West Hawaii Assoc. of Realtors What's New

Are Closing Costs Tax Deductible?

Thu, 24 Feb 2022 01:12:39 GMT

Here’s the scoop on what’s tax deductible when buying a house.

The answer to whether closing costs are tax deductible -- or mortgage interest and property taxes for that matter -- is often maddeningly, “It depends."

Basically, you'll want to itemize if you have deductions totaling more than the standard deduction, which for 2022 is $12,950 for single people and $25,900 for married couples filing jointly. Practically every taxpayer gets this deduction, homeowner or not. And most people take it because their actual itemized deductions are less than the standard amount.

But will you have enough deductions to itemize?

To see, you need to know what's tax deductible when buying or owning a house. Here's the list of possible deductions:

Closing Costs

The one-time home purchase costs that are tax deductible as closing costs are real estate taxes charged to you when you closed, mortgage interest paid when you settled, and some loan origination fees (a.k.a. points) applicable to a mortgage of $750,000 or less.

But you'll only be able to benefit from them if all your deductions total more than the standard deduction.

Costs of closing on a home that aren't tax deductible include:

Real estate commissions
Appraisals
Home inspections
Attorney fees
Title fees
Transfer taxes
Mortgage refi fees

Mortgage interest and property taxes are annual expenses of owning a home that may or may not be deductible. Continue reading to learn more about those.

Mortgage Interest

Yearly, you can write off the interest you pay on up to $750,000 of mortgage debt. Most homeowners don't have mortgages large enough to hit the cap, says Evan Liddiard, CPA, director of federal tax policy for the NATIONAL ASSOCIATION OF REALTORS®. But people who live in pricey places like San Francisco and Manhattan, or homeowners anywhere with hefty mortgages, will likely reach the maximum mortgage interest deduction.

Note: The $750,000 cap affects loans taken out after Dec. 15, 2017. If you have a loan older than that and you itemize, you can keep deducting your mortgage interest on debt up to $1 million. But if you refi that loan, you can only deduct the interest on the amount up to the balance on the day you refinanced – you can't take extra cash and deduct the interest on the excess.

Home Equity Loan Interest

You can deduct the interest on a home equity loan or a second mortgage. But — and this is a big but — only if you use the proceeds to substantially improve your house, and only if the loan, combined with your first mortgage, doesn't add up to more than the magic number of $750,000 (or $1 million if the loans were existing as of Dec. 15, 2017).

If you use a home equity loan to pay medical bills, go to Paris, or for anything but home improvement, you can't deduct the interest.

State and Local Taxes

You can deduct state and local taxes you paid, including property and income taxes (or sales taxes in states where there is no income tax), up to $10,000. That's a low cap for people who live in places where state and local taxes are high, says Liddiard. To give you an idea of how low: The average amount New Yorkers have taken in state and local tax deductions in past years is about $22,000.

Loss From a Disaster

You can write off the cost of damage to your home if it's caused by an event in a federally declared disaster zone, like areas in Florida after Hurricane Michael or Shasta County, Calif., after a rash of wildfires.

This means standard-variety disasters like a busted water pipe while you're on vacation or a fire caused because you left the toaster on aren't deductible.

Moving Expenses

This deduction is also only for some. You can deduct moving expenses if you're an active member of the armed forces moving to a new station.

And by the way, unless you are active military, if your employer pays your moving expenses, you'll have to pay taxes on the reimbursement. "This will be a real hardship to many because it’s noncash income," says Liddiard. Some employers may gross up the reimbursement amount to provide cash to pay the tax, but many likely will not.

Home Office

This is a deduction you don't have to itemize. You can take it on top of the standard deduction, but only if you're self-employed. If you are an employee and are working from home during the pandemic, you can no longer write off home office expenses. You claim the deduction on Schedule C .

Student Loans

Anyone paying a mortgage and a student loan payment will be happy to hear that the interest on your education loan is tax deductible on top of the standard deduction (no need to itemize). And you can deduct as much as $2,500 in interest per year, depending on your modified adjusted gross income.

Ways to Increase Your Eligible Deductions

There are some other costs that can be itemized not related to being a homeowner that could bump you up over the standard deduction. This might allow you to write off your mortgage interest. Charitable contributions and some medical expenses can be itemized, although only that portion of your medical expenses that exceed 7.5% of your adjusted gross income can be deducted.

So if you've had a hospital stay or are generous, you could be in itemized-deduction land.

