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My Friend Want To Buy My House…
by Denise S Nakanishi, R,CRS, ABR, GRI
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When your guests visit, they always sing high praises for your house. In fact, one couple loves it so much that they’re emphatic about wanting first crack at if you ever decide to sell. Naturally, they are so impressed with the house that you don’t expect them to quibble about the price. ….that is, if you EVER decide to sell. You aren’t surprised. After all, you have put lots of love into your home and as far as you are concerned it’s perfect. It should fetch top dollar even in today’s market. Trust me, I know the entire conversation by heart! Unfortunately, when the time comes to step up to the plate, most who expressed interest aren’t as sincere or as capable as the seller hoped. With visions of saving commissions dancing in their heads, sellers often want to delay listing until the prospective buyers make their final buying decision. Because this day may never come, it’s good to know there’s a reasonable solution that will allow the property to be listed while at the same time preserving the right to sell to someone who expressed interest prior to listing. In other words, there is a simple way to have the best of both worlds. After all, keeping the property off the market when you really need to sell isn’t the best way to move toward your selling goal. While our standard listing agreement isn’t structured to make such an accommodation, sellers can usually request that their agent include a specific prospect as an “exclusion” to the listing agreement. Simply inserting the prospect name as a special term which notes that “no commissions (or reduced commissions) will be due if sold to “x”, should be enough. But don’t expect the exclusion period to last forever. Because I start spending money the minute a listing is signed, I generally limit the exclusion period to not more than 60 days. This should be ample time for a potential buyer to decide if they want to move forward. In fact, knowing the property is listed on the open market should actually motivate them to perform. Also, a notation should be made in the Multiple Listing Service that there are parties excluded on the listing agreement. Cooperating agents should know that commissions won’t be paid for designated buyers. After all, your “friend” is probably looking at other properties with an agent while they are considering yours. But here’s the thing, even (or especially) in today’s market, finding the buyer is still the easy part. The things that must happen to hold a transaction together once a buyer decides to commit have certainly not gotten easier. Loans have gotten so complicated that choosing the proper loan program and lender from the git-go could make or break the transaction. Even cash purchases can have major challenges. When roadblocks appear, sellers don’t hesitate to call their agents for advice. They forget that answering seemingly innocent questions could establish an agency issue and create liability for the agent. Agents must be very cautious about how involved they become when they represent neither buyer nor seller. Still, excluding specific buyers is the most reasonable way to begin marketing the home while waiting for them to make their purchasing decision. After all, if the property is not on the market, your friend is basically the only one who CAN buy your house…. no one else will even know you decided to sell!
Slowing Distress...Will Act 48 Help?
by Denise S. Nakanishi, R
According to a recent Standard & Poor’s report quoted in one of our professional publications**, “it may take 49 months, or more than 4 years, to clear the supply of distressed properties that were on the market at the end of the fourth quarter of 2010.” They estimate an increase of 40% over the fourth quarter of 2009. It is widely held that the economy follows the housing market. It follows then that the need to clear distressed properties (foreclosures and short sales) is critical and yet, Act 48, which stands to slow the process locally, is being applauded by many for the protections it offers to those currently facing foreclosure. Signed into law on May 5, 2011, Act 48 creates a “Mortgage Foreclosure Dispute Resolution” (MFDR) program which must be offered to Owner-occupants of residential property facing non-judicial foreclosure. An owner-occupant is someone who has called a home their primary residence for at least 200 days prior to receiving their foreclosure notice. MFDR offers the homeowner an opportunity to meet face-to-face with their lender in order to negotiate a loan modification or to work out a payment plan. It also provides an owner-occupant the option of converting from a non-judicial to judicial foreclosure. Doing so insures judicial oversight regarding all the facts and circumstances of the foreclosure. With the number of serious errors surrounding hastily executed non-judicial foreclosures, having a judge review the facts of the case is probably a good thing. Judicial foreclosures expose the homeowner to a possible deficiency judgment for any forgiven debt. The MFDR goes into effect October 1, 2011 and ends September 30, 2014. Once implemented, the Dept of Commerce and Consumer Affairs (DCCA) must be notified and a $250 fee paid by the lender any time a non-judicial foreclosure notice is filed. After notification, owner-occupants have 30 days in which to submit the MFDR participation form along with a $300 fee. If the form is not returned, the lender is free to proceed with the foreclosure. Proceedings are suspended during dispute resolution. If a resolution agreement is reached, the foreclosure terminates. A judicial foreclosure election, which was previously left completely up to the lender, must be made prior to participation in MFDR. Whether Act 48 will create an additional delay in the collective time to clear distressed properties through the system and whether the new MFDR process will overwhelm the court system remains to be seen. Remember, Act 48 applies only to owner-occupants. Many distressed properties in Hawaii will not be affected. Because home-ownership rights are among the most fundamental rights we enjoy in this country, it really seems that slowing the process, at least for now, might be best. With over 120 pages of text, there is of course, much more to Act 48 than I can cover here. For addition assistance, call the Dept of Commerce and Consumer Affairs at 1-800-394-1902.
*Thanks to the Hawaii Association of REALTORS® and Title Guaranty Escrow Services for information contained in this recap also, **”The Residential Specialist”, May/Jun 2011.
by Denise S Nakanishi, R,CRS, ABR, GRI
Sign, Sign, Everyone Must Sign!
My REALTOR® friend, Patti reminded me of one of the most basic rules of real estate; it takes two to sell and one to buy. This adage echoes what should be common sense and yet, it’s fairly common for us to receive listings and offers signed by other than the principal (the real purchaser or the seller) or a representative with proper power of attorney. When listing a property, REALTORS® must usually depend (initially) on real property tax records and information given by the seller. Suffice it to say that there are sometimes ownership surprises when the title report is received. In one recent transaction, the title report revealed a completely different owner than the one who accepted the offer and the person on title was different from the owner listed on the tax rolls. Luckily, we successfully untangled that one. Commonly, title is vested in more sellers than initially disclosed. I recently read a legal opinion which indicated that clear written intent to sell should suffice as a seller’s agreement to sell. Here’s the problem. Listing and selling involve much more than simple permission. Among other things, it includes seller’s declarations regarding the property; inclusions, maintenance fees, utilities and the like. Sellers are required to make full disclosure, they are asked to assist with the sale and much more. A listing agreement is the express employment agreement between seller and their agent. Naturally, a sales contract, when accepted by all owners, may negate the need for a listing agreement but unless all sellers unanimously agree to the terms of the sale, problems could occur at any step along the way. Sales contracts received without all required signatures are non-binding on the sellers who do not sign. It’s little more than an agreement to possibly agree. Buyers and sellers who receive offers acknowledged by an personal representative, whether it be the sales agent, a spouse or a friend, acting without proper power of attorney, should realize that such agreements have little validity. In the case of a sales agreement, Patti is correct. It only takes one signature. A purchase agreement might contain multiple names but it’s the person who signs the contract who is bound (even if it’s the real estate agent). Here are a few important guidelines about signatures. First, make sure the seller is really the owner. Secondly, make sure all owners have signed the sales contract or in the case of the buyer, make sure the person who signs is, in fact, the purchaser. Lastly, when dealing with absentee sellers (especially foreigners) or multiple owners, life is much simpler if someone has power of attorney. Escrow will want a specific power attorney relating to the sale at hand. Escrow companies are happy to assist with this. When it comes time to sign, everyone on both sides of the transaction must definitely sign.
