Advice from one of the world’s richest men

Median sale price for single-family home drops to $585,000

The median sale price of single-family homes last month was down 8.5 percent to $585,000 on significantly fewer sales compared with the same month last year, according to the Honolulu Board of Realtors.

Condominiums sold for a median $310,000 in April, down 5.2 percent from a year ago.
The declines were close to where they have been since January. For the first four months of the year, the median single-family home sale price is down 8 percent to $575,000, while the condo median is down 7.3 percent to $305,000.
In April, there were 189 single-family home sales, down 26.2 percent from a year earlier. There were 257 condo sales, down 33.1 percent from a year earlier.
For the first four months of 2009, the number of single-family home sales are down 32.4 percent to 628, and condo transactions are down 42 percent to 824.

~Honolulu Advertiser May 4, 2009

********************************

Warren Buffett on the Housing Industry

Warren Buffett is an American investor, businessman and philanthropist. He is one of the world’s most successful investors and the largest shareholder and CEO of Berkshire Hathaway. He is constantly ranked by Forbes as the second richest person in the world after Bill Gates with an estimated net worth of approximately $37.0 billion.

“In the last few months you’ve seen a real pickup in activity although at much lower prices,” Mr. Buffett said, citing data from Berkshire’s real-estate brokerage business, HomeServices of America Inc., which is one of the largest in the U.S.

In California, medium and lower-price homes — under $750,000 — have been selling more, though there hasn’t been a bounce back in sale prices, Mr. Buffett said. “We see something close to stability at these much-reduced prices in the medium to lower part of the market.”

*********************************

Recently released national statistics for existing homes show that sales prices rose 4.2% from February to March, which is much higher than the predicted 1.8%. Four facts stand out:

1.  First-time buyers accounted for 53% of the transactions (stats based on contracts written before the new tax credit).

2.  Distressed properties accounted for over half of the transactions.

3.  Investors are starting to take advantage of great prices in some areas. Real estate-related funds are making a comeback. Some, such as Equity Residential Properties, are up 20%.

4.  New inventory is shrinking fast as banks are beginning to offer programs for renegotiating existing loans rather than foreclosing.

The federal government is offering $8,000 tax credit to a 2008 return that never needs to be repaid. This offer is for first time homebuyers as well as anyone who hasn’t owned a home for three years. Lawrence Yun, National Association of Realtors’ Chief economist predicts, “By early summer we should be seeing a positive impact on home sales resulting from the stimulus provisions.”

So……the hottest question in real estate right now is this: Is it time to start buying Hawaii real estate?

Answer: One argument for YES is that with lower home prices, there are deals to be made at every price point. Some areas that were booming in earlier times, such as Las Vegas, have homes for sale at 40% less than a year ago. A second argument could be made that a 4.75% fixed 30-year mortgage rate makes buying in destination areas like Las Vegas quite tempting.

So the right question may be: What would you regret if you bought now? Most of us look back over our real estate history and regret that we didn’t buy sooner, hold longer and buy more.

Here is a quote from Warren Buffet:

“I will tell you how to become rich. Be fearful when others are greedy. Be greedy when others are fearful.”

Right now the general public is fearful of the real estate market and many are waiting for the market to bottom out. Read his quote again and you may realize that now may be the time to buy. There was a similar market like this back in the late ’90’s and early 2000’s when the market was low and there were also many foreclosures. At that time many real estate investors started buying these properties and created tremendous amount of equity when the market peaked just a few years ago. They sold those properties, held on to the cash these last few years and are starting the cycle again by buying real estate with even lower interest rates than those rates in the early 2000’s.

***********************************

Purchase a home, get an $8,000 Tax Credit

The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.  The credit does not require repayment.  Most of the mechanics of the credit will be the same as under the 2008 rules:  the credit will be claimed on a tax return to reduce the purchaser’s income tax liability.  If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

Click here for more information

*********************************************

FORECLOSURES

Right now we are seeing foreclosures at all time highs. We are seeing home values decrease and properties over-leveraged. Could this be the time for you to buy a foreclosed property? Deciding to invest in foreclosures is an important step, and investing in a foreclosure may be right for you. Regardless, take the time to prepare yourself for the process of purchasing a property in foreclosure. It is important to learn the risks and rewards associated with the foreclosure property market.

Here is a simple way to learn about foreclosures. Watch the DVD of Abe Lee talking about foreclosures on The Hawaii Real Estate Report. Go here for more information 

*********************************************

Is Your Home Healthy and Safe For Children?

