So You want to buy a Foreclosure? *BWAHAHAHA!*

The judicial process of foreclosure involves the filing a lawsuit by the holder of the mortgage or deed of trust to obtain a court order to foreclose. This is used when no power of sale is present in the mortgage or deed of trust. The court declares a foreclosure and the property is auctioned off to the highest bidder. You will go to the auction with a cashiers check for 10% of the sale price and have to cough up the balance in cash at the end of the day if you are the highest bidder. These are usually held on the Courthouse Steps and can be called “Sheriff’s Auctions” here in Honolulu.

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. This states that the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. The lender or their representative, typically referred to as the trustee, may execute the sale.

There are all sorts of notices and time frames that have to occur in a non-judicial foreclosure, I’m not going to go into that here. Speak to an Attorney, Grasshopper…

Up until three days before the sale, the borrower may stop the sale by paying the lien debt, costs and attorney’s fees. Also, even if your sale goes through and you are the proud owner of a foreclosed property, in Hawaii if the property was sold because of outstanding taxes, the seller has up to one year to get current with the taxes and they get the house back. And YOU, lovely buyer, are out of your money.

I have done quite a few “BPO”s (Broker Price Opinions) for banks looking to do a Short Sale (more on that next post) prior to  foreclosure of a property. This consists of me personally going out to the house to place an opinion of sale price on the property for the bank. The home may be in pretty good shape at the time I assess it. And then I have gone back to those same properties after the foreclosure and the occupants have been evicted.

To say these properties have been trashed would be like saying Katrina was a Spring Shower. Plumbing ripped out, copper wiring ripped out, Appliances removed or destroyed, walls smashed in and bathtubs used as toilets. And those are some of the clean ones!  Vindictive former owners will destroy a property as a “Get even” with the evil bank that talked them into a big loan they could not afford.  Yep, it’s always the Lender and the Real Estate Agents fault, no personal responsibility there! I will be the first to admit there were quite a few lenders and agents that were crooked and went into a transaction just to make money, but don’t tell me there were not any greedy buyers involved. If you believe that I have a nice Bridge in Brooklyn for sale…

I’m not going to outline the process here, if you still want to buy a foreclosure you should probably saddle up with a good Real Estate Attorney. And I’m not going to help you buy a foreclosure. I have more fun things to do like Root Canal Surgery…

“I’ll sell it myself and save the Commission!”

You still want to sell it yourself? I do admire your tenacity! Let me ask you this; are you willing to do the tasks it takes?

You will need to:

1) Promote your home for sale in local media, online and maybe pay for a limited service listing just to get your home in the local Multiple Listing Service (MLS) so other agents can find your property.
2) Pay for signage.
3) Contact local agents to let them know you have a home for sale.
4) Take time off from work to be available to show the property.
5) Assess who is a legitimate buyer who has pre-approval from a lender and who is not ready, willing and able to buy.
6) Recommend lenders to buyers that need to get a loan.
7) Prepare and review contracts, negotiate contracts to a win-win acceptance of an offer.
Open escrow with a Title Company and keep escrow deadlines on track.
9) Carry Errors and Omissions Insurance so if there is a screw up in the contract you are covered in mediation and arbitration or worst possible case a lawsuit in court.

Hmm…so my job isn’t really as easy as you think, Mr. & Mrs. Seller. Selling a home in today’s market is a full time job, are you willing to give up yours to do mine?

How is your Agent Marketing your Property?

May Showers bring…Mud.

The National Association of Realtors defines a healthy Market as one in which there is a six month supply of homes available.  Our March numbers were 14.7 months for single family and 16.1 for condos which was a near record high amount of inventory. The great news is in April we had a 9.7 months supply for single family and a 10.1 months supply for condos, so you can see the trend is going in the right direction!

The inventory of active listings for April was 1,822 single family homes and 2,514 Condos, reflecting a drop from previous months.  Sales nudged up slightly with 189 SF and 257 Condos sold.

We are roughly at the sales volume we were at in 1999, according to the Honolulu Board of Realtors data. Real Estate trends here typically move in a ten year cycle. We saw a spike in the early 90′s due to foreign investment, which tanked as the Japanese Stock market bubble burst. Our spike in the mid-2000′s was due largely to the availability of domestic funds because of the loosening of mortgage requirements. And we all know where that has gotten us now…

You are demonstrating to buyers that you have nothing to hide and that you are going the extra mile to provide full disclosure of the property condition. Buyers are less likely to come back and cause issues stating that you concealed known defects when a home inspection report is provided prior to sale.

This also enables you to do any repair work prior to the sale. You can repair everything, or you can repair some things and disclose the rest, leaving it up to the buyer how they want to structure their offer.

Keep in mind it is not part of the inspector’s report to suggest methods, materials, or costs of corrections for any deficiencies. Keep those suggestions to a neutral, third party licensed contractor.

Aloha,
Biz

Commercial Market is great…

if you are a Tenant.

Even some of the Big Dogs are biting the bullet: Niketown in Waikiki is selling its flagship building and Chicago-based General Growth Properties just recently filed Chapter 11.

In Hawaii, General Growth owns Ala Moana Center,  the largest open-air shopping mall in the world, and Ward Centers. These are two of the largest shopping centers in the state. And if you stroll around either one of them, you’ll see quite a few empty stores…

Industrial is always a winner here because we don’t have much land to sprawl out on, and really tight zoning keeps growth to a minimum. So we are getting roughly $.85- $1.50 per square foot. Some a little lower, some a little higher depending on the property and the use.

I’ll be having an upcoming brown-bag lunch seminar in May for commercial tenants: “The Care and Feeding of your Commercial Lease- How not to get Bitten!” More on that as the date gets firmed up, or email me for more info!

Aloha from Hawaii,
The Real Estate Biz

I can’t believe it’s April already!

The sellers are realizing that the market is still sluggish and if they don’t want to hang on to their property for several months (while inventory is high and better priced properties are selling)…they need to jump on it.

With so much inventory on the market the sellers don’t have the luxury of overpricing their properties.

Sales are up over the first two months of the year. This indicates to me that buyers who have been sitting on the fence to see how low the market will go have realized that if they can qualify and are ready to buy, THEY need to jump on it.

What buyers REALLY need to jump on right now is the First Time Homebuyer Tax Credit of $8,000. Buyers must not have owned a home for the past three years to qualify as a “first time buyer” and they are entitled to an $8,000 ( or 10% of the homes value, whichever is less) refund on their 2008 or 2009 taxes. To qualify, the purchase must be made between January1, 2009 and November 30, 2009. Some people think it’s December 31 but that is incorrect. If you want more information about this great opportunity, contact me and I’ll be happy to help.

If you want to know what exactly is going on in your neighborhood give me a call, I can give you a “Market Snapshot” specific to your area.

A bit late with the Stats… I’ll blame writers block!

“The more we get economic data points like these, the more there’s an indication that stabilization in the economy is starting to unfold,” said Jonathan Basile, an economist at Credit Suisse Holdings USA in New York.

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