Also, if you're a single homeowner, it could be easier for you to exceed the standard deduction, Liddiard says. The itemized deductions on your house will probably more quickly break the 2022 $12,950 standard deduction threshold than a couple's similar house will break their $25,900 threshold.

Tax-Savvy Home-Buying Ideas

If you're a prospective homeowner with an eye to making the most efficient use of your tax benefits, here are a few ways to buy smart:

Especially in expensive areas, buy a less expensive home so you don't hit the cap on mortgage debt and local and property taxes, says Lisa Greene-Lewis, a CPA and tax expert for TurboTax.
If you're buying a higher price home, make a bigger down payment so your original mortgage doesn't exceed the $750,000 cap.

How to Decide If You Can Itemize

To see whether you have enough deductions to itemize, get some guidance from TurboTax .

Though every homeowner's tax benefits will be a little different, in the end, you're building equity, you'll likely make money when you sell, and you have the freedom to paint your walls any color you want and get a dog.

- Leanne Potts

8 Easy Mistakes Homeowners Make on Their Taxes

Thu, 24 Feb 2022 01:08:09 GMT

Don’t rouse the IRS or pay more taxes than necessary — know the score to avoid common tax mistakes.

As you prepare your tax returns for 2021, be careful not to commit any of these eight common tax mistakes, especially when it comes to the property tax deduction or the mortgage interest deduction.

Tax pros say these home-related tax mistakes can cost you money or draw the IRS to your doorstep.

#1 Deducting the Wrong Year for Property Taxes

You take a tax deduction for property tax in the year you (or the holder of your escrow account) actually paid them. Some taxing authorities work a year behind — that is, you’re not billed this year's property taxes until next year. But that’s irrelevant to the feds.

Enter on your federal forms whatever amount you actually paid in that tax year, no matter what the date is on your tax bill. Dave Hampton, CPA, a tax manager with HG CPA, LLC, in Cincinnati, has seen homeowners confuse payments for different years and claim the incorrect amount.

Tip: Taking this deduction requires that you itemize.

#2 Confusing Escrow Amount for Actual Taxes Paid

Here's another property tax issue that results in common tax mistakes. If your lender escrows funds to pay your property taxes, don’t just deduct the amount escrowed. The regular amount you pay into your escrow account each month to cover property taxes is probably a little more or a little less than your actual property tax bill. Your lender will adjust the amount every year or so to realign the two.

For example, your tax bill might be $1,200, but your lender may have collected $1,100 or $1,300 in escrow over the year. Deduct only $1,200 or the actual amount of property taxes paid that is noted on the Form 1098 that your lender sends. If you don’t receive Form 1098, contact the agency that collects property tax to find out how much you paid.

#3 Deducting Points Paid to Refinance

In many cases, you can deduct in full the points you paid your lender to secure your mortgage for the year you bought your home, if you itemize. However, if you pay points in connection with a refinance, you must deduct the points over the life of your new loan.

For example, if you paid $2,000 in points to refinance into a 15-year mortgage, your tax deduction is $2,000 divided by 15 years, or $133 per year.

#4 Misjudging the Home Office Tax Deduction

There are two ways to calculate the home office deduction. One is more complicated, has to be partially recaptured if you turn a profit when you sell your home, and can pique the IRS’s interest in your return. But it also can give you a larger deduction than the simpler method.

If you don't care to claim actual costs, which you do under the more complicated method, you can use the simplified home office deduction . If you’re eligible, you can deduct $5 per square foot up to 300 feet of office space, or up to $1,500 per year.

#5 Failing to Repay the First-Time Homebuyer Tax Credit

If you used the original homebuyer tax credit in 2008, you must repay 1/15th of the credit over 15 years.

If you used the tax credit in 2009 or 2010 and then within 36 months you sold your house or stopped using it as your primary residence, you also have to pay back the credit.

The IRS has a tool you can use to help figure out what you owe.

#6 Failing to Track Home-Related Expenses

Common tax mistakes are often of omission: not keeping records. If the IRS comes a-knockin’, don’t be scrambling to compile your records. File or scan and store home office and home improvement expense receipts and other home-related documents as you go.

#7 Forgetting to Keep Track of Capital Gains

If you sold your main home last year, don’t forget to report capital gains on any profit above the excluded amounts. You can typically exclude up to $250,000 of any profits from your income (or up to $500,000 if you’re married filing jointly).

