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Things That Can Go Wrong When Buying and Selling a House

In A Midsummer Night’s Dream, Shakespeare wrote, “The course of true love never did run smooth.” The course of buying and selling a house isn’t exactly in the same league, but there are plenty of things that can go wrong in the process once the purchase offer is accepted. While an issue may affect a buyer or seller, the end result affects both parties. Until there is an actual signed closing, there’s always the potential for something to go awry.

Low Appraisal
Say the buyer makes an offer at the asking price, and the seller agrees. That’s a deal, right? Not so fast – unless the buyer is paying cash, the lender has a say. That means the house requires a professional appraisal. If the appraisal comes in below the asking price, the lender will not approve the mortgage. The parties have a few options here. The seller can agree to sell at the appraised price, or the buyer may agree to make up more of the difference between the original price and the appraisal in cash. The seller may also challenge the appraisal. In a hot market, recent comparable sale prices, or comps, may not reflect the very latest sales. The house may have unique characteristics that make finding true comps difficult.

Problem Inspection
This is the ticking time bomb. The seller may think the house is in good shape, and it appears that way to the average observer. The home inspection, however, turns up serious issues, such as foundation issues, termites or mold. A seller may want to spring for a home inspection prior to putting the house on the market, so the odds of unwelcome surprises are lower.
Buyers must also know what is and isn’t a dealbreaker when it comes to a home inspection. Sellers should agree to make minor repairs or reduce the selling price by the few thousand dollars needed to make them, but buyers shouldn’t expect major price reductions for relatively basic fixes.

The Deal Falling Through
A buyer’s offer made in good faith on a home may not work out that way. It’s possible they can’t come up with deposit money, or the amount of money they expected to borrow for the mortgage isn’t approved. Job loss, health concerns, divorce and a host of other life circumstances can change the buyer or seller’s status overnight, and these aren’t items either party can foresee.

Contingency Clauses
If the contract contains a contingency clause stating that the buyer must sell their house before buying the new property, a deal falling through on their end means the deal falls through on the seller’s end as well. It’s a domino effect if the seller had a similar clause in the contract of a home they planned to purchase.

Paperwork Problems
Buying and selling real estate involves tons of paperwork. Any documentation error can set the process back. A title company may discover liens on the property or cloudy title conditions. These situations are usually repairable, but can delay closings and subsequent move-in dates.

Your real estate agent can help you avoid many of these pitfalls. They know the things that can go wrong when buying and selling a house, and whether you are the buyer or seller, aim to have the course of the sale run as smoothly as possible. Contact Island Realty Group LLC at 808-689-7407 or IslandRealtyGroup@irghi.com

August 23, 2017

Real Estate Terms You Should Know When Buying and Selling

Buying or selling a house is both an exciting and stressful time. Learning the terminology and how the process works is daunting, especially for first-time buyers. Here’s a list of must-know real estate terms that can help you navigate your home buying or selling journey:

Appraisal – the lender needs to know the value of a dwelling before approving a mortgage. A lender is certainly not going to lend a buyer more money than a home is worth. A professional appraiser looks at the overall condition of the home and checks recently sold comparable properties – “comps” – to come up with a number. Sellers don’t like low appraisals either, but often the buyer and seller can work out a deal if the appraisal price isn’t too far off the agreed upon sale price. For example, if the original price was $600K but the appraisal came in at $575K, the seller may agree to sell for the appraised price.

Closing costs – Hawaii has some of the highest closing costs in the country. At closing, the buyer should expect to pay between 3 to 5 percent of a dwelling’s value in closing costs, not including attorney fees. These closing costs include the appraisal, settlement, home and pest inspection, loan origination fees, title insurance and possibly survey fees.

Contingency clauses – these clauses are standard in every real estate contract. They include loan, inspection, title and appraisal contingencies. If any of these items fail to pass, the buyer is released from the contract. A non-standard contingency clause includes the sale of the buyer’s current home prior to closing on the new property. There is no advantage to this clause for the seller, and sellers should avoid this contingency if possible.