The Times Are Exchanging
The tax consequences of trading spaces are fairly painless if you participate in an Internal Revenue Code Section 1031 tax deferred exchange. Such exchanges allow sellers to defer taxable gain on investment properties. Key to this concept is that taxes are deferred which means, of course, that at some point, they must be paid. While specific rules are but a quick “Google” or “Yahoo” search away, there are critical reminders and suggestions which aren’t part of any published guidelines. Your purchase agreement is one of the first places an exchange can get into trouble. It’s fairly common for me to receive offers on my listings without the required language. In order to comply with IRS requirements, specific language indicating both parties agree to participate must be included in the purchase agreement or the exchange could be disqualified by the Internal Revenue Service. This could be a very expensive omission if the exchange is later ruled invalid. A simple recitation of the agreement will suffice but expanded language is required to fully protect seller especially on the buying “leg” of the exchange. Remember, an exchange must be like-kind for like-kind which simply stated means real estate for real estate; land for house, house for condo, etc, etc. A second caution which thwarts many local buyers and sellers involves foreigners. The IRS now requires all foreigners involved in real property transactions to have a Tax ID number. Because there are strict time limits (45 days to designate and 180 days to close) related to the exchange, a foreigner involved in a tax deferred exchange could cause the process to exceed the allowable timelines. It’s wise to ensure a foreign participant applies for a tax ID number early on. It’s also a good idea to designate multiple exchange properties. Because of the number of title and survey problems in this State, delays in resolving these could also extend closing beyond the allowable time. Be very careful when designating REO or short sale properties. Title or short sale approval delays could result in a failed exchange. Remember, key to every exchange is the concept of “control of funds”. The party relinquishing the funds (the seller, then buyer) is not allowed to touch either proceeds of the sale (the first leg) or funds being held to complete the purchase (the second leg). An Exchange Accommodator must be used. Exchange accommodators are not regulated in Hawaii so choose your third party intermediary carefully. Even though taxes are deferred, it is widely held that an investment property may be converted to personal use after a period of investment use. Investment use for one to two years is probably fine. Anything less might disqualify the exchange resulting in tax consequences of up to 20% (in Hawaii). Most exchanges are fairly straight forward but it’s always advisable to consult our financial advisor as well as an attorney versed in such exchanges. Remember, builders of spec homes are dealers. Such sales do not qualify for 1031 tax deferred exchanges. When it comes time for your next exchange remember to use a Realtor® who understands the basics especially as relates to our Hawaii market!
by Denise S Nakanishi, R,CRS, ABR, GRI
How Much Is It Worth (aka: Why HVCC Doesn’t Work)
I certainly wish I wish I had nickel for every time someone asked how much their home is worth. Value is represented in various ways; construction cost, assessor’s value, insurance value, and loan value to name a few. Here’s a bit of practical insight into the current appraisal process. Lenders still depend on appraisers to provide an objective opinion of value but a new twist called HVCC prohibits lenders from speaking directly to the appraiser. Appraisals are generally ordered thru a disinterested third party vendor called an appraisal management company (AMC). Lenders rarely know who has the appraisal order until an inspection appointment is made with the listor. The attempt to limit undue lender pressure has created a huge new set of challenges. AMCs order appraisals from a list of (theoretically) geographically qualified appraisers. They must meet minimum qualifications to be placed on the AMC list. In order to stay busy, appraisers select a broad base of zip codes to service. The result has been assignments to an increased number of out of area appraisers. Appraisers should be intimately familiar with an area in order to make accurate comparisons. At the same time, appraisers who turn down an assignment could be penalized when it comes to future assignments. I know agents who have had to lead the appraiser to the property. AMCs are paid by taking a portion of the fee which reduces appraiser compensation. Some feel that work quality has suffered. The process has added weeks to each sale making it difficult to predict a closing date. No longer can appraisals be “transferred” if a loan program needs to change. A new appraisal must be ordered. Appraisers are supposed to establish value by comparing sales of similar properties (comps) within reasonable proximity that sold during the previous 3 month period. This narrow window often skews value in favor of foreclosed properties. These rarely reflect true value across a neighborhood. Dissimilarities between properties are addressed by adjusting value of the sold property. For example, a home with a pool will loose value when compared to one without. HVCC makes addressing inaccuracies problematic. While appraisers use recent sales, owners commonly try to compute their estimated value using replacement cost. Replacement cost has little relationship to market value. Market value can change quickly. Timing of an appraisal will affect value. With a purchase, appraisers have a copy of the sales contract. When refinancing, it’s good to let the appraiser know what number you are trying to reach. Don’t be shy about providing comps. Despite a mathematical approach, there is still a great deal of subjectivity and opinion involved in the process. Appraisers are much like REALTORS®. Some are easier to work with than others. Some have strong geographical biases. Interestingly, most have never personally been inside the properties they use as comparisons. They must depend on input from the sales agents. REALTORS® gladly provide a free opinion of value as part of the listing process. It’s something we do on a regular basis…guess that’s why I’ll never get rich answering the question “how much it’s worth”!
by Denise S Nakanishi, R,CRS, ABR, GRI
Winning your “Case”!