So, if the cost basis for your home is $100,000 (what you paid for it plus any improvements) and you sold it for $400,000, your capital gain is $300,000. If you’re single, you owe taxes on $50,000 of gains.

However, there are minimum time limits for holding property to take advantage of the exclusions, and other details. Consult IRS Publication 523 . And some higher-income earners could get hit with an additional tax if the gain exceeds the exclusion.

#8 Claiming Too Much for the Mortgage Interest Deduction

If you're eligible to itemize, the MID loan limit is $750,000. Before Dec. 16, 2017, the limit was $1 million. Make sure your loan is grandfathered before claiming the old limit.

Interest paid on home equity loans and second mortgages is deductible, but only if the proceeds of such loans were used to substantially improve the home that secures the loan. You can’t deduct interest on home equity loans that were used for things like student loans or cars.

And the amount of all mortgage loans (first, second, home equity, and loans for a second home) can’t exceed the $750,000 or $1 million limits.

This article provides general information about tax laws and consequences, but shouldn't be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.

As you prepare your tax returns for 2021, be careful not to commit any of these eight common tax mistakes, especially when it comes to the property tax deduction or the mortgage interest deduction.

Tax pros say these home-related tax mistakes can cost you money or draw the IRS to your doorstep.

- G. M. FILISKO

How to Shop Around for a Mortgage Loan

Thu, 20 Jan 2022 20:59:03 GMT

Home buyers who do mortgage loan shopping can avoid leaving money on the table.

Whether you’re shopping for new bed sheets or a new car, the drill is usually the same. Hit the reviews, check with friends, and scope out the best deal. After all, who wants to buy a car that racks up repair bills right away? Yet when picking a mortgage loan, borrowers don’t always think about comparison shopping.

In a Bankrate survey of recent home buyers, 12% of millennials said they believe their mortgage rates were too high. Some buyers may think that when mortgage rates are low, they don't need to shop for the best offer. But even a few basis points can make a difference of thousands of dollars over the life of a loan, according to Bankrate, the Consumer Financial Protection Bureau , and the Federal Trade Commission .

You may think mortgage shopping is about as much fun as prepping for a tax audit. It’s true that comparing home mortgages can get complicated. But you don’t need a finance degree to make an informed decision. Here are some steps to get there.

Find a Few Lenders

When looking for lenders to consider, loan officers recommend going to a few sources:

Locals you know and trust: “Make sure the lenders you’re comparing come from referrals from local people you know who’ve worked with them — like your friends or relatives,” advises Jeff Koch, vice president of residential lending at Draper & Kramer Mortgage Corp in Schaumburg, Ill. “Wherever you have trust established would be a good source.”
Your real estate agent: “If you’re working with a real estate agent, find out if they have any feedback or advice on a lender or a loan officer,” recommends Jim DeMarco, branch manager and senior loan advisor at Flagstar Bank in Seattle.
Online reviews: These can be a good starting point, DeMarco says. “If you see a lot of really good reviews, that means people are taking the time to provide them.”

Have an Intro Mortgage Loan Meeting

During a meet and greet, you and the loan officer will usually ask each other questions, and the loan officer will use that information to assess your qualifications. That may sound cut and dried, but the meeting should be fluid based on what you’re ready to do.

Typically, the loan officer would schedule a meeting focused on comparison shopping separately. If that sounds painful to borrowers who want to (literally) get moving. No worries, Koch says. “The borrower may be well versed and want to get right to what’s most relevant for them, which are the financial and comparison details. But a lot of people need to go over their own questions or cover key topics first.”

Want to meet virtually? “Some folks are just more comfortable virtually, and that’s OK,” DeMarco says. “I’ve closed loans with people I’ve never talked to on the phone. It’s all via text.”

Interview the Mortgage Loan Officer

Whichever way you choose, this meeting is prime time to interview the loan officer. Borrowers need to find someone who will be in there with them and can problem solve. “We call unanticipated problems ‘icebergs,’” DeMarco says. “You think there’s smooth sailing. And then, suddenly, you smack into an iceberg."

Check out the lender’s communication strategy and their process for delivering on time. “The process is highly complex, and you’d think professional lenders all would have mastered it. That’s not the case,” says Koch. “When a loan isn't delivered on time, people’s finances and lives are basically balanced on the head of a pin, which is the closing date.”