Disclosure – Most Hawaiian real estate transactions require disclosure statements from the seller to the purchaser. Exceptions include sales to family members and foreclosures. The disclosure must reveal any material condition that could affect the property’s value. Material condition may refer to prior flooding or any number of situations involving the property. The disclosure form does not have to reveal anything that does not affect the physical property, such as a crime scene site.

Pre-approved vs. pre-qualified – these terms sound so much alike, some buyers may think they’re interchangeable. Pre-qualifying is the first step toward obtaining a mortgage, and a lender can give you a ballpark figure based on the basic information provided. However, it doesn’t involve analysis of your credit report – and that makes all the difference. Pre-approval requires filing out a mortgage application, and with all of your financial documentation and credit report information, the lender gives you an actual amount for which you are approved.

Title Insurance – this type of insurance guarantees that the seller has the right to sell the property, and that title to the property is “clear,” – there are no liens or similar encumbrances on the site. The title insurance company searches all public records to make its determination. If there are issues with the title, it is usually possible to fix them before the sale. For instance, the owner may owe some back taxes on the property, with a resulting tax lien. Once the lien is paid, the sale can go forward.

Whether buying or selling your home, choosing the right real estate agent is crucial. We guide you through the entire procedure, and ensure you understand what is happening every step of the way. Contact Island Realty Group LLC at 808-689-7407 or IslandRealtyGroup@irghi.com

Decorating for Summer

Summer Decorating Tips

Are you in the mood for some basic redecorating for the summer season? Hawaiians are accustomed to great weather, but it’s always fun to update your home for most relaxing time of year. If you’re handy, you can create special projects giving your home a special summer dazzle.

Lanai Dining

In summer, you and your family likely spend more time than ever in the lanai. Make this space as lovely – and usable – as possible. While tile is a beautiful and practical choice for flooring, it’s also expensive. If your lanai flooring is concrete, it can still look terrific when painted. Another option: An indoor/outdoor rug with bold print.
Create an ideal summer dining spot in your lanai using wicker or other bright, natural materials. Combine comfortable dining chairs with colorful cushions and interesting tableware to make ordinary meals a more sensuous experience. As night falls, light candles for illumination.

The Lush Life

Blur the line between the tropical indoors and outdoors with summer plantings. Attractive containers of luscious plants on the lanai complement those growing in your backyard. You can also use plants to minimize any shortcomings. If you live on a busy street, growing certain lush, flowering foliage helps reduce the noise, as well as offering privacy. Purchase plants from a reputable nursery, where store reps can advise you on the best choices for your situation and instruct you in proper care.

A Privacy Palette

Want a little more privacy in your backyard without breaking the bank. Consider a privacy garden palette – or really, a privacy pallet with a palette. All you need is a wooden pallet – make sure it isn’t chemically treated – and your imagination. First, sand and stain the pallet, then seal it. Add plant holders. Mount the pallet by simply putting two large containers of plants on each side to keep it upright. Set it up for privacy and add colorful plants – that’s the palette part. A fragrance palette fills your lanai with delightful scents, or you could try flowers with different color schemes. The privacy palette also makes a suitable herb garden. In fact, you can use both sides of the pallet for plantings, as long as you don’t overload it. Electronic lights draped around the pallet provide soft, sparkling nighttime luminescence.

Contact Us

If you’re looking to buy or sell a home at any time of year, call Island Realty Group, LLC today at (808) 689-7407. We’ll find you the house of your dreams and get you the best price on your current home.

May 24, 2017

Summer Maintenance

It’s Summertime … and There’s Maintenance to Do

Summer and “home maintenance” aren’t exactly synonymous, but it really is a great time of year to get certain things done. Unlike other parts of the country, in Hawaii the weather doesn’t factor into getting work done, but longer daylight hours and perhaps early Friday dismissal give you more time. Since you’ll probably entertain more frequently in summer, you want your home to look top-notch.