Many are surprised to learn there are usually no initial costs to list their home. Naturally, there are eventual costs which are normally deducted from the proceeds. Agent commissions are, of course, the largest expense. A close look may help explain what the seller eventually pays for. Competent agents do extensive research prior meeting the seller. The process starts with reviewing tax records, permits, the title report and, most importantly, assessing current market trends. Closing cost estimates and a plan for effectively marketing the property should be presented for your approval. Once listing terms are set, professional photos are shot. Virtual tours may be ordered. The property is submitted with photos and supporting documents to the Multiple Listing Service and other websites with which the agent participates. The agent pays a fee for each one. Traditional marketing plans commonly include flyers, marketing pieces, print advertising, agent caravans, post card mailings and open houses. Even the sign in front of the house is not free. The updated approach to marketing includes this and much, much more! In fact, the scope of on-line marketing and syndication is hugely extensive, layered and labor intensive. Top agents employ off-site virtual assistants to handle these tasks. Even though online marketing is very fluid and ever-changing, the benefits of time invested in online marketing cannot be overlooked. The longer an agent’s online presence, the better. When a buyer is found, the agent must carefully evaluate the strengths of the buyer and nuances of the contract. They must timely coordinate with lenders, escrow, title companies, termite inspectors, surveyors, attorneys, home inspectors and insurance agents. These days, short sale negotiators are often included in this list. A sale could get even more complicated if, for instance, tax or child support liens have been filed against the property. Like attorneys who are paid when the client wins, REALTORS® are normally expected to “front” all costs to you until you “win”. Costs, exclusive of labor, quickly run into hundreds and even thousands of dollars. The last study I saw quoted the cost of a listing that did not sell at $1260 per listing. Public perception is that REALTORS® make lots of money. Truth is, most do not. The national average in 2009 was $36,700 (gross). By the time print ad costs, commission splits, franchise fees, GE taxes, MLS fees, local board fees , continuing education, license renewal and on-line advertising are factored, the agent is lucky to net 1% of the sales price for each home sold. This could be broken down monthly or hourly but that skirts the real issue, which for the seller is; can your agent afford to provide the services you contracted for until your “case is won”?
by Denise S Nakanishi, R,CRS, ABR, GRI
Winning your “Case”!
Many are surprised to learn there are usually no initial costs to list their home. Naturally, there are eventual costs which are normally deducted from the proceeds. Agent commissions are, of course, the largest expense. A close look may help explain what the seller eventually pays for. Competent agents do extensive research prior meeting the seller. The process starts with reviewing tax records, permits, the title report and, most importantly, assessing current market trends. Closing cost estimates and a plan for effectively marketing the property should be presented for your approval. Once listing terms are set, professional photos are shot. Virtual tours may be ordered. The property is submitted with photos and supporting documents to the Multiple Listing Service and other websites with which the agent participates. The agent pays a fee for each one. Traditional marketing plans commonly include flyers, marketing pieces, print advertising, agent caravans, post card mailings and open houses. Even the sign in front of the house is not free. The updated approach to marketing includes this and much, much more! In fact, the scope of on-line marketing and syndication is hugely extensive, layered and labor intensive. Top agents employ off-site virtual assistants to handle these tasks. Even though online marketing is very fluid and ever-changing, the benefits of time invested in online marketing cannot be overlooked. The longer an agent’s online presence, the better. When a buyer is found, the agent must carefully evaluate the strengths of the buyer and nuances of the contract. They must timely coordinate with lenders, escrow, title companies, termite inspectors, surveyors, attorneys, home inspectors and insurance agents. These days, short sale negotiators are often included in this list. A sale could get even more complicated if, for instance, tax or child support liens have been filed against the property. Like attorneys who are paid when the client wins, REALTORS® are normally expected to “front” all costs to you until you “win”. Costs, exclusive of labor, quickly run into hundreds and even thousands of dollars. The last study I saw quoted the cost of a listing that did not sell at $1260 per listing. Public perception is that REALTORS® make lots of money. Truth is, most do not. The national average in 2009 was $36,700 (gross). By the time print ad costs, commission splits, franchise fees, GE taxes, MLS fees, local board fees , continuing education, license renewal and on-line advertising are factored, the agent is lucky to net 1% of the sales price for each home sold. This could be broken down monthly or hourly but that skirts the real issue, which for the seller is; can your agent afford to provide the services you contracted for until your “case is won”?
by Denise S Nakanishi, R,CRS, ABR, GRI
Go With The Flow!
Like most folks, my first impressions of a living near an active volcano came from an old “B” movie. Those of us who live on Hawaii Island would certainly take exception to that “run for your life” characterization. Years ago, water catchment was an immediate disqualifier for many buyers. The “B” movie effect elevated lava zones to the same level. The thing is, then, as now, buyers focus on privacy, ambiance….and price! In East Hawaii, what they seek is often found in Puna where catchment is the norm and well, as they say, lava happens. These days, REALTORS® rarely hear complaints about catchment but turmoil related to lava, loans and insurance continues to affect sales. Technical information regarding lava zones can be found in the USGS website or in a brochure entitled “Volcanic and Seismic Hazards on the Island of Hawaii”. Through what was formerly known as the “State” or “HPIA” plan, homes can be fully covered up to $350,000. There are alternatives to HPIA especially for coverage over $350,000. Admittedly, over time, some larger insurance carriers (State Farm, Allstate, USAA) have pulled out of these areas but others have stepped in to fill the gap. Although pricing will never again compete with that outside Zones 1&2, perhaps the fact that properties are much more affordable makes it a wash. Of larger impact to homeowners is the issue of exclusion by Fannie Mae and now Ginnie Mae (VA,FHA,Rural Development) loans in zones 1&2. This exclusion severely limits lending in these areas. In my mind, the Fannie/Ginnie exclusion issue is a zoning issue and should never have become a lender issue. Because lenders are fully insured, our local zoning authorities should determine when an area is too dangerous for habitation. Limited lending causes property values to decline by driving up inventory and decreasing demand. Puna (and HOVE) are the most affordable areas in the State. Buyers need as many loan programs as possible available to them. The current exclusion forces buyers into inferior, more expensive loan programs. Most of Kapoho, Leilani Estates and Lanipuna Gardens are in Zone 1. Interestingly, Kalapana, Kehena, Kaimu, the Hawaiian Beaches complex and even parts of now covered Royal Gardens are in Zone 2. Ainaloa, HPP and Hilo are all Zone 3. Zones in East Hawaii are delineated relative to the East Rift Zone. Hawaiian Ocean View Estates sits along the West Rift Zone and is also Zone 1. I always recommend that buyers work with a local mortgage brokers (our local banks exclude zones 1&2). Mainland underwriters seem to get jittery when they see the word “lava” in an appraisal report. They ask for “lava coverage”. It doesn’t exist. Homes are covered under the normal fire policy. Never mind that the rest of the world faces the daily possibility of a variety of unpredictable natural disasters, those faded “B” move memories seem to survive common sense. Seems to me they need to understand that here on Hawaii Island, we just learn to “go with the flow”!