Taking preventive measures to protect your children against unintentional injuries at home is essential. Each year more children die from preventable injuries than from all childhood diseases combined. With foresight and action, you can help prevent burns, cuts, falls, poisonings, drowning, choking, and other serious injuries.

Use these four checklists to ensure that your home is healthy and safe for the children living in it:

In the Bedroom

• Install smoke alarms outside bedrooms and on every level of the home. 
• Test smoke alarms at least once a month and change batteries at least once a year. 
• Practice fire escape routes and identify an outside meeting place. 
• Place a baby to sleep on his or her back in a crib with no pillows or soft bedding underneath. 
• Use a crib that meets national safety standards and has a snug-fitting mattress. 
• Never use an electric blanket in the bed or crib of a small child or infant. 
• Keep small toys, balloons, and small balls away from young children. 
• Check age labels for appropriate toys. Make sure toy storage chests have safety lid supports. 
• To prevent strangulation, use safety tassels for mini blinds and avoid strings on children’s toys and pacifiers. 
• Install carbon monoxide (CO) alarms outside bedrooms to prevent CO poisoning.

In the Bathroom

• To prevent poisonings, lock away all medicines and vitamins, even those with child-resistant packaging. 
• Have syrup of ipecac on hand, but use only at the recommendation of a poison control center or physician. 
• Never leave a young child alone in the bathroom, especially in a bath. 
• Before bathing a child, always test bath water with your wrist or elbow to make sure it’s not too hot. 
• To prevent scalds, set the water heater thermostat to 120? F and install anti-scald devices. 
• Make sure bathtubs and showers have non-slip surfaces and grab bars. 
• Keep electrical appliances, like hair dryers and curling irons, out of the reach of children and away from water.

In the Kitchen

• Keep knives, plastic bags, lighters, and matches locked away from children. 
• Avoid fires and burns by never leaving cooking food unattended, turning pot handles to the back of the stove, and keeping hot liquids and foods away from the edges of tables and counters. 
• Make sure you and your children know the STOP, DROP, and ROLL procedure in case their clothes catch on fire. Keep appliance cords unplugged and tied up. Replace any frayed cords and wires. 
• Securely strap young children in high chairs, swings, and other juvenile products. 
• Do not give young children hard, round foods that can get stuck in their throats – like hard candies, nuts, grapes, popcorn, carrots, and raisins. 
•  Avoid scald burns by keeping children away from the hot water taps on drinking water coolers.

In all Living Areas

• To prevent asthma attacks, eliminate sources of mold, dust, and insects, such as cockroaches. If you have a pet, keep it and its bedding clean and keep the pet off the furniture. 
• If you must smoke, avoid smoking in the house, and especially around children. 
• Make sure furnaces, fireplaces, wood-burning stoves, space heaters, and gas appliances are vented properly and inspected annually. 
• Use safety gates to block stairways (and other danger areas), safety plugs to cover electrical outlets, and safety latches for drawers and cabinets. 
• Keep children – and the furniture they can climb on – away from windows. 
• Install window guards (on windows that are not fire emergency exits). 
• To prevent falls, keep hallways and stairways well-lit and use non-slip backing for area rugs. 
• Keep cleaning solutions, pesticides, and other potentially dangerous substances in their original, labelled containers, and out of the reach of children. 
• If you have guns or rifles in your home, store the firearms and ammunition in separate containers and lock them out of the reach of children. 
• Learn First Aid and Cardiopulmonary Resuscitation (CPR). 
• Keep an updated list of emergency telephone numbers, including your local poison control center, physician and hospital emergency room, next to every phone in your home. 
• Make sure your family knows what to do during a natural disaster. In an earthquake, drop to the floor and get under something sturdy for cover; during a tornado, take shelter in a basement or an interior room without windows; and during a hurricane stay away from windows. Have handy supplies of food, flashlights, and water.

****************************************

The 9 Step System To Get Your Home Sold Fast and For Top Dollar

The Real Estate Market Has Changed . . .

“Buyers are far more discriminating, and a large percentage of the homes listed for sale don’t sell the first time. It’s more critical than ever to learn what you need to know to avoid costly seller mistakes in order to sell your home fast and for the most amount of money.”