Air Conditioning

You don’t want to lose your air conditioning in the midst of summer heat. Have your annual inspection scheduled prior to the onset of really hot weather. A regular tune-up prevents many air conditioning system breakdowns. While a professional should check the system and perform any work needed, make sure to monitor the filters consistently and keep them clean.

Window Sealing

Even if your air conditioning system is in prime working order, you’re losing cool air – and running up your electric bill – if your windows are properly sealed. Now is the time to check all of your windows, and caulk areas where sealing is needed. A good window washing each summer also adds to the beauty of your home.

Sealing and saving energy and money isn’t limited to windows or doors. Examine your walls, ceilings and other areas for any cracks and caulk or insulate them. That’s another way to keep cool air inside while not making your air conditioning system work harder.

Roof and Gutter Woes

An annual roof maintenance check before it gets too hot is always a wise idea. If you feel comfortable accessing the roof yourself, look for any broken or otherwise compromised shingles. Minor roof repairs as needed can save you the expense of replacing the entire roof and extend the roof’s life. You don’t want to wait until an emergency occurs and you are placing buckets all over your floors.

If your gutters are broken or otherwise not working correctly, you’ve got a problem come the rainy season. Look for any breaks or cracks, and have gutter or roofing professional fix them. If it’s simply a matter of cleaning the gutters, you can probably do that yourself.

Pressure Washing

In Hawaii, you’re always fighting a battle against mold and mildew. A yearly pressure washing not only improves the look of your home, but gets rid of bacteria. Pressure or power washings also work well to clean driveways and any concrete surfaces. Your home just sparkles when guests come over for barbeques.

Clean and Close the Blinds

Give your blinds a good cleaning prior to summer, and keep them closed during the hottest part of the day to reduce the temperature in the house. Closing the blinds can reduce indoor temperatures by as much as 10 degrees, again saving energy and utility bills.

Contact Us

If you’re looking to buy or sell a home at any time of year, call Island Realty Group, LLC today at (808) 689-7407. We’ll find you the house of your dreams and get you the best price on your current home.

Make Your Home Look and Feel Bigger

The Right Paints, Finishes and Tricks to Make Your Home Look Larger

If you’re thinking about putting your home on the market, you want to spruce it up as much as possible for buyer appeal. If your property is relatively small, it makes no sense to spend money adding on to it prior to a sale – and in many cases that’s not a possibility – but by using the right paints and finishes, you can make a small space appear much larger. A few optical tricks allow potential buyers to think the home is larger than the square footage indicates.

Stretch Ceilings

A stretch ceiling gives a room an almost magical appearance. What’s a stretch ceiling? It’s a membrane using natural or manmade light sources to create a luminous, spacious effect. Although products such as Extenzo stress the ceiling, the material is useful for partitions and other items useful for fostering a desired ambiance. Easily change the intensity, light color and even size of the ceiling, as the material is designed for fast transformation.

Bright Colors

A good coat of paint prior to listing your home makes rooms look neat and clean, but color choice can make a space look smaller or larger. It’s always best to use neutral colors when painting for resale, but using light, bright shades with trim and moldings painted in a lighter tone. For example, you might paint your living room off-white, with white trimmings. The lighter trim makes the walls appear set back – and the room looks larger. Whatever you do, brighten any dark-colored rooms. Dark hues make a room look smaller.

Trompe L’oeil

Literally, trompe l’oeil means “fool the eye” in French. Using trompe l’oeil methods to make your home look larger doesn’t cost much and really works. Mirrors and lighting are the key. Purchase large mirrors and place them where they naturally reflect light back into the room. Visitors should encounter the mirrors as soon as they enter the room, and their first impression is of a much larger sized area than it actually is.
You’re probably more familiar with trompe l’oeil as murals or other wall art. If the wall covering sends the viewers eye into the far distance, the optical illusion reflects on the room.
If a room receives lots of natural sunlight, keep the curtains or shades open and let that light flood into the space. For rooms not blessed with good exposures, artificial light will fill the bill. Make sure there’s soft lighting in every corner – dark corners equal a cramped appearance. It’s also crucial to keep the house at a comfortable temperature. That may not seem to have anything to do with size, but it does. An overheated room or house without sufficient air flow may make a potential buyer think the place is smaller.