by Denise S Nakanishi, R,CRS, ABR, GRI
Hawaii Foreclosure Basics
Last week’s front page article related to a bill winding its way through our State legislature may have confused those needing a primer on the basics of foreclosures. While many states limit foreclosure proceedings to either judicial or non-judicial, most Hawaii homes may be subject to either. Interestingly, the homeowner has no say in the type procedure initiated but the lender does. The unintended consequence of the non-judicial process has caused the legislature to re-think this unilateral arrangement. Non-judicial foreclosures laws in Hawaii have been in effect for only about 10 years and yet most foreclosures today follow these abbreviated procedures which basically require only a notice of default, posting in the newspaper for 3 consecutive weeks and an auction. Older mortgages do not contain the right to use the streamlined non-judicial procedures so the foreclosure must go before a judge prior to auction. Most properties currently in jeopardy involve recent mortgages so non-judicial procedures apply. We’ve all heard the horror stories of homes auctioned in error. Judicial oversight provided by a judicial foreclosure would have slowed the process enough so that cooler heads could prevail. Use of the non-judicial process was originally touted as a way to save time and money. While attorneys’ fees are supposed to be less, this hasn’t always been true. There is no limit or oversight related to what attorneys can charge. In fact, we often see both a mainland and Hawaii attorney (and escrow) involved. There is no deficiency judgment related to non-judicial foreclosures so a homeowner generally walks away. Any lender holding a note may choose a judicial foreclosure. The primary reason for doing so would be to position the lender to seek a deficiency judgment against someone with other assets to attach. Because the non-judicial process is supposed to be faster, the property should return to the bank faster and in better condition, however, delays are common. Unfortunately, news reports sometimes give the false impression that a homeowner’s attorney can easily stop the entire process. While an attorney may be able to delay the inevitable, the reality is that when a mortgage is in default, the property will eventually foreclose. Even though there recent legislation targeted unscrupulous mortgage rescuers, we still see questionable mortgage rescue ads. We also see ads from attorneys who would apparently take a retainer but are normally unable to influence the outcome. Last week’s article also notes that lenders may be ramping up their efforts in order to complete the process in anticipation of new elective process. If rumors related to the numbers of foreclosures still in the pipeline are correct, it will be awhile before we see an end to this problem. Real property rights are some of the most basic rights we are afforded as Americans. There’s no denying that we need to return our real estate market to normal as quickly as possible but, in my opinion, every effort to preserve basic rights of homeowners should carefully considered.
by Denise S Nakanishi, R,CRS, ABR, GRI
Winning When Sellers Finance
It’s Super Sunday! Today’s winner takes home all the marbles! Do kids even play marbles anymore? Is there an electronic version? Even though that particular game isn’t as popular as it once was, like football, seller financing is always in vogue. In fact, if I had a marble for every reason a seller might offer to finance, I’d have a sock full. I’d have a “no other way to finance” marble and one for “I want to earn the interest”. There’d even be an “outside the ring” marble for distressed sellers. But not all marbles are regulation marbles. In fact, players sometimes “fudge” by playing a “non-regulation” marble. When this happens, the “pros “generally feel it’s time to take their marbles and go home! Here’s the thing. Even in times when seller financing is less risky for buyers, knowing why a seller is willing to finance is critical. The mortgage meltdown left us with few options for vacant land loans especially for an out-of-state buyer. At times, sellers also opt to offer financing so that they can make extra money on their sale. Permit issues are a popular reason for offering financing as well. These are all fairly common and straight-forward reasons for offering financing. But what happens when the sellers owe more on the property than it’s worth or when their property is otherwise distressed or when the property simply will not appraise for the purchase price. These are situations when sellers tend to explore every sales approach. For a buyer, these offers should be considered with caution because there could be a “fudging” seller involved. Sales with an existing mortgage on the property are conveyed by way of an “agreement of sale”. This involves “wrapping” the mortgage which basically means that the buyer pays the seller and the seller continues to pay their note. Not all lenders embrace this concept because such a sale further encumbers title. While it’s possible to wrap the mortgage without lender permission, most title companies will not provide title insurance without it. But the difficulty presented in gaining lender permission pales in comparison with the problems created when a seller stops making payments on the underlying mortgage. This begins a chain of events that leaves everyone distressed. Of course, there are ways to address risks but it’s never foolproof. Seller financed properties generally do not (but can) include a formal appraisal so carefully consider information a about comparable sales. . There may be times when seller financing works best but be sure to consider the players and understand why they are playing and by all means, hire a REALTOR® who understands this type financing and who can advise you about the advantages and pitfalls. In this Superbowl of transactions, it’s time to put aside kids games and equip yourself to play with the big boys! Enjoy the game!
by Denise S Nakanishi, R,CRS, ABR, GRI
A Simple Concept
Real Estate ads are subject to a couple of sets of regulations. One recently amended State requirement continues to generate numerous questions. Disclosing the value of an estate is fairly unique to Hawaii. Until 2003, designation of estate quality as fee simple (FS) or leasehold (LH) was required on all forms of advertisement. While leasehold ownership must still be specifically noted, properties not so designated are now assumed to be fee simple. Because the concept of leasehold ownership is fairly unique, it should be no surprise that people always question the distinction between the two. In the most basic terms, fee simple means you own the property. As the name implies, leasehold properties include a lease as part of the conveyance. There are various forms of leases. Every lease is different. Conveyance of a leasehold property may include not only a transfer but a possible renegotiation of the ground lease as well. Additionally, leasehold conveyances involve both a lease transfer and a conveyance of the real property interests. Sales of leasehold properties are much more involved than fee simple transfers. Disclosures are more extensive. Leasehold prosperities in East Hawaii are basically limited to Hawaiian Homes, condo units along Banyan Drive and homes along Oceanview Drive. There may also be a few remaining leasehold units in Hale Moana Condominiums as well. A common belief is that leasehold properties belong to either the State or one of the larger Estates. In fact, churches or individual families own many. As relates to ownership, property is always conveyed with a “bundle of rights” regarded as the ownership “estate”. Fee simple ownership rights include the right to use the property for any legal purpose not otherwise limited by deed or subdivision restrictions. A lease could add further restrictions. Fee simple ownership exists indefinitely. Leasehold estates have a definite duration. While the ownership concepts are simple, the details of any property transfer are not. Understanding the differences is key in choosing not only the property but also the agent who will help guide you through this not so simple process!
by Denise S Nakanishi, R,CRS, ABR, GRI
Where’s the Beef?
