afternoon naps simply wouldn’t be the same without those blaring trains. You love everything about your home, so it must be worth a little extra, right? Not necessarily.

 

An all-too common mistake by those selling a home in Kailua, Honolulu, and literally everywhere else, is that they overvalue their property. Maybe they want to recoup their investment on costly improvements. Maybe their personal taste doesn’t match with market trends. Maybe they did some misguided research, or maybe they’re just going with their gut. Whatever their reason for an unrealistic sense of their home’s value, they can all be deadly to a listing’s chances.

 

Inevitably, a portion of sellers will heed poor advice from agents who will say anything to sign a listing. Others may scorn the advice of a good agent. But what really happens when a home is overpriced?

More is Less

Ironically, if your listing is overpriced, it’s more likely to sell for less than if you had priced correctly at the outset. Buyers are often reluctant to offer a “lowball” price to an overpriced listing, for fear of wasting their own time or possibly offending the sellers. Sure, some bold buyers might decide (or be convinced by their agent) to bid low, but many more of them won’t even bother.

 

When a listing is priced too high, buyers will move on to spend their time and energy on the reasonably priced listings in the area. They don’t want to waste their effort. That leads to decreased competition for the overpriced listing and, in the end, a lower sales price. Good agents can spot an overpriced listing from a mile away. When they spot one, they will know that their clients needn’t worry about getting stuck in a bidding war. A seller who has overpriced should expect to see lower bids and fewer of them.

Losing Steam

Your first days and weeks on the market are the most crucial. When your listing goes live on the MLS, it triggers a cascade of events meant to help drum up interest in your property. Notifications are sent to buyers and agents through automated MLS alerts and search websites like Zillow, when a home that meets their criteria hits the market. If your listing is overpriced, those alerts won’t get a second look. In fact, if your pricing is way off, those alerts won’t even go to the “right” subset of buyers at all. Either way, you’ve wasted an opportunity.

 

As soon as your listing goes live, open houses and broker tours will populate on search sites, and your agent’s marketing plan should be in full swing. Snail mail, email, social media, agent networkingeverything is full-speed ahead to supercharge your entry into the market. But, if you’ve priced too high, then you’ve stymied that effort from the get-go. Overpricing is an exercise in self-sabotage.

Going Stale

Once the initial marketing period is over, an overpriced listing will continue to linger on the market. And linger. And linger. And linger… you get the point. “Going stale,” in industry lingo, means being confronted with two options. First, you can simply wait. Perhaps you have the time to wait for conditions to improve. You’re not in a rush, and at the very least inflation will catch up to your unrealistic expectations eventually, right? Some sellers choose to pull their home off the market, but many don’t have that kind of time to spare, or they don’t want to live in listing limbo.

 

Your second option is a price drop. Sometimes, a price drop is a perfectly reasonable course of action; if it’s spurred because of a shift in market conditions, then you’re at least somewhat insulated by the fact that everyone else is floating in the same ebbing tide. However, if you must drop your price due to your own initial mistake, then you’ll turn into easy prey. Much like the lion that hunts the sickly gazelle, buyers will identify your listing as fundamentally weak. Offers will come in low, and buyers who see multiple price drops will just wait around for the next one.

Hitting the Sweet Spot

The dangers of overpricing highlight the importance of finding an agent who you trust. You deserve a real and honest discussion. At Hawaii Realty International, we apply our experience in Oahu real estate to fit your needs, and we offer guidance based on the realities of the market—good or bad, up or down. We are your trusted advisor in selling or buying a home on Oahu. If you’re considering making a change, reach out to start the no pressure conversation and we’ll discuss all your options.

 

Posted in Selling a House
Nov. 11, 2019

OK Millennials! The New Generation of Homebuyers

 

As the largest adult population group in the US, millennials wield $1.4 trillion in purchasing power, and more of them are aging and earning their way into the real estate market.

