Archive for the 'Negotiating Contracts' Category
Multiple Offers on Honolulu Real Estate & Options For Handling Them
September 12th, 2008 categories: Negotiating Contracts
I know you must find it shocking for me to discuss multiple offers on Honolulu real estate, as many people assume the market is slow. Believe it or not, I have been having multiple offers on a number of my listings.
So how can one handle more than one offer on a property? To make this simple, let’s first assume that each offer is substantially the same, because if one offer is significantly better the other offers, it may be best to work with the strongest offer. Here are your options.
1. Go back to all parties and tell them that you have multiple offers and that they have until a certain date and time to present their best offer. Once those offers are received, the seller can then pick the best one with which they would like to work.
2. Work with the offers in the order that they were received. Comment, if I represent a seller, I have observed that this is not the best way to get to the best buyer, as you are letting the clock decide who is best to work with. Just because a buyer delivered their offer first, does not mean that they are the best buyer.
3. Issue multiple counter offers. With the proper contractual language, a seller may issue simultaneous counter offers to multiple parties. In the event that more than one counter offer is accepted, then the language should allow the seller to choose the contract they want to work with and cancel the rest.
There are variations of these methodologies, but in general these are your options. When I represent a seller, I find the third option to work the best. It positions a seller to be able to have more than one qualified buyer from which to choose and it enables the seller to create terms and conditions that best meet the seller’s needs.
Today’s picture was taken from the hiking trail behind my house. It is looking over the upper end of Kilauea Avenue, Kahala, the Waialae Golf Course and you can see Blackpoint on the right.
OTHER POSTS WORTH READING!
Loans For College Condos
The Value Of A Realtor
Realtor Code of Ethics
Determining Offering Prices
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Sell Your Honolulu Home Before Buying Another!
August 25th, 2008 categories: For Sellers, Negotiating Contracts
Sara MacLennan and Sheldon Johnston, real estate agents in Edmonton, recently wrote a great article regarding the problems created by Buyers making offers on their new home before their old home is sold. They say the following.
“In order to get this condition accepted, every other part of your offer needs to be very strong. When we’re representing a seller and we receive a subject to sale offer, we will generally advise our clients to counter strong. The sellers really have nothing to lose, since the likelihood of the deal actually going together is slim to none. So as a buyer, you end up in a weak negotiating position, and will likely have to pay top dollar, with a large deposit and tight time frames on your other conditions – in fact, you could very easily end up paying for an inspection, only to lose the home to another party.”
CLICK HERE TO READ THE ENTIRE POST
I concur with their findings and highly recommend that you get your home sold before you try to buy another.
Today’s picture is another fish that I had a chance to meet on my recent vacation.
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The Hard Conversation
August 11th, 2008 categories: For Buyers, For Sellers, Negotiating Contracts
Real estate is a great business. As a Realtor, I have the opportunity to represent people in the sale or purchase of one of their most significant sets. As a result, I am required to have ongoing consulting and advisory conversations concerning various aspects of a transaction. I classify these conversations into 2 groups, easy and hard.
All most anyone can have in the easy conversations. These include things like the following.
1. Congratulations your offer was accepted.
2. Your loan is approved.
3. You received a lower interest rate than we expected.
4. The seller took our price on the offer.
5. The seller agreed to close earlier and this will allow you to move in when you wanted to.
6. The seller agreed to pay $5000 of your closing costs.
7. The buyer is willing to pay full price.
8. The buyer is paying cash.
9. There are a myriad of other “good news” carrying reports.
Examples of hard conversations are as follows:
1. Your will loan was approved, but it’s at a higher rate than you wanted.
2. The buyer will be using a VA loan and this means you will be paying more closing costs.
3. Based on the condominium documents it appears there may be a special assessment made in the near future.
4. The open land next to this home is zoned residential and could be developed into a subdivision at some point in the future.
5. The buyers loan approval was due on Monday and it loan process doesn’t appear to be going well, you may want to consider canceling the sale.
6. We’ve been on the market 30 days and have not had any offers, based on this activity level, it is time to consider reducing the price.
7. If we don’t reduce the price you could end up getting less money six months to a year from now.
While almost any real estate agent can have the easy conversations. It takes an experienced professional to have hard conversations. And now you’re thinking what’s the point?
The point is this. A professional real estate agent is good at both conversations and goes out of their way to make sure that any required hard conversations are handled in a timely manner. A timely manner is key, because the longer a conversation is put off, the greater a potential issue can grow in magnitude. In my experience, many agents “go underground” when it is time to deal with inconvenient things. A professional wants to deliver a clear picture of the situation, possible solutions and potential outcomes of a course of action. Ultimately, the client is the party responsible for making a decision concerning their transaction, but a realtor’s job is to guide the process so the client can make the best decision for himself or herself.