Nothing sparks a livelier conversation than the issue of surveys. That’s one reason I mention it so often. It’s interesting that even the most seasoned sellers still object to the idea of paying for a survey. A new survey absolutely provides the best protection for all involved. Even though the benefits are covered with Sellers many times prior to accepting an offer, the expense still seems to cause controversy. After over a thousand transactions over the past 21 years, here’s my take on the subject. Always check with your agent, their opinion and your situation may different but here’s mine. You must survey. Buyers need to know what they are buying. On rare occasions it may be acceptable to waive the survey. An owner able to produce a recent survey and can verify all pins may have a good argument for not re-surveying. Older surveys should probably be re-done. Sellers of newly built homes often suggest the buyer should rely on the pins that were placed when the property was purchased. I disagree. This provides little assurance that the new improvements are properly situated. Remember, the County of Hawaii does not check setbacks compliance during construction. In fact, they don’t even determine that improvements (buildings) are placed on the correct lot. Recently subdivided parcels should not need to be re-surveyed especially if there are no improvements on the property. Economic considerations sometimes dictate the possible shifting of survey cost and responsibility. For instance, here on the Big Island, vacant land parcels sell for as little as $3000. A simple staking of the property could leave the seller coming out of pocket in order to close. Sellers sometimes want to use pin-finders as a way of cutting costs. Pin-finders are unlicensed “contractors”. REALTORS® cannot recommend them. Doing so subjects us to investigation and fine. Most pin-finders ultimately rely on a metal detector to find pins. The pins could be for some other purpose such as electrical poles. Buyers and sellers wishing to waive the survey requirement will likely be asked to sign a very strong notice advising them of the importance of doing the survey. Interestingly, property surveys are not always common practice in other markets around the county. Hence, out-of-area sellers aren’t always so keen to survey. All things considered, it certainly seems that everyone should be in agreement on this issue. Buyers want absolute assurance that the boundary pins are correct. Sellers want peace of mind knowing they have properly represented the property. To tell the truth, the whole issue leaves me scratching my head and wondering the same thing that little old lady did as she drove thru the fast-food window; “Where’s the beef?”
by Denise S Nakanishi, R,CRS, ABR, GRI
I’m Dreaming of a White Christmas…or would Blue be better??
Time was, selling a home meant that everything got a fresh coat of white paint! These days, the concept of “staging” has caused us to re-think the “white sells best” concept. A couple of years ago, I read an interesting article in the Old Republic Title News Digest. The article took a fresh look at colors and the messages they convey. Jamie Jackson, an interior designer with Pacific Home in Honolulu helped explain the psychology of color. Basically, each color palette paints a picture of a different lifestyle. For instance, it’s no accident that white conveys cleanliness. It’s the symbol of peace (dove), purity (bride) and elegance. Jamie says white, especially in Hawaii, can be used as a “blank canvas” upon which an owner can build. Contrary to popular belief, blue is a calming color not a depressing one. Jamie says that blue can be a reflection of the ocean. It’s being paired with contrasting colors and neutrals such as reds or rich dark browns. In my personal experience, blue is a color that evokes strong emotion; people love it or they hate it. Green obviously is a color that paints our island landscape. It can be a spring color symbolizing “renewal and growth” or it can be a calming color. Lanai areas are typically green focused areas. Be careful with “Paniolo Green” houses however. I’ve found that only homes built in the original style can get away with such strong exterior paint. Lemon yellow “represents harmony and optimism”. Jamie suggests that painting only one wall a “golden yellow will make a room appear larger”. Although citrus yellows may reflect the sunlight, I don’t find many amateurs using it successfully in their staging efforts. Like yellows, “dessert” colors such as tangerine, are considered joyful colors. Because they tend toward the warm range, I have seen them used quite successfully. I recently visited a home with purple bedroom walls. Children love the idea but unfortunately, children aren’t normally the ones selecting the home. Jamie says that purples
and pinks represent the “feminine side” but in Hawaii, they are also reflections of our tropical flowers. Apparently, a little goes a long way. Jamie suggests using them as accent colors. During a recent REALTOR® caravan, one home that evoked a very positive response was painted a combination of warm colors with white as an anchor. The use of color definitely turned an otherwise basic home into a showpiece. Giving up all white can be scary I’ll admit but there’s no need to “go where no man has gone before” in order to achieve great results. It’s fairly simple to find homes on-line that have used color to the fullest advantage. Your agent can likely recommend a good home stager or designer. Whatever color palette you choose, here’s hoping it all turns out Merry and Bright! Merry Christmas everybody!
Jamie and her partners can be found at www.pacific-home.com.
A Home For The Holidays 
It’s that time again! It’s time to remind sellers, that, especially in Hawaii, property does sell during the holidays! Conventional wisdom would indicate that the holiday season would be the worst time to sell. In Hawaii, however, this has not historically been true. While home sales in the rest of the nation lag during the holidays, here in Hawaii, the period between Thanksgiving and the New Year is one of our heaviest selling seasons. Wanna know who looks at property during the holiday season? Buyers, not lookers, that’s who! It makes perfect sense. Because so many of our buyers are traveling from off-island, they tend to combine their buying trip with their holiday break. Local buyers usually have extra time off during the holidays as well. You can bet the ones who take time out during this hectic time are very serious. If selling your home is on your “to do” list, you may want to back your time table up a bit. After all, think how much nicer your home will show with the holiday decorations. Take time to bake those holiday cookies; that “homey” smell helps create a sense of nostalgia. It’s a great “staging” opportunity. It helps mentally move a buyer into the home….which is exactly where you want them to be during this busy selling season!! Buyers can be sure that sellers willing to list at this busy time of year are very serious. Buying opportunities are better than ever but one word of caution to buyers; be careful that your Christmas shopping does not give you a “holiday hangover”. Just $100 of additional credit card debt will impact the amount of mortgage you can qualify for by over $15,000. Don’t forget that new debt or credit inquiries could negatively impact your credit score as well. Prices are stabilizing, inventory is excellent and interest rates are at historic lows. These are all reasons that buyers will be buying and sellers should be selling. So shop ‘til you drop but don’t forget to book time with your REALTOR®. Whether buying or selling, your agent will be happy to assist with your holiday real estate needs. After all, we know that there’s still time to “wrap up” your transaction in time for Christmas!