Contact Us

If you’re looking to buy or sell a home, call Island Realty Group, LLC today at (808) 689-7407. We’ll help you sell your current house and find you the house of your dreams.

April 19, 2017

Maximize Your Space!

Furnishings to Maximize Space in a Smaller Home

If you dwell in a small house, apartment or condo, space is at a premium. On the plus side, that means you probably aren’t keeping a lot of unnecessary junk around. A small living space really teaches you what you do and do not need. However, the right furnishings allow you to make the most of the space you have and not turn you into an involuntary ascetic. When planning to put your home on the market, it’s essential to make your home look as comfortable – and spacious – as possible.

Get Rid of Clutter
Nothing makes a room look smaller than a lot of clutter. Choose chic furnishings that maximize storage space. Some suggestions:
• Kitchen/work table that can also store pots and pans
• Coffee tables with lift-able lids
• Apothecary tables

Hide storage bins under the bed or in other, easily accessible areas. That’s the place to put out of season clothing – although there are fewer items in that category in Hawaii – while reserving your day-to-day wear for your precious closet space. For your closet, invest in shoe organizers and other practicalities for maximum organization and space-saving.

Go Full Size

Choosing smaller furniture for a small space seems to make sense, but it actually makes rooms look tinier. While you don’t want huge pieces that can overwhelm a room, pick conventionally-sized furnishings that add to the idea of normal proportions. What you can do is choose furniture serving more than purpose, such as a convertible sofa or daybed that can double as a guest bed.

Hang’em High

Make your walls and ceiling seem higher by hanging artwork above eye level. If guests or potential buyers have to look up at the art, the brain registers the setting as taller.

The Bathroom

If your home only has one bathroom, it’s easy for it to become clutter central. Make it space-saver central instead, with attractive shelving over the toilet and a raised vanity for additional storage space. Opt for rounded vanities rather than square – they take up a bit less space, and no one gets hurt by accidentally bumping into it in a tiny bathroom.

Delineate

Although “room” delineation in a studio or small apartment doesn’t involve furniture per se, it does address the flow of space. For example, in a studio apartment, use different – but complementary – paint colors for delineation. You might use three separate wall colors that are all “cool,” which helps separate the kitchen from the living area from the bedroom. Separating spaces in a studio – and paint color is just one way to do this – really helps to corral guests in certain areas of the apartment.

Contact Us

If you’re looking to buy or sell a home, call Island Realty Group, LLC today at (808) 689-7407. We’ll help you sell your current house and find you the house of your dreams.

Beyond the Mortgage

Beyond the Mortgage – Additional Cost Considerations for Home Shoppers

When assessing how much house they can afford, potential home shoppers concentrate on the down payment and the mortgage rate. While those are two important elements in home buying, there are other costs that can trip up home buyers if not taken into consideration. Hawaii has the dubious distinction of the highest closing and third-party fees in the nation.

Closing Costs

Homebuyers will pay between 3 and 5 percent of a home’s value in closing costs. For a $500,000 home, that’s between $15,000 and $25,000. Such costs also vary by the lender. These costs include:

• Broker’s commission
• Loan origination fee – also known as points, this fee is based on the amount of the loan. Each point amounts to 1 percent of the loan. Document preparation, funding and underwriting all fall under the guise of “loan origination.”
• Title insurance -Title insurance protects the buyer and the lender and is an absolute necessity for homebuyers with a mortgage. A title company ensures a legitimate title to a particular piece of property. The insurance protects buyer and lender from any possible litigation against title – or ownership – of the property. In Hawaii, expect to pay around $1,000 for title insurance, split between seller and buyer.
• Escrow fees – split 60-40 percent between seller and buyer.
• Property taxes – if the seller has prepaid property taxes at the time of closing, the buyer must reimburse the seller for the amount. If the seller owes taxes on the time they owned the house, they must pay them at the closing.