 

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If you explored Twitter recently, you’d get the feeling that inter-generational squabbling has reached new heights. In a flurry of contentious posts, the trending “OK boomer” meme has highlighted the divide between millennials and baby boomers. Even cultural icons like William Shatner have joined the fray.

 

However, despite the often-strained, less-than-cordial relations relations between the two age groups, it is increasingly apparent that both sides agree on at least one thing: Just like their elders, millennials see home ownership as an essential part of the American experience.

Millennials Want to Buy Homes

Like any market, real estate is driven by supply and demand, and demand is strong among millennials. One 2018 study found that a whopping 9 out of 10 millennials are interested in purchasing a home. The same study showed that those millennials intend to act on that interest, albeit with some variance in their expected timelines. 

 

Of millennials who plan to buy a home, just 4% expect to buy in the next year, while a whopping 85% want to buy at some point in the next 2 or more years. If economic conditions allow, we can expect to see many more homeowning millennials in the years to come.

 

The important question is whether millennials will be able to afford to buy the homes they so desperately desire. Despite 2019 seeing slower growth in real estate markets nationwide, making a competitive offer to buy a home is still out of reach for many younger buyers.

Recession: A Coming of Age Story

The Pew Research Center defines millennials as the population born between 1981 and 1996 (ages 23 to 38 in 2019). When the global financial crisis hit in 2007, younger millennials were in middle school, high school and college, and the older half were young professionals just beginning to build their careers. The difficult economic conditions in which millennials came of age have had lasting effects on their long-term earning potential and their overall economic outlook.

 

Millennials had a front row seat to the havoc wreaked by subprime loans, unscrupulous lenders, overextended borrowers and unchecked debt markets. Many parents of millennials struggled financially in the years that followed, and some lost their homes. With firsthand experience of the dangers of debt, it seems that millennials have vowed not to suffer a similar fate.

 

For example, credit card debt among millennials is significantly lower than that of previous generations. Millennials average $3,403 of credit card debt, baby boomers average $5,603, and gen-Xers average $6,752. Millennials also hold less mortgages and car loans. What millennials do have, though, are student loans—and boy do they ever: millennials hold an average of 182% more student debt than their college graduate counterparts in 1995.

 

In short, millennials are cautious. But while they remain wary of overextending themselves, that won’t stop them from buying their slice of the American dream. In fact, millennials already make up the largest proportion of the home-buying market.

 

How I Met Your Realtor®

Spending habits aren’t the only way in which millennials differ from their predecessors. In the same way that dating apps have digitized the world of romance, the internet and real estate apps are poised to revamp the traditional home buying experience.

 

The days of the Yellow Pages and lookie-loo buyers are fading into obscurity, replaced by a savvy and well-researched consumer base. According to the National Association of Realtors®, at least 81% of millennials who already own a home found their property through a mobile app. Millennial buyers tend to know what they want, and that includes fast and attentive service.

 

Millennials also want different types of homes than previous generations. They are trending away from 20th century McMansions, instead preferring smaller, more manageable properties. They are seeking features and amenities that suit their lifestyles, from pet-friendly yards to space for organic gardens. Millennials may prefer cozy locations within walking distance of local shops and nightlife, in lieu of a sprawling estate on the edge of town. From the way that millennials meet their agent, to the way they choose their home, technology and the internet age are pressuring the industry to adapt. 

 

A Guiding Hand

At the end of the day, partnering with a veteran agent for expert guidance and tailored service is still key to buyer success. The home buying and selling process is sure to change further as young blood enters the market and new technologies arise. Those real estate agents who do not provide sufficient value to their clients will fall by the wayside. On the other hand, agents who leverage their market insight, their local connections, and their dedicated role as trusted advisers, will find continued success.

 

Whether you’re a first-time buyer looking to start building equity instead of throwing away rent each month, or if you’re a seasoned homeowner looking to make a move, we have the experience to help you succeed and the track record to back it up.