by Denise S Nakanishi, R,CRS, ABR, GRI
Special Electricity
Even in a down market, a staggering number of vacant parcels still change hands each year. These days, investors are snapping up well-priced properties quickly. Because inventory is high, buying opportunities are the best they have been in over a decade. Unless there’s something special about a property, competitive pricing is the fastest way to insure a sale. Interesting thing about vacant land listings, we rarely know if they are being shown. Most agents just assume the parcel is available if it’s still listed in the Multiple Listing Service. The risk of having a buyer disappointed after having been presented a lot for their consideration is fairly slim. Because pricing is so critical, buyers (and sellers hoping to be competitive) must remember to factor in the “hidden cost” of the Special Subdivision Power Provision (SSPP). While not unique to vacant land, it’s certainly a bigger issue when the charge to connect to power is part of the future cost to develop the property. This is especially important when considering a purchase in Puna. Take a typical Hawaiian Paradise Park (HPP) lot, for example. Several possibilities may exist regarding payment (if any) for power poles along the roadway. The power may be “regular” power which means no charge attaches. The property, could, however belong to an SSPP. This means that HELCO has outlined an area in which a cost-share charge applies and has been established for each parcel along that SSPP. Unless an owner makes a conscious decision to participate, the charge is not assessed until a connection to permanent power is established. The charge for a typical HPP lot usually ranges from $2000-$3000. I have, however, known of charges in excess of $8000 in Hawaiian Acres. As owners connect along each line, the charge deceases. Don’t forget that these charges can apply to residential sales as well. HELCO will allow owners to prorate the payments over several years, making the charge very affordable (normally around $30 per month in addition to use charges). SSPP charges under $2000 must be paid lump sum and for participants with appropriate balances, must be paid upon transfer. No matter where you buy on Hawaii Island, it’s a good idea to inquire if an SSPP exists. Most Real Estate offices have a record of affected properties listed by TMK. The list is updated on-line or you may also verify if an SSPP applies by calling HELCO Engineering . It’s important to check because, after all, you don’t want the cost of electricity to turn a simple purchase into a truly “shocking” experience!
by Denise S Nakanishi, R,CRS, ABR, GRI
VA Benefits: Use It OrLoose It!
For years, it seemed that Hawaii Veterans’ home loan benefits existed in name only. With previous loan limits hovering around $230,000, trying to use VA loan benefits seemed hopeless in most of the state. Two major factors changed this. Home prices have softened, again allowing Vets to qualify for existing inventory. In addition, Veterans can begin searching with confidence knowing their loans can be guaranteed on pricing even over $600,000 as long as they qualify financially. There are reasons that using VA benefits makes a lot of sense. It’s refreshing to see that VA seems willing to bend over backward to assist qualified Veterans. Once again, VA interest rates are competitive with prevailing conventional rates. Veterans enjoy higher allowable debt ratios enabling them to purchase more house with the same income. While other programs (especially zero down programs) cap the borrower’s debt ratio at 29-33%, including the proposed house payment, VA expands this ratio to 41%. As an example, a dual income family in East Hawaii making $5000 per month could qualify for a VA mortgage of approximately $350,000. Other loan programs would cap this amount at approximately $285,000. VA has always been a bit more forgiving about credit “hiccups” than other loan programs. Where the Veterans Administration had strict requirements for homes less than a year old in the past, these requirements seem to have been relaxed. So, while it’s still not possible to build a homes using a VA loan, purchasing new construction (and there’s still plenty to purchase) is an appealing possibility. Many National Guard and Reserve soldiers do not realize that they qualify for VA home loan benefits. Widows of qualified Vets can use a spouse’s benefits but children cannot. For this reason, I always encourage Veterans to use their benefit. It’s possible to inherit a home but, for other than a spouse, VA benefits are extinguished at death. Vets with existing mortgages should consult their lender to determine if refinancing into a VA loan is worthwhile. Remember, other government guaranteed loans (Rural Development) do not set limits on the cost of the home but caps on household income keep loan amounts below the median priced home in most areas. There are geographic restrictions related to RD loans, but not with VA. In fact, in general, VA loans have fewer restrictions and limitations. FHA loans, which are low-down government insured loans have a lower loan cap than VA. Issues such as catchment, roads and ingress/egress have made FHA loans to be less common in our local market. Considering that no down payment is required for VA loans, points are now negotiable and interest rates are still very low, it’s easy to understand why VA loans are once again becoming very popular in and around our East Hawaii neighborhoods. All-in-all, this means that VA loans are good for sellers and great for us Vets!
by Denise S Nakanishi, R,CRS, ABR, GRI
Looking for Treats, not Tricks?
It’s that time of year again. Halloween gives us a chance to be silly and show our personalities in as bizarre a fashion as we choose. It’s all in good fun. Looking good is important and making a good first impression is critical whether you’re trying to be the Bride of Frankenstein or off to a job interview. As the old adage goes, “there’s never a second chance to make a good first impression”. It’s just as true when selling a home and unfortunately applies even if sellers aren’t realizing a profit. Curb appeal is crucial. We are quickly approaching what is normally one of our busiest selling seasons. If your home is on the market, it might be a good idea to walk across the street, turn around and see if your home is “dressed” to impress. Curb appeal is crucial. A well-groomed exterior, including fresh paint and neat, trimmed yard set the stage for the attitude of a potential buyer. Make no mistake, if the yard is a mess, a buyer will look more critically at all aspects of the interior spaces. Make sure the inside of you home sparkles. Clear the counters, repair cracked drywall, repair loose tiles. A messy or cluttered interior weighs the house down. Spaces look and feel smaller. Get rid of junk, even if you have to rent a storage unit. The feeling of space, light and cleanliness are the very reasons we love looking at home magazines. These are major attractions when a buyer views a property. It’s hard work but a clean house not only sells faster, it tends to bring top dollar. After all, isn’t that your goal? As a seller’s agent, I know it’s always mine! Here’s wishing you only treats and no tricks this Halloween!
It’s a Big Ol’ Digital World Out There!