To avoid problems, ask questions like these:

Fact finding about the proces s :

Would you take me through the process?
What should I expect?
What will I need to supply?

Compatibility with the loan officer or mortgage banker or broker:

What’s your communication style? Are you willing to communicate virtually?
When would I work with you? Are you available in the evenings?
Will I be working with you or a member of your team?
What do you think of my time frame to get to closing?
What if any problems do you foresee?

Track record of loan officer and lender:

How long do loans you process typically take to close?
How would you expedite the process if there’s a tight time frame?
About what percentage of loans you work on close on time?
How many loans have you worked on that haven’t closed or haven’t met deadlines?
What’s the biggest problem you’ve had with a loan and how did you fix it?

Use the Meeting to Learn

You can also use the meeting to clarify general info you’ve picked up online and talk about your concerns. DeMarco gives a couple of examples. “You may have switched careers or industries in the last year or started having bonus or commission income. Your research may have shown you can just divide your salary by 12 to figure monthly income. But it may not be as simple as that.”

You’ll also want to bring up concerns like the impact on your credit score. Thirty-eight percent of buyers think comparing multiple mortgage offers in a short time will hurt their credit rating, according to a 2020 LendingTree survey. “As long as the lenders all pull the borrower’s credit within a couple of weeks, it’s counted as a single credit inquiry. So, it’s not a problem if they do it within a narrow band of time,” Koch explains.

Get and Compare Financial Information

Whether you’re looking at a federal form called a loan estimate or a precursor form called the fees worksheet, you’ll see a breakout of closing costs, explains Koch. “To compare the lender financials, you’ll want to drill down to origination charges in the lender section. Make sure you’re comparing apples to apples. If one lender is offering a 30-year fixed rate at 2.875% with no lender fees and another is offering 2. 75% with $1,500 in lender fees, those are unlike products. Get the fees at the same rate to find out which is less expensive.”

6 Tips to Get Mortgage Loan Information

Comparison shopping can get complicated. Here are six ways to keep it simple:

1. Keep Your Pool Manageable

Mortgage shopping “depends on the borrower and the personality type and how they’re wired,” Koch says. “The process can seem overwhelming. That’s why it makes sense to have a select few options to compare so borrowers can process and assimilate them.”

2. Get a Fees Worksheet

The best way to compare effectively is to zero in on the fees worksheet, which the loan officer should provide. “You’ll be able to figure out just what the lender’s direct fees are, and you can make a nice, simple comparison.”

3. Understand a Fees Worksheet Versus a Loan Estimate

The numbers on the worksheet are estimates and not locked in. Interest rates are fluid and change daily or even more often, DeMarco says. On the other hand, after you have a contract with a seller, “the loan estimate and loan application are where the information is binding, barring structural changes to the loan,” Koch says. Make sure the information reflects previous discussions with and disclosures by the loan officer.

4. Be Careful Interpreting Third-Party Fees

Third-party fee estimates are included on the worksheet. Two lenders could each come up with different estimates for title, escrow, or appraisal fees, Koch explains. But not all are negotiable. For instance, the seller chooses the title company, so the lender doesn’t control the choice or the fees. The lender could be choosing the high or low end of a range, but it’s only an estimate.

5. Think About Timing

Make sure lenders are using the same time frame for locking in pricing and that it will extend through the closing, Koch notes. “A lender might offer a rate that’s a lock for three weeks, but if you anticipate or know your closing date will be five or six weeks out, that’s a problem.”

6. Consider Applying for Loan Approval Before Finding a Property

“Many lenders will not do this,” Koch says. “But some will allow borrowers to go through the formal underwriting process — not just pre-approval — without having a property. The borrowers can get a bona fide mortgage commitment with all of the major buyer financials truly underwritten at that point. Then when borrowers make an offer, they can close more quickly.”

You'll have to invest some time and effort into comparison shopping for a mortgage loan and selecting a lender and a loan officer. But your return on investment can pay off over the long haul.

Begin your Mortgage shopping by checking out our WHAR Sponsors page to find great mortgage lenders here on the Big Island!

First-Time Buyer SEASON 2

Thu, 20 Jan 2022 20:50:38 GMT

Stream Season 2 on Hulu, Youtube, or Facebook

Remember buying your first home? Easy peasy—or not so much? Now add the most competitive market ever into the mix and the pressure is unreal! Watch what happens when first-time buyers go all in, guided by the expertise of a REALTOR®, in First-Time Buyer.