 

At Hawaii Realty International, we always aim to provide value to our clients buying and selling real estate on Oahu. To get our clients to best terms, the best offers, and the best opportunities. We dedicate our waking hours to help guide you through one of the biggest decisions of your life, because it’s what we love to do. Don’t hesitate to reach out and let us know how we can help!

 

Oct. 31, 2019

Buying Oahu Real Estate: Which Loan is Right for You?

 

Interest rates are low, low, low, and that means it’s a great time to be a home buyer! While median home prices haven’t dropped much nationwide, the costs you save with a low rate over the course of your loan more than make up for any monthly market swings. So, if you’re ready to take the plunge, and if you’ve saved for a down payment (more on that below), it’s time to consider your financing options!

 

These days, the 30-year fixed-rate conventional mortgage remains the predominant form of financing for home purchases around the country. At an average interest rate of just 3.61% in September of this year, standard terms on these loans are currently quite favorable to buyers. However, as consumers grow more sophisticated or seek more help through other alternatives, we are beginning to see a rise in the percentage of purchases financed through non-conventional means.

 

Per the National Association of Home Builders’ analysis of 2018 Census Bureau data, in 2018 nearly 30% of financing secured by home buyers was non-conventional. FHA loans led the pack at 11%, followed by cash purchases at around 10%. While you may or may not have the stack of dough on hand to make an all-cash offer, loans such as an FHA first-time buyer loan may be perfect for you.

 

Let’s take a look at the loan type options, conventional and non-conventional, that you can consider for your Oahu home purchase:

Fixed-Rate Loan:

The big daddy, the standard by which all others are judged. Accounting for over 70% of loans originating in 2018, conventional fixed rate mortgages are far and away the most common form of financing. These loans offer a single interest rate over the course of the loan, from day-one to day-ten thousand, nine hundred and fifty seven (and a half - thanks leap years!). A conventional fixed-rate loan is perfect for buyers who want a predictable payment and who intend to stay in their new home for the long haul. A down payment is required, so be sure to pad your savings account if this loan sounds right for you.

Adjustable-Rate Mortgage (ARM):

As the name implies, adjustable-rate mortgages do not remain constant like a fixed-rate loan. Typically offered at lower starting rates compared to fixed-rate loans, an ARM offers a better deal for a period of time such as five to ten years, and then the rate “adjusts” to the current market. So, if you’re planning to sell the home two or five or even ten years down the line, this financing option may be a great option for you to save money during that period. Considering the incredibly low rates offered these days, it’s unlikely that your ARM rate will remain as low once the initial fixed period runs out, so make sure that the terms of your ARM coincide well with your long-term plans.

FHA Loan:

Backed by the Federal Housing Administration, an FHA loan offers the opportunity for qualifying buyers to pay as little as 3.5% down on their home purchase instead of the typical recommended 20% on a conventional loan. While 20% is not required by all conventional financing, conventional guidelines tend to be more stringent, so FHA loans are a perfect option for prospective buyers with decent credit but lower savings to make a purchase. FHA loans are fixed-rate over 15- or 30-year terms, with a maximum loan amount that varies by state and county. Note that buyers of FHA loans must use the home or investment property purchased as their primary residence, and they are required to pay for mortgage insurance over the course of their loan.

VA Loan:

Veterans who have served for 90 consecutive days during wartime, 180 days during peacetime, or spent six years in the reserves are eligible for a VA loan with no down payment and no mortgage insurance requirements. These loans, backed by the Department of Veterans Affairs, do have some additional requirements, however: The home must serve as the buyer’s primary residence, and the home must fit within certain standards set by the program. That means no fixer-uppers are allowed!