Third Party Fees

During the home buying process, all sorts of third-party fees arise. Some of them you may expect, while others may catch you unawares. Your lender may not have knowledge of some of these third party fees. Here’s a basic list for those who don’t like surprises:

• Appraisal fees – expect appraisal fees to range from $600 to $800, depending on the size and condition of the house.
• Survey – the survey fee is generally in the neighborhood of $800.
• Pest inspection – $125
• Legal fees – without extenuating circumstances causing attorney fees to rise, expect to pay about $650 for a standard closing.
• Flood report – $10
• Credit report – a flat fee of about $20
• Courier services – approximately $50.

Beware of “No Closing Costs” Loans

There is really no such thing as a “no closing costs” loan. A buyer won’t pay these fees individually, but they are still tucked into the mortgage.

Mortgage Insurance

If you put less than 20 percent down on a home, your lender will require you to carry mortgage insurance. Once you reach 20 percent equity in the dwelling, you can ask your lender to cancel the mortgage insurance.

Contact Us

If you’re looking to buy a home, call Island Realty Group, LLC today at (808) 689-7407. We’ll help you find the house of your dreams.

March 14, 2017

Preparing for Home Inspections

How Sellers Should Prepare for Home Inspections

Even if your home is in good condition, having a home inspector come in to examine the dwelling is nerve-wracking. Some basic preparations can smooth the inspection process along.

Inspected Systems

The home inspector makes visual and hands-on inspections of different systems in the dwelling to ensure they are in good working order. These include:
• Plumbing
• Electric
• Air Conditioning
• Heating

The inspector also evaluates the condition of the exterior, roof, foundation, framing, insulation, interior, kitchen and bathrooms. A buyer may request mold, asbestos or lead paint assessments.

Indoors

Clean the house and remove clutter. That’s really a no-brainer, since an unkempt, messy home reflects on the overall maintenance of the property. Make sure the inspector can easily access any areas requiring inspection, such all electrical panels, under the sink plumbing and HVAC systems. Check all filters and clean or replace as needed. If there’s a toilet that’s not flushing properly or a leaky faucet, have them fixed beforehand. Appliances staying with the house must be in good working order. If that includes the washer and dryer, remove all laundry.
If there are cracks in windows or door glass, have the glass replaced. Test smoke detectors to make sure they work. If your home has a fireplace or wood stove, have it cleaned and give the inspector a copy of the service record. Check all of the light bulbs and replace any that have burned out.

 

Outdoors
Have the gutters cleaned. Check all vents to ensure they are open and working. Trim any foliage back so it is not interfering with the foundation, downspouts and exterior walls. Check downspouts to see if they are draining away from the house.

 

Keep a Good Attitude
Yes, the home inspector is checking for any possible defects in your home. Remember that this gives you an opportunity to make those repairs and avoid disrupting the sale. Keep a positive attitude and treat the inspector courteously. Home inspectors often experience a bit of antagonism from sellers – a friendly seller makes the inspection go easier for both of you.
If you are not going to be home during the inspection, place your pets in crates. Let the inspector know where he or she may find a key.

 

Pre-Inspections
If your home is older, is it worthwhile to spend the money and have the property pre-inspected before putting it on the market. Not only can you correct any issues ahead of time, but a recent inspection certification helps sell your home faster.

 

Contact Us
If you’re looking to buy or sell a home, call Island Realty Group, LLC today at (808) 689-7407. We’ll help you sell your current house and find you the house of your dreams.

 

Adding Square Footage – Is It Worth It for Resale Value?

Adding Square Footage – Is It Worth It for Resale Value?

You need more room. Whether it’s because you now have kids in the picture or your home is bursting at the seams, you’re left with two basic choices: Add on or move. Certain additions will up the value of your house for resale, while others won’t make a difference – or make the home harder to sell.

Kitchen and Bathrooms

From an investment standpoint – as well as quality of life – enlarging the kitchen and/or adding a bathroom are your best bets. A large, airy kitchen with up-to-date appliances attracts buyers much more than a small, cramped space. Many buyers won’t even consider a home with just one bathroom, and they want state-of-the art fixtures. If your budget is tight, add a half-bath with a shower but no tub.