8 Home Remodeling Projects With Top-Dollar Returns

Tue, 21 Dec 2021 00:09:32 GMT

Not all home improvements are created equal. These will reward you the most when it comes time to sell.

Your home is in the perfect location, came at the perfect price, with the perfect lot. (Yay southern exposure!)

But the home itself? Perfect isn’t the adjective you’d use. But you knew that moving in, and now you’re ready to start making it just right.

Where to begin, though? How about with data? Data is that friend who tells you like it really is.

Because while any home improvement that brings you joy is priceless, not all add as much home equity as you might expect.

The "Remodeling Impact Report" from the National Association of REALTORS® has tons of data on how much improvements cost — and how much of those costs you can recoup.

Here are eight of the report's best home remodeling projects with equity-building might:

#1 New Roof

If you find yourself sprinting for the buckets when it starts to sprinkle, getting a new roof should be your No. 1 to-do. Measuring rainfall from the indoors isn't cool.

The cost: $7,500

The return: 107% at $8,000

Considering it’s what’s between you and the elements, it’s a no-brainer.

Not sure if you need a new roof? Signs you might include:

Shingles are missing, curling up, or covered in moss.
Gritty bits from the asphalt shingles are coming out the downspout.
The sun’s shining through your attic.
You notice stains on ceilings and walls.
Your energy bill is sky high.

#2 and #3 Refinished or New Hardwood Floors

You flip on the TV to see that your fave home reno-ing duo is it at again, flipping a ranch that’s stuck in the '80s.

They make it to the living room, pull back the dingy carpet to reveal hardwood floors in great condition. They’re psyched — and for good reason.

Hardwood floors are a timeless classic. Refinishing is a no-brainer. Neither will you regret adding new hardwood floors if you have none.

The cost to refinish: $2,600

The return: 100% at $2,600

The cost to buy new: $4,700

The return: 106% at $5,000

#4 New Garage Door

No surprise that a garage door replacement project made it onto this #winning list — a new garage door provides a big boost for your home’s curb appeal at a relatively modest cost.

The cost: $2,100

The return: 95% at $2,000

There are options galore, too. A host of factory-finish colors, wood-look embossed steel, and glass window insets are just some of the possibilities that’ll give your doors bankable personality.

#5 Better Insulation

Insulation is tucked out of sight, so it’s often out of mind — that is, until you’re forced to wear your parka indoors because it’s sooo darn cold.

The cost: $2,400

The return: 83% at $2,000 (plus the added savings on heating and cooling costs!)

#6 New Siding

In any color! And never paint again.

Those are two of the three benefits of vinyl siding. The third, of course, is your home’s value.

But if long-time homeowners look at you funny when you mention vinyl siding, just tell them that today’s vinyl is way better than what they remember because of fade-resistant finishes and transferable lifetime warranties.

The cost: $15,800

The return: 63% at $10,000

#7 Fiber-Cement Siding

Want fiber-cement siding instead? It also shows a strong payback of 76%. Although it’s the pricier option — you’ll spend about $19,700 with a payback of about $15,000 — it has one thing vinyl still lacks — the perception of quality.

The cost: $19,700

The return: 76% at $15,000

#8 HVAC Replacement

Air quality is top of mind these days, so replacing an HVAC system is a timely project — plus it cuts those pesky utility costs. Of the people surveyed in the NAR report, almost half said the most important benefit of HVAC replacement was better functionality and livability.

The cost: $8,200

The return: 85% at $7,000

Quality matters. In a survey from the National Association of Home Builders, “quality” was the one of the most important traits home buyers focused on when house hunting.

Perceptions of quality can vary, but the majority of both first-time buyers and repeat buyers said they'd rather have a smaller home with high-quality products and services than a bigger home with fewer amenities.

Written by: Anne Arntson

What You Need to Know About Buyer Love Letters to Home Sellers

Tue, 26 Oct 2021 00:59:21 GMT

Think twice before you write or receive a home love letter.

Did you hear the one about the dog who wrote a love letter? Not to his owner, but to a home seller. Well, actually the dog’s owner wrote the letter in Buddy’s voice, describing how wag-worthy the house was and how much he craved a game of fetch in the backyard.

Doggie ghostwriting, which happened IRL, is just one example of how home buyers are using creativity to try to get their offer accepted. It sounds harmless enough. But buyer letters to home sellers can unintentionally create Fair Housing Act discrimination and risks for buyers, sellers, and their agents.