by Denise S Nakanishi, R,CRS, ABR, GRI
Our digital world has gotten so huge that if considered as an extension of our physical world, we would not be able to comprehend the magnitude. Digital technology has brought amazing change to the business of real estate. Digital imaging, email and the Internet have spawned customer independence and created a level of convenience we could not have imagined even a decade ago. REALTORS® no longer use conventional photos. Digital images are easier and provide definite advantages over film. One huge advantage is the ability to preview images on-line. In fact, Sellers should take advantage of digital imagine technology prior to listing. Sellers taking photos of their property in advance are able to use their cameras as a staging tool. Posted photos go not only to the Multiple Listing Service but as noted below; they get distributed across the entire digital world! Cluttered counter tops, unmade beds or a messy presentation are sure ways to guarantee that a potential buyer clicks thru to the next listing! E-mail has made it convenient for buyers and sellers to correspond with an agent 24/7. When it comes to real estate related websites, the number is mind boggling. Watch this. Wanna know what properties are being foreclosed? Go to www.realtytrac.com. Realty Trac allows you to search pre-foreclosed and foreclosed properties by zip code ( $49.95/ month after a 7 day trial). Frontdoor.com is sponsored by HGTV and Scripps Network. It’s a convenient place to search listings and connect to research content referenced on HGTV, DIY, Food Network, Fine Living, etc. Cyberhomes.com is an AOL sponsored realty site with a customizable valuation estimate tool. Property amenities can be entered manually allowing improvements to be included in their value estimate. GoogleBase.com follows a “Craig’s List” format but in a more organized and aesthetically pleasing fashion. Google draws from their on-line search returns (Homes and Land, agent websites, Hawaii Information and For Sale By Owner) in order to populate the site. The base sites are not always monitored for accuracy so some listing information is out-of-date. In a similar fashion, Oodle.com grabs listings from classified ad sites. The data is not always segregated correctly (Kona listings are mixed with Hilo, etc). The list goes on. There’s Craigslist.com, Vast.com, Propsmart.com, Trulia.com, homescape.com, citycribs.com, house.com, CLRsearch.com, livedeal.com, yahooclassifieds.com, move.com, moving.com, alohalivng.com and zillow.com. Each site tries to service a different niche’ or provide enhancements to attract searchers. Edrnet.com (Environmental Data Resources) offers property specific environmental information for a fee. Information on homes used as meth labs, close to leaking underground tanks or those near existing or previous landfills is available. Now, here’s the thing. Remember, that pair of underwear or overflowing trash can in your listing photo. It may not disappear with your listing. The above list of sites where a listing could show up is just a drop in an, never-ending, over-flowing digital bucket!
Still A Roller Coaster Ride
Recent headlines have even casual observers seeking clarification. The recent Hawaii Tribune Herald report that foreclosures are up generated as many questions as answers. Remember, “all real estate is local”; very local. A close look at foreclosure notices reveals that the majority are still concentrated on the west side of Hawaii Island. The news that banks are temporarily halting foreclosures generated interest from buyers and owners alike. Some even wondered if the government would require lenders to un-do foreclosures. At issue is adequate procedural reviews of foreclosure documents. At this point, completed sales of foreclosed properties don’t seem to be involved. The fix doesn’t seem complicated so this may pass quickly. Noteworthy is an observation on foreclosures vs short sales. Foreclosed owners hoping to become homeowners again will likely find themselves waiting longer. Fannie Mae recently instituted a 7 year (instead of 4) wait period. Other lenders will likely follow the Fannie Mae lead. The fact that this period is reduced to 2 years with a short sale should encourage owners to consider a short sale route when they can. The hiatus in foreclosures may offer the perfect opportunity to pursue alternatives to foreclosure. Overall, the market looks like it’s staying fairly even with many areas showing lower inventory and only minor adjustments in pricing.
Area |
Active 1st
Qtr/3rd qtr |
Med Active $ 1st /3rd qtr |
# Contingent
1st/3rd qtr |
Contingent $
1st/3rd qtr |
# Sold
1st/3rd qtr |
Sold $
1st/3rd qtr |
HPP |
138/109 |
269900/
275000 |
52/39 |
202200/
182000 |
35/36 |
202000/
200500 |
S. Hilo |
286/196 |
296900/
349950 |
56/46 |
272000/
297000 |
49/58 |
262000/
248500 |
Ainaloa |
22/36 |
197997/
163000 |
21/10 |
132200/
128750 |
15/9 |
126000/
123900 |
Leilani |
12/15 |
186000/
149000 |
6/5 |
195100/
164995 |
12/9 |
187000/
170000 |
Nanawale |
15/16 |
137000/
99999 |
6/2 |
97383/55450 |
7/6 |
91250/
76000 |
Mauna Loa
Estates |
11/7 |
201000/
225000 |
4/4 |
241000/
132065 |
0/2 |
0/172000 |
Royal Hwn
Estates |
6/15 |
191083/
149500 |
2/0 |
181250/
N/A |
1/1 |
138700/
102000 |
Fern Acres |
10/9 |
170680/
153000 |
4/5 |
174000/
99500 |
7/0 |
183500/
N/A |
The fact that we aren’t seeing a huge difference in 1st and 3rd quarter numbers indicates nominal effect related to the First Time Homebuyer’s credit. Second quarter numbers aren’t published here but can be found at www. majormom.com. Those numbers are fairly consistent with activity during 1st and 3rd quarters. Land sales are still very soft, driven mostly by high inventory levels. Hamakua/N. Hilo activity is up but pricing is down primarily as a result of a recent bulk sale. These values have remained historically strong. Our biggest pool of buyers is still local people looking for a principal residence. Homes priced outside that demographic will likely spend time on the market. So, even though life in the world of East Hawaii real estate seems to be stabilizing, it seems that we are still experiencing unexpected twists and turns that will keep us on a roller coaster ride for some time to come.
Proper Restrictions
by Denise S Nakanishi, R,CRS, ABR, GRI
Conditions, Covenants and Restrictions (CCRs) are normally incorporated in the deed when property is initially subdivided. CCRs are said to “run with the land”, hence, they are binding on subsequent owners. Advocates of such restrictions feel property values are enhanced because minimum standards by which all owners must comply are formalized. This concept of maintaining quality neighborhoods is so well established that newer (mostly mainland)subdivisions are even including exterior home maintenance such as yards and painting as part of the community association duties. CCRs can cover a myriad of issues. Minimum house size, covenants against barking dogs and restrictions against the keeping of farm animals are common. Prohibitions against clotheslines, garage requirements and even house color are other common restrictions. Those opposed to such limitations feel it’s an undue restraint on their individual property rights. They feel whatever they wish to do on their property is their business. Many people who feel this way are kind enough to buy in remote areas where their activities will not affect the quiet enjoyment by neighboring property owners. Because many rural Big Island subdivisions consist of narrow lots, unsightly conditions or noisy neighbors can seriously impact value or even the ability to sell at all. Your agent should inform you if Conditions, Covenants and Restrictions apply when you view property. Review the preliminary title report carefully. It’s possible for deed restrictions to apply to an individual property as well as those imposed by the subdivision. Review the list of restrictions carefully. Your needs may be very specific. If you are sensitive to crowing chickens or barking dogs, let your agent know. You’ll want to be certain you won’t be prohibited from keeping your pet pot-bellied pig or establishing that Bed and Breakfast you had your heart set on. It’s just one more ball your agent may need to juggle in order to help you find that perfect piece of paradise!
