FREQUENTLY ASKED QUESTIONS
We provide you the method to sell your home “For Sale By Owner” or FSBO on Hawaii, Kauai, Maui, Molokai or Oahu and save thousands!
Sell without an agent and pay no commission.
Reach: Over 95% of home buyers today start their home search online. With platforms like ours and it’s easy to reach these buyers. Listed on MLS, it will be seen on every agents website, Zillow, Trulia, Realtor.com and hundreds of of others. This helps reach agents in addition to home buyers directly.
Options:Once you’ve signed with a traditional 6% agent you’re locking yourself into a contract, often for months. This severely limits your options even if the agent is incompetent. It is generally better to attempt to sell your home yourself before locking yourself into a contract with an bad agent.
Is it a science, or art, pricing your property to sell?
Do you want to just list it, or sell it?
Selling a home in Hawaii, Maui or Oahu? The price to sell is a direct function of marketing. A strategic market price will complement our marketing campaign and position your home effectively in the marketplace.
Let’s look at few ways that psychology can influence the price.
1. The $9.99 syndrome
It amazes me how many agents price a home with a 95, 99 at the end. You always see $395,000 $299,999 or $199,900.
Why does 99 percent of the agent population follow the crowd, and supermarket mentality, and price the same way?
Many agents are not looking at the price as a function of marketing. It has been said the 9’s first appeared in the 1880s convincing the gullible that they were getting a bargain. Many discounters still use 99 in their pricing, but it does not fool smart people.
The main reason it can hurt your listing is that most buyers start their search online, on a smartphone or tablet when looking for a home. Whens the last time you said, or heard, “Hey, lets buy a house, let’s go talk to a real estate agent at his office”, If a buyer is looking between $500,000 and $525,000 for a home, and you priced your at $495,000 or $499,999, that buyer may never see the property online.
The best advice is to price at $500,000, as you will capture both sides of the search. Someone looking between $450,000 and $500,000 and someone looking between $500,000 and $550,000 will find the property online.
Also, you should position your home as luxury brands do, not as discounters. For instance, Godiva chocolate prices at $36.00, not $35.99, and Neiman Marcus prices at $625.00, not $624.99. Ferrari and many other luxury brands also use this model for their products.
Do they know something or is this just coincidence? Does the consumer perceive this as a higher-quality product? These brands apparently think so.
That same home, listed online, is actually losing buyer traffic because of its pricing gimmick. The reason is simple, and it should be an obvious reason to never use the “99” pricing model again.
Online buyers search in zeros. Buyer A searches for homes from $500,000 to $600,000. Buyer B searches for homes from $600,000 to $700,000. That’s the way MLS’s, portals and agents’ websites have set up the pricing parameters. With a listing priced at $600,000, both Buyer A and Buyer B will see the home. Priced at $599,999, Buyer B won’t see it.
It’s tempting to believe that you’d miss out on only a small percentage of buyers or that most buyers won’t set a “lowest price” in their search, but it’s simply wrong. Our company has a client database of around 8,000 users, and we track their searches on our websites. The majority of users set a fairly tight price range in their searches. They know what they can afford and don’t want to waste time looking in a price range that they know won’t fit their needs.
Don’t let your listing miss out with a .99 gimmick. Over ninety percent of buyers are searching online. Price the home the way buyers search.
2. The power of four and seven
Studying the psychology of price, the concept of the power of four and seven is evident. For example, a price of $447,000 or $444,000 is precisely priced, and appears that the seller has scrutinized true market value, which could suggest to the buyer that there is less negotiation room. This assumption benefits the seller.
Another reason is that the price is unique and stands out to the buyer. Think about all the property listings displayed on all the website portals, like way too many products on a shelf at a store. A unique price, unlike the others, stands out. Because it’s different and more unique, it will attract the buyer’s attention. Examples of this would be Costco or Wal-Mart, who use the four and seven frequently on their sale items. They want to differ from their competitors.
There is also something call the “Right Side Digit Effect.” So, a price of $527,000, has the perception of looking like a better discount or value than $529,999.
Some believe that using the four and seven in your pricing is more emotional to buyers. It’s a friendly number that leverages the buyer’s ego and self-image and has a higher perceived quality of what you are selling.