How Love Letters to Home Sellers Work

“A love letter is any communication from the buyer to the seller where the buyer is trying to set themselves apart,” says Deanne Rymarowicz, associate counsel at the National Association of REALTORS®. “ It could be an email, a Facebook post, a photo. Some buyers send elaborate packages with videos and letters. The communication has the intent of ‘pick me, and here’s why.’”

Buyers who write the letters typically send them to the listing agents, along with their offers, says Paul Knighton, CEO and cofounder of MORE Realty in Tigard, Ore. “They ask, ‘Would you please pass this along to the sellers?’ They’re trying to do what they can to get their offer accepted, especially in a competitive market.”

Letters Can Risk Violating Fair Housing Act

While these love letters may seem harmless enough, they can create a problem if buyers accidentally reveal information in one or more of the seven areas protected by the Fair Housing Act, Rymarowicz explains. Those areas are race, color, religion, sex, disability, familial status, or national origin. “Buyers could say something like, ‘this is down the street from our temple,’ or ‘the hallways are wide enough to accommodate my wheelchair.’ Anything that provides personal information related to one of the prohibited bases for discrimination could result in a violation if a seller makes a decision based on that information.”

Do Love Letters to Home Sellers Work?

In addition to creating potential risk, love letters to sellers aren’t all that effective, Knighton says. A case in point: Several years ago, one of his clients got 14 offers overnight, ranging from $219,000 to $250,000. “A person who offered $225,000 wanted to send a love letter. I said to him, ‘You’re writing an offer that’s $25,000 under the highest offer. A letter’s not going to help.’ He wrote it anyway, but the seller didn’t even read it and took the higher offer. The offer needs to stand on its own.”

Beyond ignoring the letters, some sellers may be completely turned off, Rymarowicz says. “They may think, ‘This is a financial transaction.’”

Even the circumstances can suggest Fair House Act discrimination, she explains. Say that an offer with a love letter got the house but was less attractive than an offer without a letter. “If the losing buyer doesn’t share characteristics of the seller and the winning buyer does, you could potentially have a situation. If sellers accept love letters, it’s more important that they document the basis of their decision when selecting a winning offer.”

Tips to Avoid Violating the Fair Housing Act

Here are five tips to avoid risk of violating the Fair Housing Act:

1. Keep the contract in mind: Knighton says real estate pros at his firm talk to buyers and sellers about contract boundaries. “We say, 'Please don’t communicate with the other party, because we are in contract negotiations and need to manage time frames.'”

2. Focus on objective information: Find ways to differentiate yourself on objective terms. And talk to the agent about how to improve the substance of your offer, Rymarowicz advises. “Can you make a larger earnest money deposit? Can you give them a longer closing date?”

3. Proceed with caution: The NAR discourages buyer letters to home sellers and advises caution, according to Rymarowicz.

4. Talk to your agent: Don’t be surprised if your real estate agent brings up the subject. “If you’re the seller, the listing agent may talk to you about the potential for Fair Housing violations. They may ask if you want to accept the risks,” Rymarowicz says. If the agent doesn’t raise the subject of buyer letters, the buyer or seller can do so.

5. Know your state law: Oregon passed a law governing how letters to home sellers are used. “Effective January 2022, a seller’s agent must reject any communication from a buyer other than customary documents,” Knighton says.

Even if a buyer letter to a seller focuses on the property and not the buyer, there’s little to be gained, Knighton says. “There’s risk, but the reward isn’t there. Instead, focus on writing a really strong offer. That’s what has to stand out.”

The Hunt is About So Much More than the House

Wed, 22 Sep 2021 19:05:58 GMT

Watch First-Time Buyer by National Association of REALTORS®

See firsthand what first-timers face, and how relying on the expertise of a REALTOR®, a member of the National Association of REALTORS®, helps them prep for the unexpected and make sure this milestone decision is made with confidence.

Watch Here ->

What You Should Really Know About Browsing for Homes Online

Wed, 22 Sep 2021 18:58:44 GMT

It’s fun! It’s exciting! It’s important to take everything with a grain of salt!

Oh, let’s just admit it, shall we? Browsing for homes online is a window shopper’s Shangri-La. The elegantly decorated rooms, the sculpted gardens, the colorful front doors that just pop with those “come hither” hues.

Browser beware, though: Those listings may be seductive, but they might not be giving you the complete picture.