USDA Loan:

If the bustle of city living no longer suits you and you’re looking to start a “Green Acres” life of your own, consider a Rural Development loan from the US Department of Agriculture. These loans are backed 100% by the government, meaning you don’t need to pay a down payment, and the program offers discounted mortgage rates for those looking to lay down roots in a rural area. Guidelines include restrictions on buyers’ debt-to-income ratio (not to exceed 41%), and property purchased must be in an eligible rural area as designated by the USDA. Learn more about the various types of USDA loans.

Bridge Loan:

If you’re looking to buy a new home but your money is tied up in your current home’s equity, then a bridge loan is your answer. Like its namesake, a bridge loan spans the gap between the home you currently own and the home you want to purchase. Lenders will combine your current and your new mortgage payments into one, and when you sell your current home you will use those proceeds to pay back the bridge loan. These loans are great for buyers who currently own a home, have good credit and a low debt-to-income ratio.

Bucking Convention(al Loans)

We hope that this brief overview helps to give you an idea of your options for financing the purchase of your next home. As local real estate experts, we have seen it all, and we know how important it is for you to consider all your options. For a good portion of buyers, a conventional fixed-rate loan makes the most sense. But for many others, these alternatives are worth considering! Let us know if you’re in the market to buy a home, and we’ll be happy to hook you up with a trustworthy lender offering competitive rates. It’s our pleasure to assist in anything real estate related, from the first steps of securing financing to the day you move in and for years to come.

 

Posted in Buying a home
Oct. 23, 2019

Ten Top Tips for Oahu Landlords


 

Owning rental property in Oahu can be a lucrative investment, providing a steady stream of income every month. However, being a landlord can also be a major source of stress, headaches and heartache, from screening tenants to collecting rents to upkeep of your property.

 

So how do you manage your Oahu investment property or properties while simultaneously managing your sanity? Here are some helpful tips that may save you time and money in the end.

 

1. There’s An App For That

Whether you’re managing two or twenty rental properties, it’s critical that you stay organized. Losing track of your repair receipts might mean a hit to your tax deductions. Misplacing a lease agreement may bite you later if you’re forced to evict. Utilizing property management software, you can keep everything safely in one place. Some apps even enable you to collect and track rent payments, manage repair requests, screen tenants, and list a vacant rental on sites like Zillow and HotPads.

 

Take a look at these reviews to learn about 2019’s best property management apps:

FitSmallBusiness.com

Reviews.com

 

2. Think Long-Term

As a landlord, you’re likely not in it for a quick flip. You want to extract the most income from your property over a period of years, even decades. With that in mind, consider undertaking renovations and improvements that may cost more right now but will pay off in the long run. This includes adding in-unit laundry, updating the kitchen and bathrooms, and installing soundproof windows in street-side rooms. It may take a few years for these investments to pay off, but in the end you will recoup your costs, realize higher total income, and have a property that’s more attractive to future renters.

 

3. Don’t Overlook Landscaping

The next time you’re heading to your rental property, try this little experiment: Drive past first without going inside, and take note of the exterior. Does it look inviting, or does it look unkempt and overgrown? Based on the view, would a potential renter want to see more? You don’t need a veritable Garden of Eden outside your property, but a well-kept exterior space is important in maintaining your rental’s curb appeal. Plant some low-maintenance foliage, and set up a system to manage its health. Contract a landscaping company if need be—in the end, you’ll benefit from more renter interest and higher rents.

 

4. Show Your Tenants Some Love

The stress of being a landlord can vary greatly based on the quality of your tenants. To ensure that the good ones stick around, address their concerns promptly. If something at your property needs repair, express to your tenants that you are working hard to solve the problem, and do your best to get things fixed as soon as possible. Just like you want good tenants, your tenants want a good landlord who cares about more than just receiving their monthly payment. Write them a letter of appreciation for prompt payments and keeping the place clean, or simply thank them for treating your property with care the next time you’re around.