And don’t forget — seven is a lucky number
3. Avoid an agent who is “Buying” your listing
Some sellers who price high are given false hope by unscrupulous or newbie agents who are uncomfortable telling their clients the truth.
Beware of ‘Sign Agents,’” buying your listing, what’s a sign agent? Some agents will agree to any price you want, just to get their sign on your lawn, then work you down to a realistic price, costing you time, and money.
Instead of listing at the inflated price, “come to realistic expectations of what your home will likely sell for.”
Imagine you want to buy a gallon of milk. You eye the case, shelves stocked with dozens of choices, but they are really all the same. Milk is milk, and which one you select is really insignificant because they are all identical, and they are all priced the about the same.
But what if each identical container was priced differently? Odds are you have set aside enough time for your shopping , and you carefully check the price labels and go for the best deal. Or maybe you are drawn to the more attractive packaging?
When selling your home, attractive pricing and packaging are arguably the two most basic essentials. In our current real estate market, the buyers have lots of choices. In many areas, the shelves are simply overstocked. And since no two homes are the same, making that distinction between your home and the dozens of others is key to getting offers and selling.
Where pricing is concerned, establishing that all important asking price is part science and part art, and there are several things you should consider.
- Study past sales. This is the starting point for any thoughtful and successful pricing strategy; think of the “science” part. Take the time to study past sale statistics for homes in your area and areas similar to yours. None will be identical, of course, but having a clear understanding of true market value is the first step in establishing your selling price, or yourlisting price.
- Do not confuse active listings with past sales. Active listings have not sold. They are just your competition. It is important to be aware of your competition’s pricing, but this is often just an reference of what your home won’t sell for.
- Do not overprice because you have “time.” If the market is rising, this strategy may work, but if prices in your area are declining, or flat, you may quickly find yourself chasing the market and costing yourself time and money. And if the market is stable? Your home will just sit as another listing. Buyers pay in today’s dollar value, and time is rarely on your side.
- Leave some room for negotiation, but don’t overreach. No seller wants to feel he left money on the table, and no buyer wants to overpay. Your price should give both parties room to maneuver, but if it is too high, you may be perceived as unrealistic, and buyers will pass over your home.
- Think like a buyer. What are the things that you value in a home? Is it a large yard, an updated kitchen or a view? These are likely the same things that your buyer values as well. Talk to your agent about current buyer trends. Yesterday’s avocado green shag carpeting is today’s granite countertop. The property facing the interstate is going to be a tougher sell than the one with an ocean view. Your price should reflect how your home truly compares to the others offered for sale. Buyers will find objections to any home, as none is perfect, but it is curious how quickly objections disappear when the price is compelling.
- React swiftly and decisively. If your home is on the market and is not being shown or if you receive feedback that you are priced too aggressively, be realistic, don’t hesitate to adjust your price. Bad news, like spoiled milk, doesn’t get better with time.
Do you want to list it, or sell it?
The three biggest reasons for you to remove all references to For Sale By Owner, or FSBO, on your signs, web sites, flyers, any marketing materials:
1) FSBO unfortunately attracts bargain hunters only. They feel you are desperate to sell and will offer only ridiculously low prices.
2) It may scare away inexperienced buyer agents as they are afraid of losing their commission.
3) It attracts unethical local listing agents to solicit your listing: they will LIE to you about realtors blocking our listings. Why would any buyer agent not showing our listing when you are paying them exact the same 2% or 3% commission?. They want you to drop us then they will happily try to charge you 6% commission to list your home in exact same MLS. Why on earth would you pay 6% working with the same MLS and same buyer agents?
Once you are on the MLS, you just hired 1000+ buyer agents working for you. You have the same playing field as all other homes on it. All buyer agents are protected.
Please be aware of those local listing agents who contact you while your home is actively listed on the MLS. It is UNETHICAL and ILLEGAL to solicit your listing.
Please report them to us immediately and file a complaint on the Hawaii DCCA web site:
On our 1% full service listing, we provide all forms, addendum’s and documents as well as our proprietary documents crafted from years of negotiations.
Note: Some changes require an additional fee, most are free.
Our marketing system syndicates to over 185 Participating Publishers reaching Home buyers on more than 900 Websites, as well as every agents website in the MLS, and their clients.