That perfect split-level ranch? Might be too close to a loud, traffic-choked street. That handsome colonial with the light-filled photos? Might be hiding some super icky plumbing problems. That attractively priced condo? Miiiight not actually be for sale. Imagine your despair when, after driving across town to see your dream home, you realize it was sold.

So let’s practice some self-care, shall we, and set our expectations appropriately.

Step one, fill out our home buyer’s worksheet . The worksheet helps you understand what you’re looking for.

Step two, with that worksheet and knowledge in hand, start browsing for homes. As you do, keep in mind exactly what that tool can, and can’t, do. Here’s how.

Full Article ->

Home Sales and Prices Increase On High Demand In West Hawaii

Tue, 10 Nov 2020 23:48:21 GMT

Home Sales and Prices Increase On High Demand In West Hawaii

The rabid interest in West Hawaii real estate has led to a 63.41% year over year increase in the number of single family homes sold in North Kona and a 21% increase in residential sales in South Kohala according to statistics from Hawaii Information Service for October 2020.

According to the Griggs Report, inventory is at the lowest level for this date since the monthly housing statistics were first reported. Pending sales are strong and lack of inventory is driving up prices. This has caused the Pending Ratio to reach a new recovery high. The current data trend shows several similarities to the peak demand years of 2003 and 2004. Median price remains up +14% and 30 day sales are at recovery peak. Prices ranges up to $1.5 million are in the peak demand category. Inventory for homes listed below $700,000 are less than 20.

Median prices for single family homes in North Kona jumped 32%year over year as more homes are selling in the upper eschalon of prices due to the lack of inventory below $700,000. The median price of homes was $869,000 with condos jumping 8.32% year over year to $371,000 up from $342,500 in 2019. Condo sales have been improving and sales are up 7.5% from last year when 40 condos sold in October 2019 and 43 sold in 2020.

Land sales are following the trend of the improved residential market with sharp decline in inventory with sales rising 133% year over year from 9in 2019 to 21 in 2020. This improved demand has caused prices to increase dramatically since August. This demand and price trend is similar to the peak demand year in 2004.

The Griggs Report is published semi-monthly by Michael B. Griggs, PB, GRI

5 Things You Need to Know About The Joint Tech Expo on Oct 26-28

executive@westhawaiirealtors.com (Taylor Rodamer) — Wed, 21 Oct 2020 22:06:16 GMT

5 Things You Need to Know About

The Joint Tech Expo on Oct 26-28

From tech tools, trends and marketing ideas to real world local case studies during the challenging days of COVID-19, here are five things you should know about the Adapt and Thrive Tech Expo:

1. The Expo is complimentary with your membership! It’s FREE. NO charge.

2. Nobu Hata, past NAR Director of Outreach, will discuss the “New Normal in RE/Tech” and trends.

3. WHAR member, Dylan Nonaka, will be a panelist sharing his experience successfully managing the pandemic on the “Adapt and Thrive” panel on October 27th at 9 am.

4. HIS will share a special preview of its fast and new powerful MLS system coming 2021.

5. Prizes! Networking!

Don’t forget it is 8:00 am to 12:00 pm each day.

CLICK HERE TO REGISTER

September Statistics

executive@westhawaiirealtors.com (Taylor Rodamer) — Sun, 18 Oct 2020 00:27:41 GMT

September Market Statistics

As historic interest rates continue to drive demand in West Hawaii, buyers are snapping up homes creating a marked lack of inventory and days on the market is dropping quickly.

According to statistics from the Hawaii Information Service in September, the median price for single family homes increased by 13.48% year over year in North Kona from $688,000 to $780,750. Condo median sales prices have increased 16.50% from $339,000 in 2019 to $394,950, a 16.50% increase.

For number of sales, 7 more single family homes sold in North Kona in September 2020 compared to September 2019, a 15.56% increase from 45 sales to 52. For condos, sales jumped 20% from 35 sales in 2019 to 42 in 2020.

South Kohala residential sales price jumped 24.90% year over year while prices of condos declined by 3.2%. The number of sales for both single family homes and condos dropped year over year by 6.67% for SFR and 9.09% for condos.

In South Kohala, the number of sales of residential homes jumped 106.67% from 15 in 2019 to 31 in 2020. For condos the sales numbers dropped 10.53%.