 

5. Sweeten the Deal

Since a thank-you note may not always be enough to retain your good tenants, consider offering them concessions such as a free month of rent or an extension of their current lease. It’s always easier to keep your current tenants than to find new ones, so losing a bit of income in the short term is well worth it to save you the time and effort of finding and screening a new batch of applicants. If a lease is set to expire during slower months like the holiday season, you can propose an extension to keep your tenants in the property until a busier time of year when new tenants will be easier to find.

 

6. Keep a Record of Your Property’s Condition

To protect your investment, be sure to keep detailed records of your property’s condition between tenants. Before new tenants move in, take photos and video of the entire property and save them securely in multiple systems like your computer and the cloud (a la Dropbox or Google Drive). When your new tenants are ready to move in, prepare a checklist and walk through the property together. Note the condition of each space, and have your tenants sign the checklist to acknowledge that the walkthrough was conducted.

 

7. Analyze the Market

If you’re getting ready to put your property on the rental market, first perform a comparable rental analysis. Just like selling a home, your best resource for pricing a rental is to compare your own property to others in the area. Look at rental properties of similar size, bedroom and bathrooms, and amenities. Make note of their rental prices, and adjust your target price based on differences like recent upgrades or problem areas. Losing rent income due to vacancy is your greatest enemy as a landlord, so it’s important to maintain a competitive, fair price.

 

8. Require Rental Insurance

This is frequently overlooked by landlords, but it can save you a heap of trouble. Requiring your tenants to have rental insurance will help if your tenants cause more damage than their security deposit covers. If a forgetful tenant leaves on the stove and starts a fire, or leaves the sink running and causes water damage, your landlord insurance might not cover all of the damage. You may be able to recover damages from your tenants’ renters insurance. In addition, your tenants will be more secure from losses to their own personal belongings. Renters insurance is a benefit to everyone.

 

9. Work With a Real Estate Attorney

Whether you are drafting a lease agreement or seeking an eviction for a deadbeat tenant, it is eminently helpful to work with a real estate attorney who knows federal, state and local laws inside and out. As we all know, attorneys don’t necessarily come cheap; but making sure that your i’s are properly dotted and your t’s are well-crossed is worth the price. While on its face a contract or a court filing may look simple enough, it can set you back months of time and thousands of dollars to get something wrong.

 

10. Treat it Like a Business

Ultimately, your rental properties are like any business investment, and you should treat them as such. Focus on cash flow: pursue late rents and do not hesitate if eviction is required. Invest in improvements which will net higher rents. Follow laws and ordinances to the letter, including Fair Housing and zoning rules. Maintain your property to high standards. And most of all, if you cannot afford the time and effort of being a hands-on landlord (which can be considerable), then consider hiring a property management company. You’ll lose a portion of your rental income, but the majority of the stress that comes with managing a property will be off your hands. Not a bad tradeoff.

 

We’re Happy to Help

 

As your local real estate experts, we have years of experience helping investors buying and selling rental properties. In addition, we have a broad professional network of trusted vendors, and we are always happy to recommend a contact for any of your investment property needs. Whether you’re looking for a real estate lawyer, a painter, a photographer for your rental listing, or any other industry pro, we are well acquainted with some of the absolute best. Let us know how we can help!

 

Oct. 16, 2019

No Green Thumb? No Problem: 7 Easy Houseplants to Liven Your Living Space

If you’re buying Kailua real estate, staging your Honolulu home to sell, or when rainy weather has just got you down, then you could stand to benefit from some bright and lively houseplants!

Houseplant History

For thousands of years, people have been bringing a little piece of the outdoors into their homes. According to the legend, King Nebuchadnezzar II of Babylon commissioned the fabled Hanging Gardens for his wife, Queen Amytis, way back in 600 BC. The Greek scribe Berossus noted that the queen was not native to Babylon, so the Hanging Gardens were filled with familiar foliage to help her feel at home in a foreign land.

 

Historical findings have also documented houseplants in ancient Egypt, Greece, Rome, and among eastern civilizations. Roses and violets in marble or terracotta pots could be seen bestrewn about the homes of wealthy Roman citizens, eager to display the tallest and brightest flowers. Miniature potted plants such as the Japanese Bonsai and Chinese Penjing first appeared around 200-500 CE.

