Archive for the 'Negotiating' Category
Days on Market and Negotiating in Honolulu
May 30th, 2008 categories: Negotiating, Views of Honolulu
In my previous post on negotiating the price of a property, I state that one of the important question to ask is “How long has it been on the market?” Ah yes! The old days on market question! Days on market, or DOM, are the number of days a home has been on the market since it was listed for sale. Too many days on market should be a sign to you that a property has one or a combination of 5 different problems.
a. It is priced to high.
b. It is in poor condition
c. There is problem with the home or the neighborhood.
d. Poor marketing efforts have been made.
e. Or there is poor access to see the home.
Over the last three years, Honolulu’s real estate market has shifted from an insane seller’s market (12 to 14 days on market) to a moderate seller’s market (43 days on market at the end of April). So in May of 2008, if a property has been on the market for more than 45 days, you can assume that there are some issues keeping it from selling. Just because a property isn’t selling, doesn’t mean that the seller is all of a sudden going to become really flexible on their price. However, if a seller is going to take less it will probably happen as the DOM extends beyond 45 days. The opposite is true too.
In my experience, sellers are not very flexible immediately after a property is listed for sale. In fact, if an offer comes in too fast, sometimes a seller may believe that they priced the property too low. So if you like a property and it appears it is priced near the current market value, and it has been on the market for a short period, don’t expect to get a large reduction in the price. Consider a small reduction a major victory. Furthermore if a property doesn’t suffer from any of our 5 maladies, then expect it to sell quickly! So if you want it, plan on possibly competing for it.
In summary, be sure to determine the days on market as part of your offering strategy. Don’t rely on it solely, but be sure to get the information and add it to the mix.
By the way, today’s picture was taken on the trail above Lanikai. Since I am not a botanist, I am not sure what it is, but I found very pretty. Email me if you know what it is.
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What Price Should A Buyer offer On A Honolulu Home?
May 29th, 2008 categories: Honolulu Real Estate 101, Negotiating
This picture was taken this past weekend during a visit to Hanalei, on Kauai. The fish was interviewed and then released to his family. No fish was harmed in the making of this blog.
Buyers often ask, “What price should we offer for the property?” It seems many are looking for a rule of thumb concerning how far below the list price they should offer. There is no certain answer to this simple query. The price to be offered can be driven by many things and what follows is a list of 28 important questions to weigh when deciding on an offering price. Read the rest of this entry »
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Why Seller Shouldn’t Make Repairs & Why A Buyer Doesn’t Want Them To!
April 14th, 2008 categories: Honolulu Real Estate 101, Negotiating
No home is perfect, so it seems after a buyer completes their inspection (Purchase Contract paragraph C-51) there is almost always an attempt by the buyer to negotiate some sort of concession (price reduction, dollar credit, seller repairs). In a previous blog, I talked about the benefit of handling issues through a price reduction or monetary credit. With this post, I encourage everyone to avoid (like the plague) having a seller make repairs for a buyer and here is why:
1. It is difficult for a seller to meet or understand a buyer’s expectation as to the quality of a repair. In other words, the buyer expects it to be fixed one way and the seller has it done in another manner, then upon inspection the buyer may not accept the repair. Which means problems, problems and more problems shortly before an escrow is supposed to close.
2. By giving a monetary solution, the buyer is then in a position to have the work done to his or her liking. Furthermore, the worker completing the work is answerable to the buyer. If work is done and/or authorized by the seller, the new owner may need to get the seller involved with the contractor to have a repair fixed or redone.
3. Liability for repairs could extend back to a seller. For everyone involved, it is best that when an escrow is closed all further relationships between the seller and buyer (with the exception of friendship) are severed. No seller or buyer wants to be dealing with an issue 2 years after a sale is closed.
I am not saying that sellers should never make a repair, but you (agents, sellers and buyers) should look at all other options before going there.
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Home Inspections & Negotiating in Honolulu Real Estate
April 12th, 2008 categories: Honolulu Real Estate 101, Negotiating
Once a price and Purchase Contract (PC) are agreed to by the Seller and Buyer in the sale of Honolulu real estate, the next major hurdle to get over is the inspection of the property. This can be performed by a professional inspector (I highly recommend the use of a professional inspector) or the buyer. After acceptance of the offer or counter offer, under the terms of paragraph C-51 of the PC, the buyer has a period of time (normally between 10 and 15 days) in which to complete the inspection of the property, the public records, surrounding area and any other aspect of property or neighborhood which may be of concern. Once the inspection (s) are completed it is not unusual for a buyer to ask the seller for a concession or to even cancel the sale.
The cancellation of the sale must be done in writing and within the time frame agreed to under C-51. Assuming this is done correctly, the buyer’s earnest money deposit is returned and the property then goes back on the market.
When it comes to concessions, they can take the form of a Read the rest of this entry »
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Termites in Honolulu Real Estate?
April 8th, 2008 categories: Honolulu Real Estate 101, Negotiating
If a termite could eat wood, how much wood could a termite eat? Well, it depends whether or not the termite is of the ground variety or from the tribe of the dry wood termites. The latter can still eat you out of house and home, but it will take a lot longer than the former. Believe it or not, what you see to the left is what remains of a significant beam (4×8 or maybe a 4×10). Note that the beam is completely hollowed out. The interesting part of this discovery was that the house had no other signs of ground termite infestation. Normally, when there is this magnitude of damage, one can see evidence of the critters all over the house.
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Surveys and the case of Encroachments in Honolulu
April 7th, 2008 categories: Honolulu Real Estate 101, Negotiating
One of the issues that can be shown on a perimeter survey is called a encroachment. In layman’s terms, an encroachment is when a wall, gate, pool or some other improvement crosses the property line. This can be an improvement from a neighboring property coming onto your property or from your property going onto a neighboring lot. What to do?
First, it needs to be determined if the encroachment is de minimus and in Honolulu residential real estate this means that it is six (6) inches or less (HRS 669). If it meets this standard (de minimus) then the Purchase Contract calls for no further action. If it is greater than six (6) inches, and C-42 and C-43 of the Purchase Contract apply, then the seller is obligated to do one of two things: Read the rest of this entry »
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