In closing, when interviewing a realtor to represent you, be sure to determine that they were bringing the professionalism necessary to have the easy and, more importantly, hard conversations that will protect your interests.
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Buying Property Through the Bankruptcy Court
June 19th, 2008 categories: For Buyers, Negotiating Contracts
I have been fortunate to represent a number of U.S. Bankruptcy Trustees in the sale of Honolulu real estate. I find that many people think that the bankruptcy sales process is the same as a foreclosure. In some ways it is similar and in other ways it is totally different. Rather than comparing and contrasting the two processes, I am going to walk you through an outline of the bankruptcy (Chapter 7) sales process.
1. An owner of a property files Chapter 7 Bankruptcy and becomes known as the debtor. This will “stay” creditors from taking action to exercise their rights. Read the rest of this entry »
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Honolulu’s Twin Brothers of Different Mothers!
June 4th, 2008 categories: For Buyers, For Sellers, Negotiating Contracts
To be politically correct, I need to say “Twin Sisters of Different Fathers.” I know what you’re thinking, where is Keahi going today. During yesterday’s workout, I began pondering the differences between buyers and sellers of real estate and I came to the conclusion that, though they are on opposite sides of the negotiating table, in many ways they are the same. The more I thought, the more I understood that sellers who price their homes to high are like buyers who make “low ball” offers.
Both of them have the following characteristics.
1. They ignore the facts. In most cases, recent comparable sales will set the value of a property within a certain range of value, yet they try to get a price well above or below this range. If gold is generally priced at $800 an ounce, what makes a buyer think they can buy it for $700 an ounce, a seller think that they can sell at $900 an ounce.
2. They ignore professional advice. If a client works with an experienced real estate agent or broker, that professional most likely has many years of experience and has sold hundreds of homes. Yet when a price is suggested, the client ignores that experience and wants to come in with an offer outside the current market. Attorneys have a saying, and I paraphrase, “An attorney that represents themselves has a client for a fool.”
3. They don’t trust their agent. I have seen situations where the agent/client agent client relationship is very adversarial. Both parties seem literally at one another’s throat. I don’t work in abusive relationships, so I haven’t experienced this bizarre happening, but why would the agent and/or client put themselves in that position. A word of advice for both of you, there are too many fish in the ocean to work with someone you don’t trust.
4. They are unrealistic. In any Honolulu real estate market, there is a price range for every property that will be widely supported by the majority of the buying community. If a seller is too far above that price they won’t sell, if a buyer tries to buy too far below that price, they won’t be able to buy. Go back to my previous post on offering prices (both buyers and sellers) and you will have a clear road map to arriving at a fair offering price.
In summary, the market is the market. If you are a buyer and prices are above your budget, than you are not a buyer in that market. If you are a seller and prices are too far below your expect price, than wait and on the next up cycle you might get there. The one difference between these two parties is that the seller can wait, because over time the market most likely will catch up to the desired price. However, by waiting, the buyer will become that much further priced out of the market. As my father says, “Choose wisely!”
Today’s picture is of great vintage home that can be found on Sierra Drive.
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To Add Or Not To Add to Your Honolulu Contract?
June 4th, 2008 categories: Negotiating Contracts
Here is another part of your Honolulu contract quiver. Coldwell Banker Pacific Properties uses an Addendum to the Purchase Contract and many firms mirror this document. CLICK HERE TO GET A COPY. For me, one needs to ask whether or not this is necessary and if it brings some additional language that justifies its addition to the contract. I say no!
The Hawaii Association of Realtors Purchase Contract is well written and it already addresses any additional issue which may be included in the Coldwell Banker Addendum. Read on and learn.
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Hawaii’s Purchase Contract Makes Honolulu Real Estate Easy!
June 4th, 2008 categories: Negotiating Contracts
If you are planning on buying or selling real estate in Honolulu it is good idea to familiarize yourself with the Hawaii Association of Realtors Purchase Contract. Those of us who have been around for a long while, have had the term Deposit Receipt Offer and Acceptance (DROA) steeped into our memory, but the new contract is called the Purchase Contract (PC).
The PC is a binding contract and it contains all of the agreements made between buyer and seller. A copy is delivered to escrow and escrow follows the terms in the PC to make sure the terms and conditions agreed to the buy the buyer and seller are met. Get a copy by double clicking on the link below. Knowing the document will help your real estate transaction go much more smoothly (I have included copies of the AS IS Addendum and Counter Offer too).
CLICK HERE FOR A COPY OF THE PURCHASE CONTRACT, AS IS AND COUNTER OFFER.
Today’s picture was taken this past Sunday. I was holding canoes at the starting line at Keehi Lagoon. This is view looking straigt down the line.
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Days on Market and Negotiating in Honolulu
May 30th, 2008 categories: Negotiating Contracts
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: For Buyers, Negotiating Contracts
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: For Sellers, Negotiating Contracts
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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