Hawaii homes

I watched the election results last night and in the early evening (Hawaii time) John McCain made his concession speech in Arizona. I was surprised at his humble and kind words for Barack Obama and his call to his supporters to support our president-elect.

Here are some quotes from his speech last night:

"I urge all Americans who supported me to join me in not just congratulating him, but offering our next president our good will and earnest effort to find ways to come together, to find the necessary compromises, to bridge our differences, and help restore our prosperity, defend our security in a dangerous world, and leave our children and grandchildren a stronger, better country than we inherited.

Whatever our differences, we are fellow Americans. And please believe me when I say no association has ever meant more to me than that."

You can read his full speech here: http://www.johnmccain.com/Informing/News/Speeches/Read.aspx?guid=6d126e21-5857-40c3-96e2-4f504e27e22c

If you're wondering who I voted for, it was Barack Obama. I had been considing John McCain and then I called my dad, a long-time resident of Alaska. I asked my dad what he thought about Sarah Palin and his answer was not supportive. He described her rise in Alaska and her inexperience. He also spoke about some remarks she's made since she had become the vice-presidential candidate that Alaskans knew were false and misleading. Finally, he noted John McCain's age and expressed concern that, if McCain were to become ill or incapitated, a woefully underqualified person (Palin) would be at the helm.

Even the Anchorage (Alaska) Daily News endorsed Obama for president in an article printed October 25, 2008.

I salute John McCain, his hard work and patriotism. I also feel that the U.S. has picked the best team to run our country for the next four nears.

If you haven't been up Diamond Head Trail, it's a great hike! You'll have to try it sometime - just don't try it until after November 20, 2008. On October 20th, the State of Hawaii closed the trail for repairs.

The trail was built during World War II for defense purposes. The steep terrain makes it easy for the trail to erode. There's also a long tunnel towards the top of the trail that leads to the top of Diamond Head.

The park inside Diamond Head crater remains open. In my opinion, there's not much to see in there. On the other hand, if you're visiting Hawaii and have never been to Diamond Head, might as well go inside the crater and take a look around.

The views from Diamond Head on a clear day are spectacular. Would you like to see a picture? Well shucks, the last time I went up there I didn't even have a digital camera (it's been at least 10 years).

Here's a photo I dug up from around 1985, when I was attending the University of Hawaii. My dad and I did the hike. When we got to the top, the guy on the left side of the photo was there (I think his name is Jim). He and his wife were regular customers at Buzz's Steak House in Moiliili, where I worked as a waiter. My dad snapped this picture. Anyways, you can see how nice the views are. You can also see how photos fade after sitting around for over 20 years.

When the trail reopens I will take a hike, get some new pictures and post them here.

Diamond Head homes

Today my buyer closed on a townhouse in Aiea. It was a short sale, listed for $366,000 and she bought it for $300,000. Price-wise, it was a heck of a good deal! Three bedrooms, two and a half baths, 1,300 square feet interior and two parking stalls. The place does need cosmetic work though. The prior owners neglected the property and it basically could use an entire remodel. The buyer has a contractor lined up and the work will commence shortly.

If you haven't been involved in a short sale yet, they can be tricky. While the owner signs the purchase contract, his bank is actually in control. The owner's bank sometimes rejects what we feel to be "good" offers. When they decide an offer might be acceptable, the bank's review period is 30-45 days. If the bank decides to accept, they suddenly want the buyer to close quickly, like a few weeks.

A buyer in a short sale is usually a bit reluctant to spend money on the appraisal, home inspection etc. because of the uncertainty of this type of transaction. They often hold off on any contingencies until the bank says "Yes" and that makes it a big rush to get the deal done on time. Meanwhile, if another buyer decides to offer a higher amount for the property, the bank can drop the first buyer and switch to the second buyer.

In our case, the bank gave us about three weeks to close. The loan officer said "No Problem" - but then she had not seen this townhouse! Basically, the prior owners bought it several years ago, had around 4-6 people living there and ran it into the ground. Water leaks were not promptly repaired and caused water damage to wood cabinets. Holes were put in the walls, patched up and left unpainted. Crayons and magic markers were used for kids to practice writing on the walls.

The appraisal came back and the valuation was okay! However, the condition was not okay. For conventional loans (Fannie/Freddie), the condition of a property must come in at least "Average." This property came in one step below, "Fair." Part of the problem was a hole in the ceiling caused by a water leak. The appraiser asked a young girl in the home whether the leak was fixed. She said "No." when in fact the leak WAS repaired (but the hole in the ceiling wasn't repaired).

This was a first for me. I've had several buyers purchase fixer upper homes over the years but never had an appraisal come in at or above value but without an average condition. This place was not that bad, it was just UGLY! Simple things could have been done to fix it up.

The appraiser requested a letter from a licensed contractor outlining the damages and estimated costs to repair. We found a contractor that could meet us quickly (we were down to about 10 days left before closing) and he wrote out a letter. Since the water leaks had been repaired, the appraiser upgraded the condition and the loan was approved!