 

Throughout the Middle Ages after the fall of Rome, houseplants largely fell out of practice, surviving mainly in monasteries by monks who grew practical plants like herbs and vegetables. When the Renaissance came around, interest in houseplants was revitalized, and wealthy individuals paid handsomely for exotic specimens procured by explorers such as Christopher Columbus. Suffice it to say that humanity has long known the value of the humble houseplant!

 

Green Living

Aside from simply looking nice, houseplants have some great additional benefits. First and foremost, plants purify the air around us. The hungry buggers gobble up our exhaled carbon dioxide, and they release fresh and clean oxygen for us to breathe in—all at the low cost of a little water and sunshine. Plants also clean volatile organic compounds (VOCs) from the air in our homes, although at such a small scale that it doesn’t make much difference.

 

Additionally, houseplants have shown various health benefits in clinical trials. In one example from the Department of Horticulture, researchers found that hospital patients recovering from surgery in the presence of houseplants had lower blood pressure and less anxiety, pain and fatigue. Patients reported that the plants “brightened up the room environment, reduced stress, and also conveyed positive impressions of hospital employees caring for patients.”

 

These effects can be realized in the home or workplace by adding plants of your own! If you have a home office or even occasionally work from home, consider adding a plant or two in view. A study by researchers at Washington State University found that workers with a potted plant in their line of sight saw increases in productivity of up to twelve percent.

 

Houseplants Made Simple

You may be interested in houseplants to liven up your home’s decor or to reap the health and other benefits covered above. If you’re new to taking care of plants, however, you’re likely wary of making a purchase just to see it die in the weeks or months that follow. But fear not, as there are plenty of options for those less floriculturally-inclined.

 

Here are just a few plants that DON’T require a green thumb to keep alive and well:

 

Aloe Vera


This hardy succulent only needs to be watered every couple of weeks. Allow soil to dry completely between waterings. As an added benefit, you can cut a piece and apply the latex it secretes to ease sunburns and minor cuts.

 

Snake Plant


Another plant which doesn’t need frequent watering, this succulent’s thick and waxy leaves store plenty of moisture. No need to stress while you’re away on a two-week vacation!

 

Spider Plant


This popular houseplant is perfect for newbies. A mainstay of homes around the country, and for good reason, the spider plant can withstand plenty of neglect. Just keep them watered and in indirect sunlight.

 

Pothos


Although tropical in origin, this viney plant’s heart-shaped leaves thrive even in cooler and drier climates. They don’t mind lower light or humidity levels, making them an easy and beautiful option for any home around the country.

 

Cactus


A symbol of the dry desert, cacti are the quintessential low-maintenance plant. Allow soil to dry between waterings; roughly a week if your pot has drainage holes, longer if not. As you might have guessed, these do require lots of sunlight, so place them in a brightly-lit space.

 

Cast Iron Plant


This lush evergreen is as resilient as its namesake. It is known to survive drastic shifts in temperature, and it doesn’t need a whole lot of sunlight or water to thrive.

 

Tillandsia (Air Plants)


As their name suggests, these beauties don’t even require soil to grow! As "epiphytes," plants which extract nutrients directly from the air around them, you can hang tillandsia from the wall or ceiling as an attractive decorative piece. Just place them in bright sunlight and mist them occasionally to prevent drying, with frequency depending on the season.

 

Boost Your Quality of Life

As local real estate experts, we aim to show your listing in the best possible light. Just like a fresh coat of paint, a few well-placed plants can revitalize a room, so so we love to use them when staging a home! The truth is that you don’t need a green thumb to enjoy the mood and health benefits of indoor plants. Give some of these houseplants a shot, and let us know how you fare! We’re always happy to hear from you.

 

Posted in Lifestyle