The 9 Step System to Get Your Home Sold Fast and For Top Dollar

Selling your home is one of the most important steps in your life. This 9 step system will give you the tools you need to maximize your profits, maintain control, and reduce the stress that comes with the homeselling process:

1. Know why you’re selling, and keep it to yourself.

The reasons behind your decision to sell affect everything from setting a price to deciding how much time and money to invest in getting your home ready for sale. What’s more important to you: the money you walk away with, or the length of time your property is on the market? Different goals will dictate different strategies.

However, don’t reveal your motivation to anyone else or they may use it against you at the negotiating table. When asked, simply say that your housing needs have changed.

2. Do your homework before setting a price.

Settling on an offering price shouldn’t be done lightly. Once you’ve set your price, you’ve told buyers the absolute maximum they have to pay for your home, but pricing too high is as dangerous as pricing too low. Remember that the average buyer is looking at 15-20 homes at the same time they are considering yours. This means that they have a basis of comparison, and if your home doesn’t compare favorably with others in the price range you’ve set, you won’t be taken seriously by prospects or agents. As a result, your home will sit on the market for a long time and, knowing this, new buyers on the market will think there must be something wrong with your home.

3. Do your homework.

(In fact, your agent should do this for you). Find out what homes in your own and similar neighborhoods have sold for in the past 6-12 months, and research what current homes are listed for. That’s certainly how prospective buyers will assess the worth of your home.

4. Find a good real estate agent to represent your needs.

Nearly three-quarters of homeowners claim that they wouldn’t use the same realtor who sold their last home. Dissatisfaction boils down to poor communication which results in not enough feedback, lower pricing and strained relations. Another FREE report entitled 10 Questions to Ask Before You Hire an Agent” gives you the straight, to-the-point questions you should be asking when you interview agents who want to list your home. You can obtain a  FREE copy of this report from my website.

5. Maximize your home’s sales potential.

Each year, corporate North America spends billions on product and packaging design. Appearance is critical, and it would be foolish to ignore this when selling your home.

You may not be able to change your home’s location or floor plan, but you can do a lot to improve its appearance. The look and feel of your home generates a greater emotional response than any other factor. Clean like you’ve never cleaned before. Pick up, straighten, unclutter, scrub, scour and dust. Fix everything, no matter how insignificant it may appear. Present your home to get a “wow” response from prospective buyers.

Allow the buyers to imagine themselves living in your home. The decision to buy a home is based on emotion, not logic. Prospective buyers want to try on your home just like they would a new suit of clothes. If you follow them around pointing out improvements or if your decor is so different that it’s difficult for a buyer to strip it away in his or her mind, you make it difficult for them to feel comfortable enough to imagine themselves an owner.

6. Make it easy for prospects to get information on your home.

You may be surprised to know that some marketing tools that most agents use to sell homes (eg. traditional open houses) are actually not very effective. In fact only 1% of homes are sold at an open house.

Furthermore, the prospects calling for information on your home probably value their time as much as you do. The last thing they want to be subjected to is either a game of telephone tag with an agent, or an unwanted sales pitch. Make sure the ads your agent places for your home are attached to a 24 hour prerecorded hotline with a specific ID# for your home which gives buyers access to detailed information about your property day or night 7 days a week without having to talk to anyone. It’s been proven that 3 times as many buyers call for information on your home under this system. And remember, the more buyers you have competing for your home the better, because it sets up an auction-like atmosphere that puts you in the driver’s seat.

7. Know your buyer.

In the negotiation process, your objective is to control the pace and set the duration. What is your buyer’s motivation? Does s/he need to move quickly? Does s/he have enough money to pay you your asking price? Knowing this information gives you the upper hand in the negotiation because you know how far you can push to get what you want.

8. Make sure the contract is complete.

For your part as a seller, make sure you disclose everything. Smart sellers proactively go above and beyond the laws to disclose all known defects to their buyers in writing. If the buyer knows about a problem, s/he can’t come back with a lawsuit later on.

Make sure all terms, costs and responsibilities are spelled out in the contract of sale, and resist the temptation to diverge from the contract. For example, if the buyer requests a move-in prior to closing, just say no. Now is not the time to take any chances of the deal falling through.

9. Don’t move out before you sell.

Studies have shown that it is more difficult to sell a home that is vacant because it looks forlorn, forgotten, simply not appealing. It could even cost you thousands. If you move, you’re also telling buyers that you have a new home and are probably highly motivated to sell fast. This, of course, will give them the advantage at the negotiating table.

For more information about any of our innovative homeowners programs, give us a call.