HARPTA is an acronym for Hawaii Real Property Tax Act, a Hawaii State law that requires a withholding of 7.25% of the sales price (not the gains) from the seller, when the seller is an out-of-State resident. Sellers may recoup some of the withholdings beyond the applicable capital gains tax by filing the appropriate form.
FIRPTA is an acronym for Foreign Investment in Real Property Tax Act, a federal law that requires a withholding of 15% of the sales price (not the gains) from the seller, when the seller is an out-of-country resident. If the buyer intends to occupy the property as their residence, the required withholding is reduced as follows:
a) 10% of the sales price for properties sold between $300,001 to $1Mill.
b) 0% of sales price for properties sold up to $300,000.
Sellers may recoup some of the withholdings beyond the applicable capital gains tax by filing the appropriate form.
Sellers need to know that the sale of an investment property may also raise questions by the Dept of Taxation regarding rental income received and if the appropriate GE and TA taxes (if applicable) have been paid.
The time between the Purchase Contract acceptance date and the date when the buyer takes ownership of the property (recordation date) is called the escrow time period. The length of the escrow time period is often in the 30 to 60 days range depending on if it is a cash transaction or if the transaction is subject to financing. However, some cash transactions could close as quickly as 1 week! Some other transactions involving brand new development projects under construction could take as long as 2 years, or longer, until the completion of the project.
Once the Purchase Contract is accepted (signed by buyer and seller) ‘escrow is opened’ and the fully executed contract together with the buyer’s Earnest Money Deposit gets deposited with the escrow company. The escrow company is an independent third party that will, among other things, order a title search, prepare and record the conveyance document (deed) as well as disburse the proceeds of the sale at time of closing aka recordation.
Purchase Contracts can vary but most have a number of ‘contingencies’ (conditions that must be satisfied, or, events that must occur before a party is obligated to proceed). Some important contingencies include the home inspection contingency (J-1), financing contingency (H-3), title review contingency (G-2), review of Seller’s Disclosure (I-1), survey review contingency (K-2, K-3), termite inspection contingency (L-2), association and or condominium document review contingency (M-1), just to name a few.
Sometimes while in escrow as a result of a discovery during inspection, buyer and seller may negotiate repairs or credits before the inspection contingency (J-1) time period expires. The buyer may terminate the contract and receive a refund of his deposit, as long as the buyer cancels prior to the inspection contingency (J-1) time period expiration, per the cancellation provisions in the contract. Keep in mind that in the State of Hawaii, sellers are not automatically obligated to repair defects unless otherwise agreed in the contract. Once all inspections are completed, the loan application has been approved, all documents and reports have been reviewed and approved and all other contingencies have been removed, escrow will have the conveyance documents (deed) prepared. Both buyer and seller will sign the deed and other escrow closing documents. In addition, the buyer may sign the mortgage loan documents. Signing could be done out of State, as long as the original signed and notarized documents are returned to escrow for proper recordation.
All signed and notarized conveyance documents and loan documents together with all funds (cash and loan) need to be received by escrow no later than 2-business days prior to recordation. Conveyance documents will be stamped and recorded at the Bureau of Conveyances in the morning of the closing date aka recordation date. Escrow will also pay off any existing loans on the property, balance the file, pay any remaining bills, disburse funds and documents and close escrow. Closing escrow for most transactions means the buyer receives ownership rights along with the keys to the property and the seller receives the proceeds of the sale. Congratulations on the successful purchase or sale of your home!
In Hawaii the escrow company will need to have ‘Good Funds’ in order to record a real estate transaction. That means that all funds, cash (cashiers check) or wire as well as the bank loan, need to be received by escrow no later than 2 business days prior to recordation. Also, all escrow closing documents and loan documents will need to be signed and notarized no later than 2 business days prior to recordation. By that time buyer and seller will need to have fulfilled all conditions of the contract.
Once all escrow closing documents are signed and funds are deposited with escrow, escrow will take the file to the Bureau of Conveyances for their final review 1 day prior to recordation. On the actual date of recordation the conveyance document gets time stamped 8:01am with the date, and recorded at the Bureau of Conveyances. Shortly after 8:01am we will receive recordation clearance, usually a phone call from the escrow company that the transaction has successfully recorded aka closed. Escrow will disburse the funds and close the file. The buyer is entitled to the keys and the seller is entitled to his share of the sales proceeds.