Next problem - my customer had her money for closing costs deposited at one of those big brokerages. I won't name them to avoid hearing from an attorney. Let's just say they're one of those big financial firms that hasn't gone under. They just did an acquisition of another firm and cash was tight. Lucky for the buyer, her money was not in mutual funds. The cash was in some type of high yielding interest bearing account. She started talking with the broker two weeks prior to closing and they said they couldn't promise her the money on time!

We were up against the wall. We had until no later than October 21st or the property would go to auction the next day. On Thursday the 16th we had the escrow signing. I asked the officer how much time we had left to get the buyer's funds in. She said we could turn them in up until noon on Friday.

Friday morning, the buyer got her check from the firm. She still needed to make a cashier's check and make it payable to escrow. Luckily, the investment firm banks with Bank of Hawaii. They wrote an explanatory letter and she took it to the bank along with her check. Bank of Hawaii issued the cashier's check. I picked up her check and delivered it to escrow by 10 a.m. Whew!

Short sales are tough but they beat having no sales!

Mike Bates - Aiea homes for sale

My Scion Xb is holding up nicely and customers love it. It also takes time to clean it up each time we go house hunting - generally at least once a week. I've been looking for a truck or station wagon for those tasks that get the car dirty - like surfing and taking the dogs for a ride.

One of the better places to look for vehicles is craigslist.com. Here are a few things I've learned while reading craigslist ads and from previous purchases of used vehicles. This info applies to both buyers and sellers.

- A good photo is important in an ad. Take a look at some poor photos and ask yourself who would be interested in this vehicle? The price would have to be less than comparables to catch a buyer's attention.

Examples of cruddy car photos

Note to sellers - don't take a partial picture with your car shaded by trees.	Second note to sellers - Make sure there's enough light when you take your photo!

- In Hawaii, air conditioning is a "must" for the average person. Sure, we don't have the highest temperatures in the U.S. - just ask somebody who lives in Arizona, Nevada or even the midwest and they'll tell you they get higher temperatures than Hawaii.

Beware of ads that say "a/c just needs a recharge" or "have parts, just needs to be fixed." The seller might actually be sincere, but bear in mind that repairing air conditioning systems can be very expensive. If the a/c truly just needs a recharge, the cost would be $40-$50. Ask yourself - why did the refrigerant leak? If the a/c compressor is shot, it will leak. It will also cost $500+ to replace. The condenser (looks like a radiator) is also susceptible to damage and leaks. It will also cost some bucks to replace. So the "minor a/c problem" might end up costing you $1,000 or more. The best solution is to avoid cars with a/c problems.

- Hawaii has trade winds, which are prevailing winds that blow from the northeast. On an average day, the wind will blow more or less from this direction. Communities on the north and east sides of the Hawaiian Islands will be exposed to this salty ocean air more compared with communities on the south and west sides.

On Oahu, that means vehicles in neighborhoods such as Kailua, Kaneohe and Waimanalo are more likely to develop rust - especially if they are parked close to the ocean! If you're buying a vehicle from these areas, take a close look for rust.

Areas on the leeward sides of Oahu, such as Hawaii Kai, Honolulu and Pearl City generally are not subject to the onshore breeze and vehicles hold up better against rust.

- Sun damage is also an issue. This can be more of a problem with an inverse relationship to salt air. The leeward areas of Oahu see less rain and more sun. Thus the sun bakes a car's paint more in these places.

Windward Oahu gets more clouds and rain and usually stays a bit cooler. This weather tends to kinder to a car's paint.

In summary, take a good look at a vehicle and don't let your emotions push you into a quick decision to buy. These days the economy is slow and cash is king! Take your time and find the vehicle that fits your needs.

Aloha, Mike

I've noticed a trend lately and it's a good one for buyers. We go out, look at homes, the buyer thinks about it and the homes are still on the market! Only the most appealing homes are selling quickly. I define appeal as a combination of the home's condition and it's price.

Many mainland markets may have been in this situation for years. Oahu's sales volume has declined about 50% since 2005, however good homes for sale in Honolulu still generally sell quickly. The recent financial meltdown certainly has caused some problems lately.

My wife's cousin had their $1 million house in Kailua in escrow and the buyer pulled out on the day he was to sign documents at escrow. That was a week ago, we'll see if the deal will be salvaged or if the home goes back on the market. I have a feeling the sellers will need to reduce the price if they have to go out and seek new offers.

Getting back to buyers - I've been working with two lately. One has identified a couple of properties she likes. She's getting her money ready and taking her time. The properties aren't going anywhere! The other is looking at a few homes and waiting for the days on market to increase so he can offer a price significantly below asking - and these homes aren't moving either. If the trend continues and they might get some exceptional deals!

Comparing housing with the financial markets, don't you wish you bought a load of stocks last Friday 10/10/08 and sold them on Monday 10/13/08, when we had the largest point gain for the Dow Jones Industrial Average in history? It would have been easy money.

Stocks can be sold much quicker than homes. Stocks and homes have a similar characteristic: On average, they both increase in value over time. Homes have a better characteristic: They are more than just pieces of paper, they are tangible property that you can live in.

If you're looking for income opportunities and have cash, watch Hawaii's housing market.

Aloha, Mike