Taming Taxes??
by Denise S Nakanishi, R,CRS, ABR, GRI
If I’m being fair, I have to admit that our real property taxes are very reasonable. This is largely because unlike most areas of the Country, real property taxes in Hawaii do not fund our school system. Given the state of the economy, it seems inevitable that these taxes are bound to rise. There’s no time like the present to think about minimizing that future tax bill. As I mentioned previously, filing a homestead exemption is key to reducing taxes on a principal residence. Most homeowners do not realize that it is also possible to apply for a 3% growth cap which will cap yearly increases. Hawaii County classifies land in 9 different ways. The fact that classifications are based on the “highest and best use” should be an immediate indicator that the classes are directly tied to Chapter 7 of the Hawaii County Code, which, as you may have guessed, covers tax assessments. Properties are classified as residential, affordable rental housing, apartment, hotel/ resort, commercial, industrial, agricultural/native forests, conservation and homeowner. Besides a homestead exemption, dedications and non-speculative use assessments are the most effective methods of minimizing real property taxes. While these are normally associated with agricultural lands, even lands in urban districts can be dedicated to a specific agricultural use. Dedications are for a minimum of 10 years and lands in agricultural districts can be dedicated up to 20 years. There are a couple of things to keep in mind when deciding on a non-speculative use. When lands are dedicated to agricultural use, roll-back taxes (the collection of taxes forgiven during the dedicated period) could apply if the property is either sold or sub-divided below 5 acres lots. Dedications are recorded at the Bureau of Conveyances so the issue of roll-back taxes normally shows up on a title search. Even when it’s not noted on the title search, it’s a good idea to insure (especially) agricultural properties are not ag dedicated. Seller profit margins are so tight right now, that payment of roll-back taxes might be enough to de-rail a sale. A non-dedicated ag use will discontinue when the property is sold but roll-back taxes are not an issue. Fortunately, the folks at our real property tax office will attempt to contact the new owner to see if they wish to continue the use. With either a non-speculative use or ag dedication, the County will set aside ¼ acre for residential purposes if there is a home located on the property. This portion will be assessed as one of the homeowner classes. Remember, I’m only here to suggest possibilities. The experts at the County of Hawaii Real Property tax office are really in the best position to advise regarding the opportunities that apply to you. And even though they are responsible for generating your tax bill, they are always very nice and super helpful. They are always ready to devote time to help you find ways to tame your taxes!
Enjoy Your Dinner!
by Denise S Nakanishi, R,CRS, ABR, GRI
Ahh, peace and quite…. Recall if you dare, the days prior to October 1, 2003. No dinner was complete without a huge helping of telemarketing! Worse, when they called, there was no graceful way to get them off the phone. Didn’t they get it! They were invading our space. Many of us finally resorted to either screening our calls (and to think the answering machine was first used to insure we didn’t miss calls) or to caller ID. In other words, we were willing to pay to insure we weren’t bothered. You may be surprised to learn that it took 10 years for the FCC and the FTC to formulate legislation that would help us recapture our sanctuary. The “Do Not Call” list evolved as a result of the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994. Guess what, it applies to REALTORS® just like everyone else. Here’s what I know. Both agencies have a version of the law. The FTC regulates intra-state only while the FCC has jurisdiction over all phone solicitations, so the FCC rules apply most often. Hawaii does not have a separate set of rules. There are basically two situations in which we can still call. An established business relationship allows us to call for 18 months. So, if I sell you a house, it’s o.k. for me to follow-up with you for the next 18 months. Secondly, with express written permission, we are allowed to call. For instance, if you send a request for one of our newly published newsletters, we have the permission to give you a call. This type written permission is good for 3 months. The rules apply only to registered residential and mobile phones. It does not apply to business phones, door-to-door solicitations or email. Remember, REALTORS® are not supposed to solicit an already listed property under any circumstance. It’s a violation of our strict Code of Ethics. You must re-register every 5 years. This is your reminder that it is now time to register. Go to www.donotcall.gov or call 1-888-382-1222. But don’t disable that caller ID just yet. November is just around the corner and guess what, politicians are definitely are still allowed to call…hmmm, how nice of them to exempt themselvesJ By the way, if you want a copy of our next newsletter, give us a call, we’ll be happy to hear from you and we’ll only call if you ask us to!
Extreme Nesting
by Denise S Nakanishi, R,CRS, ABR, GRI
I grew up in a home not unlike many on the Big Island. It had three bedrooms and was about 1000 square feet. It was pretty much the same as many others in Palatka, Fla. In those days, it was a big deal if a house had more than one bathroom. Sound familiar? If so, innovations and the evolution of the American home might be a real eye-opener. “Nesting” , the desire to stick close to home, really blossomed following 9-11. In fact, the current economic downturn and the idea of a “stay-cation” continue to interest owners in the concept of creating a personal sanctuary. Crafting spaces specific to an owner’s lifestyle has increased the popularity of home offices, media rooms, craft rooms, exercise rooms, saunas and, of course, swimming pools. As witnessed by the continuing popularity of HGTV and home improvement stores, the focus on home renovations which intensified during the recent housing boom has not waned. In fact, personal nests have reached a whole new level. I’ve personally seen indoor hand-ball courts, tennis courts, wine cellars, indoor waterfalls, putting greens, skate parks and 3-hole golf courses. From time-to-time we see tree-houses on the market and our office previously had a home listed with its own baseball field. These, however, pale in comparison with the possibilities. Love bowling? According to realestate.msn.com*, for a cool $88,000, you could be throwing gutter balls any time you wish with your own personal bowling alley. Worried about losing your sharpshooter edge? Adding a firing range might be the answer. For a mere $30,000 you can commence fire at your heart’s desire. How about an indoor basketball court? Adding one will take you to new heights; 2 ½ stories to be precise. Some prefer indoor climbing walls, indoor shuffleboards or his and her hobby areas. The possibilities are endless but here’s the rub. These spaces are so specific that re-sale could become a real problem. Take for instance, the late Michael Jackson’s former digs at Neverland Ranch. Except for the novelty, the number of buyers specifically interested in a 6.5 square mile zoo and amusement park which happens to come with a mansion is probably fairly limited. Creating a personal home playground might sound like the ultimate fantasy but life can be unpredictable. It’s good to remember that the time may come when the property has to be sold. Too much of a good thing will severely limit the number of like-minded buyers. One would think that living on an active volcano in the middle of the ocean would be extreme enough for just about anyone. If, however, you feel compelled to make a few unorthodoxed modifications to your home, you might want to first chat with your REALTOR®. After all, you don’t want your nest to become so extreme that no other hen will ever want to roost thereJ
*www.realestate.msn.com 5/18/2006
