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7 Tips for Today's Market

Whether you are buying or selling, these bits of advice can help you you navigate through Hawaii's uncertain real estate world

Tip 1: Think Locally, Act Locally1: Think Locally, Act Locally

The nation’s economy has gone to hell in a hand basket, with a possible recession waiting around the corner. It seems like the absolute worst time to be buying a new home. However, before being discouraged by the nation’s troubled financial waters, look around the confines of your own pond. Hawaii’s economy is still strong, with economists predicting only a slight slowdown in 2008, and, with the Fed’s interest-rate cuts earlier this year, financing is readily available. If you’re standing on solid financial footing, you might consider jumping into the real estate pool. But remember that good economic policy begins at home. You need to get your financial house in order before you even think about looking for a new home. Track your spending over the course of three months and find out where your money is going and why. Then make a budget and adjust your spending and lifestyle accordingly. Just because the bank says that you can afford a $3,000-a-month mortgage payment doesn’t mean you can. Only you and your checkbook know for sure.

Tip 2: Do Your Homework2: Do Your Homework
One thing that the subprime mortgage crisis made clear was that no one was crunching numbers during the frenzy – not the homebuyers, not the lenders, not even the wizards on Wall Street. The loan products got more complicated and the financial structures behind them even more so. The bad news is that many mortgages still have bells and whistles attached to them, so it is important for borrowers to know what those provisions are and what they require. When it’s time to visit a credit counselor, financial planner or lender, make sure that you speak freely and honestly and ask questions, a lot of questions. Many people clam up. They would rather discuss their marital infidelities than their financial screw-ups. It’s uncomfortable and difficult, but it’s nothing compared to dodging phone calls from collection agencies.

Tip 3: Think Like Warren3: Think Like Warren
Legendary investor, businessperson and philanthropist Warren Buffet amassed his $52-billion fortune in part by practicing some good old-fashioned business principles, one of which is “buy and hold.” The strategy is especially relevant now that the days of flipping properties for a quick profit have flopped. Thinking long-term involves a mindset that looks past current trends, fads and momentary losses of sanity. It identifies real, lasting value, always a good way of approaching real estate in a city that is surrounded by water. Think marriage, not one-night stand. (We told you it was old fashioned.) By the way, Buffet still lives in the same Omaha, Neb., house that he bought for $31,500 in 1958. It’s now valued at $700,000. The guy’s sitting on a gold mine!

Tip 4: Go Surfing4: Go Surfing
According to the National Association of Realtors, 74 percent of prospective buyers who drove by a home for sale first saw the property online. Of those who stopped and took a walkthrough of the house, 61 percent had visited it on the Web beforehand. The Internet’s significant influence on commerce of all kinds is hardly a revelation. But one thing people may forget is that the Internet is the home of the first impression, which is extremely important in today’s buyers’ market. When posting your property, make sure that your listing has plenty of pictures, at least six, and that those photos are well staged and capture the attributes of your home and maybe even the immediate surrounding area. If you don’t hook buyers during that first viewing, you might not get them back. However, it’s not just about pretty pictures. Once the word goes out, it’s out and you can’t get it back. That’s why they call it the World Wide Web. Price your home intelligently, basing your reasoning on sound research. One of your most important tools: the Web.

Tip 5: Be Realistic5: Be Realistic
It’s over. The real estate bubble has burst. If you don’t believe us, we have some stock in we’d like to sell you, and we’ll throw in a sock puppet as a bonus. If you’ve bought your property in the past couple of years, then you’ll have to come to terms with not recovering your money if you’re selling today. That’s the reality of the current market, which some analysts believe will be with us for quite a while. In the old days (2005), sellers could get away with a little overpricing, because the market would eventually catch up. Try and look at your property through buyers’ eyes and study the comps as closely as they do. It will take some of the emotion out of the transaction and may save you a lot of time and pain later on.

Tip 6: It Never Hurts to Ask6: It Never Hurts to Ask
Making a low initial offering on a property may seem a little un-neighborly, but it’s a buyers’ market, and you might be surprised at the answer. Pay attention to the transactional history of the house: Is it a short sale? How long has it been on the market? Is it a re-listing? Those tea leaves might give you a little insight into the seller’s motivation. It may take a while for reality to set in (see previous tip), but sellers and their prices will come around, and you might have found the right person at the right time. The worst thing that could happen with a low offer is that the seller could turn you down, at which time, you could either make another offer, or just move on.

Tip 7: Rent/Full House/Meet the Parents7: Rent/Full House/Meet the Parents
You might feel that your sitcom of a life can’t be an American Dream until you own your own home. But if your current housing situation is favorable, whether it be renting, sharing or freeloading, it might be the best place for you now. The market is in flux, so waiting for prices to fall while saving for a down payment is a sound strategy. However, keep in mind that it’s exactly what many others will be doing, so expect a small bump in the rental market. Don’t be surprised if your landlord/parents decide to take advantage of the increased demand. Another thing to consider is investing in real estate, while still maintaining your rental or back bedroom at mom and dad’s. Purchase a property, but make the move when your life and finances are ready (like when you get a girlfriend or boyfriend), or use the property as a possible stepping stone to another purchase later on. Sometimes you can have it all.



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