A typical deposit schedule for a regular residential resale transaction may look something like this: Initial Earnest Money Deposit anywhere between $1,000 minimum and up to 5% or more of the purchase price at time of submitting the Purchase Contract. Additional deposit between $2,000 minimum and up to 15% or more of the purchase price within 2-business days of the removal of the J-1 inspection contingency. The J-1 inspection contingency time period is often in the range between 10 to 15-days from the acceptance date. Final remaining balance could be cash and or loan no later than 2-business days before recordation.
The exact deposit amount depends on a.) the buyer’s available cash to be used for the purchase, and b.) the buyer’s willingness to show financial strength when submitting the offer. For example, a buyer with limited cash funds trying to obtain a 97% LTV (Loan To Value) mortgage may only deposit minimal cash. An all cash buyer that wants to show sincerity and financial strength to the seller may deposit a much larger initial deposit sometimes 5% or more. The same buyer may make the additional deposit even larger sometimes 15% or more.
These are guidelines only. Every buyer has different circumstances that need to be considered when structuring an offer.
A typical deposit schedule for a brand new development project (before or during construction) may look something like this: 5% at signing, 5% within 30-days of receipt of the Final Public Report, 5% when the project is 50% completed, remaining balance (could be a loan) no later than a few business days before recordation. These numbers and due dates vary depending on the developer and or the strength of the market. When the market is hot developers may require a more aggressive deposit schedule (more money or at an accelerated pace), and bulk-closings (multiple closings on the same day) with the remaining balance due sometimes weeks before recordation.
When the Hawaii real estate market is hot like it currently is, properties often receive multiple offers from competing buyers. Seller’s will review the offers received and decide how and who to respond based on price, terms and other factors.
One option to add credibility to your offer is to attach a Pre-Approval letter from a reputable qualified lending institution when submitting your offer. A Pre-Approval letter shows the seller, that:
a.) a financial institution has reviewed your finances (income and employment history, liabilities and assets), and b.) determined that you are qualified to obtain a mortgage loan up to a certain amount. Furthermore a Pre-Approval shows the seller, that c.) your credit score has been verified and is sufficient to obtain the type of loan you are applying for.
These are three important factors that could possibly give your offer an edge over other offers received and give the seller a degree of assurance that your loan should get funded.
While a Pre-Approval letter includes the important credit check, a Pre-Qualification letter lacks the verification of credit history. For added credibility we strongly recommend to obtain a Pre-Approval letter over a Pre-Qualification letter when submitting an offer.
It is a good idea to have the Pre-Approval dollar amount on the attached letter match the offered price. If the seller counters a higher price we could submit an updated Pre-Approval letter once buyer and seller agree on the new price.
What if the Pre-Approval letter shows a higher price than the offer price and we are unable to obtain in time a Pre-Approval that matches the offer price? On one hand it could show the seller you can afford more and therefore the seller might counter higher. On the other hand a higher Pre-Approval amount shows your financial strength but it should not be interpreted as your willingness to pay any more than the offered price.
When possible, matching the Pre-Approval amount with the offer price is the better option.
By the way, getting a Pre-Approval letter from one lender does not obligate you to get the loan from this lender. You might still discover a better funding source.
Proof of Funds:
With any cash transaction, we recommend to attach a Proof Of Funds with your offer.
This could be a copy of a bank statement showing a.) buyer’s name, b.) name of the financial institution, and c.) account balance (make sure to black out the account number!).
The Preferred Method , is a bank letter on the bank’s letterhead indicating the buyer is in good standing and has sufficient funds to make a cash purchase up to a certain dollar amount. Be prepared, if you don’t provide proof of funds with your cash offer, the seller will often counter and require the proof of funds. It might be to your benefit to be proactive and add an edge to your original offer, especially in a market where multiple buyers are competing for few available properties.