Sunrooms

In Hawaii, adding a sunroom to add to your living space makes a lot of economic sense. That’s true whether you want to enclose an existing lanai or add an entirely new room. Depending on the structure of your home, adding a sunroom may serve as a way to enlarge your kitchen. There’s such versatility to a sunroom, as it can serve as a playroom for kids, a light-filled dining space or however you want to use it. Family rooms are a wise addition to smaller homes, and the sunroom can fill this purpose.

Additions Unlikely to Add Value

There’s nothing wrong with adding to your house for your own pleasure, as long as you’re realistic about possible payback. If your master bedroom leaves a lot to be desired, go ahead and add a master suite. You spend a great deal of your life in that room. Enjoy it but don’t expect it to add much value to your home, and avoid going overboard. You probably don’t need that mini-bar.
The same holds true for home offices. Increasingly, anywhere you place your laptop is your office, so putting on an addition for that purpose makes little sense. If you really want a home office, make sure it’s easily convertible to another bedroom or den.

When Not to Add On

Additions don’t make sense if they aren’t compatible with the neighborhood. If an addition makes your home the largest on the block by a noticeable margin, you’re unlikely to recoup your money when you try to sell. If you love the area you live in, consider moving to a nearby neighborhood with larger homes. Of course, if the opposite is true, and your home is among the smallest in the neighborhood, adding on makes sense and should increase value.

Contact Us

If you’re looking to buy or sell a home, call Island Realty Group, LLC today at (808) 689-7407. We’ll help you sell your current house and find you the house of your dreams.

February 21, 2017

Buying a Foreclosure – What Buyers Need to Know

Buying a Foreclosure – What Buyers Need to Know

Buying a foreclosure comes with risks. You might score a great deal, but a foreclosure in a good Hawaiian neighborhood might sell for close to its market value. While the number of foreclosures has dropped dramatically in the past few years, as of late 2016 the Hawaiian foreclosure rate was 1.7 percent, according to real estate information intelligence company CoreLogic. That puts it fourth in the nation for the highest inventory foreclosure rate, behind New Jersey, New York and Maine. That means the bargains are here in Hawaii, but you need to know what to do to find them.

Bank-Owned Properties

Foreclosed properties are bank-owned, also known as real-estate owned (REO). There are advantages to bank-owned properties. The house costs the bank money, and they want to get it off their ledgers as soon as possible. There’s no emotional attachment to the dwelling, so that isn’t a pricing factor as in some privately owned homes. The downside: the bank probably doesn’t have any maintenance records for the property, which hinders assessment of the house’s actual condition. The bank is unlikely to make any repairs.

As Is

When you purchase a foreclosure, the home is sold “as is.” You probably know that, but it’s imperative to know just how much work is involved. That’s why you should never buy a foreclosure sight unseen. It’s not unusual for just about everything – plumbing and lighting fixtures, electrical systems – to be gone or unusable. Photos and videos won’t tell the complete story. Even a great Hawaii location can’t make up for the fact that you may have to virtually reconstruct the home to make it livable. Spend a few hundred dollars and have the house professionally inspected. If the inspector finds it in acceptable condition, have a licensed contractor provide an estimate for any necessary repairs. Only then do you know what you’re getting into, and an idea of how much it will cost to make the house livable. On a national average, foreclosed properties sell for approximately 18 percent below market value. Crunch the numbers to ensure repairs make buying a foreclosure feasible.

Use a Real Estate Agent

Improve your chances of success with a foreclosure by using a real estate agent. These types of sales are often more complicated than traditional purchases, and a knowledgeable realtor can help you through the process and extra paperwork. An experienced real estate agent knows what to look for in any distressed property, and the right valuation for the home. They also know the “comps,” or recent sale prices for similar properties.

 

Contact Us
If you’re looking to buy or sell a home, or are interested in a foreclosure, call Island Realty Group, LLC today at (808) 689-7407. We’ll help you sell your current house and find you the house of your dreams.