Hawaii’s Real Estate Purchase Contract provides that the buyer’s initial deposit is fully refundable as long as the buyer cancels the Purchase Contract during the inspection contingency (J-1) time period, usually between 10 to 15-days as of the acceptance date. This is the obvious and most often used contingency to cancel where the buyer can expect a full refund. There are other contingencies that the buyer may use to terminate the Purchase Contract, such as the buyer’s review and approval of the seller’s disclosure, the buyer’s review and approval of subdivision and association documents, etc.
With brand new development projects the buyer’s initial deposit is fully refundable as long as the buyer cancels the Purchase Contract within 30 days of the receipt of the Final Public Report. Be prepared that it might take a few days for the escrow company to process your refund.
The home inspection contingency gives the buyer the right to personally (or by a qualified expert, professional or other representative of buyer’s choice at buyer’s cost), inspect the property in detail.
We strongly recommend that a buyer should use a qualified professional home inspector and or additional specialized qualified professionals to inspect any and all aspects of the property including the electrical systems, plumbing systems, appliances, foundation, walls, doors, windows, ceilings, roof, structural issues, drainage issues, and other that would be prudent to assess. Any and all inspections and reviews of findings should be completed within the inspection contingency time period, usually between 10 to 15 days as of the acceptance date, as outlined in paragraph J-1 of the Purchase Contract. If the buyer is not satisfied with the inspection results, buyer may terminate the contract. However, the buyer must elect in writing to terminate the contract within the specified time period, otherwise the buyer will have waived this contingency. It is best to schedule the home inspection immediately after the contract acceptance. Home inspectors get booked up some days in advance and it is best to have the inspection results / report several days before the inspection contingency time period expiration, in order to have sufficient time to obtain repair quotes if necessary.
The buyer may request repairs, or ask for a credit in lieu of repairs. The seller could agree, or not agree, counter with a compromise, or not respond at all, depending on many different factors, including the nature and extent of the remedy request as well as the seller’s motivation to close the sale. If the buyer is not satisfied with the seller’s response to the remedy request, the buyer’s recourse is to terminate the contract.
However, the buyer must elect in writing to terminate the contract within the J-1 inspection contingency period, otherwise the buyer will have waived the inspection contingency.
If Buyer is using a loan to purchase the property, any Health and Safety items will need to be resolved prior to funding.
Our experienced Realtors experienced Realtor can also share quickly changing market insights that are otherwise not readily available.
Our experienced Realtors can assist with identifying your purchasing power, suggest appropriate financing options and provide you with a list of qualified lending institutions.
Our experienced Realtors can also assist with analyzing and evaluating the property in regard to a multitude of issues. This includes referring additional qualified professionals to further investigate title issues, survey issues, zoning issues, tax issues, structural concerns, foundation, roofing, plumbing, electrical, lead-paint, asbestos, cesspools, septic tanks, building restrictions, setbacks, encroachments, easements, flood zones, utilities, appliance & pool inspections, termite issues, mold, dry rot, building permits, HARPTA & FIRPTA, 1031 exchange strategies, schools, hurricane and flood insurance, tenancy & vesting, association issues including pending lawsuits and reserve studies / budgets, road widening, future developments, resale value, etc.
Our experienced Realtors can help negotiate price, terms, financing, closing date, occupancy date, rent back, inspections, other contingencies and timeframes, repairs, credits, inclusions, etc.
Today’s Hawaii Real Estate Purchase Contract includes 14-pages plus often several addenda. Sometimes there are revisions to the Hawaii Purchase Contract, which sometimes is due to legislative changes. An experienced Realtor can advise on recent changes and how it might affect the buyer’s and seller’s rights and obligations.
Our experienced Realtors, as your listing agent, can help evaluate, analyze and compare every buyer’s offer received and advise on how to best navigate through the escrow process, foresee and reduce the risk of possible pitfalls and improve certainty of closing.
Our experienced Realtors as your listing agent, can advise on how to prepare your home for the most effective sales results (repairs, re-purpose, cleaning, staging, etc) and how to best position your property in today’s market to obtain your desired goals regarding price, terms, closing time frame, etc.
Our experienced Realtors are required to take Continuing Education (CE) courses to keep up with law updates regarding real estate in order to give you current and valuable advice.
All Hawaii Real Estate Team agents are full time licensed Realtors in the State of Hawaii and members of the National Association of Realtors that subscribe to a strict Code Of Ethics.
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