Looking at third quarter statistics from July to September, North Kona prices have increased by 10.92% and condos rose 20% year over year while number of sales have increased 10.49% and condos have decreased 6.19% .

According to the Griggs Report: Inventory is at the lowest level for this date in 23 years. Prices ranges up to $1.5M are in the peak demand category while only 20 homes are now listed below $700,000. The island wide pending ratio is approaching the peak demand level. Condo statistics are showing the effects of lack of tourist traffic and pending sales are strong and probably would be higher if it weren’t for the lack of inventory.

MLS confidential: 8 realities sellers need to know about their listing

executive@westhawaiirealtors.com (Taylor Rodamer) — Tue, 29 Sep 2020 22:31:11 GMT

MLS confidential: 8 realities sellers need to know about their listing, BY CARA AMEER for Inman News

Listing a property on the MLS — while representing it accurately and truthfully — can be a complex process, which is why agents need to do explain to sellers what is and isn't possible when setting up a listing. Here's how

There’s a certain adrenalin rush all sellers feel when their home first hits the market and when they see their listing go live online. After weeks — or sometimes even months — of preparation and hard work, they experience a mix of emotions that range from excitement to anticipation and anxiety.

Even if they’re looking forward to their move, selling a home always arouses a deluge of conflicting feelings in sellers. Aside from all the memories they’re parting with, they’re probably also thinking about how they’re leaving a home that’s hard to replicate at an affordable price by today’s standards.

Of course, seeing your own home on the market is like looking into the mirror. It becomes really easy to criticize how things appear in photos compared to how they look in real life — not to mention written descriptions and the features shown on the official MLS listing and subsequent websites. So, to set realistic expectations, here are eight things agents can tell sellers about having their home on the MLS.

1. Photos are not always true to life

As agents, we know that most sellers spend endless hours prepping their homes — both inside and out — for sale. But no matter how good a photographer is, the reality is that photos don’t consistently show a true and accurate representation of the home.

Paint colors may not translate. Cream-colored walls, for example, may look somewhat yellow in photos. Interior and exterior spaces can seem smaller or even larger than they really are. Photos also draw attention to certain flaws like an aging roof (think: aerial shots), patches of dead grass and cracked driveways. Agents should help sellers understand that photos will not — and often cannot — show a property that’s a 100 percent perfect. This is real life.

Although the power of photo editing can remove nearly every defect and make every home look like a perfect, shiny object, there must be truth in advertising. Sellers shouldn’t ask their agents to conduct “photo plastic surgery.”

Turning a pale lawn into an emerald green carpet of grass or wiping out power lines or utility poles in the background is not permitted. Can you imagine a buyer’s frustration and their agent’s embarrassment when the home ends up looking nothing like it did online? They’ll think they’re at the wrong property!

2. Photo roulette

Speaking of photos, sellers often want to play photo-editor-in-chief when it comes to determining the selection, placement and order of the pictures to be used in a listing. Although this is a highly subjective process, sellers should keep in mind that this is where an agent’s expertise comes into play.

Agents know how to structure and order photos in a way that immediately captures attention and effectively communicates a property’s story. Some sellers may insist on placing a photo of their grand dining room first — but trusting their agent’s judgement here is key.

Ditto for seller judgement calls on eliminating or swapping out professionally taken pictures with those they have on their cell phone from two years ago. Haphazardly eliminating certain photos may do more harm than good. It may lead agents and buyers to question — what is the seller hiding? Why are there little to no photos of certain spaces?

Although not every angle of every room has to be shown, eliminating photos can inadvertently diminish a home’s value. Furthermore, the wrong photo stream can really determine whether or not a buyer decides to proceed further with a property. The first few seconds of an initial viewing mean everything.

3. Rip off and repeat — not!

If a home was listed with one brokerage before and is coming on the market again with a different company, many sellers erroneously assume they don’t have to get their house ready for another photo shoot. They think their new agent can simply use the prior listing’s photos.

AUGUST MARKET STATISTICS

executive@westhawaiirealtors.com (Taylor Rodamer) — Mon, 14 Sep 2020 20:34:23 GMT

Demand Remains High, Supply Remains Low

West Hawaii REALTORS® have had a very busy summer with homes selling almost as quickly as they come on the market. According to statistics from Hawaii Information Service (HIS), the number of homes sales in North Kona for August was 63, up 28.57% year over year from 49 last August. Condo sales dropped 15% from 40 sales in 2019 to 34 in 2020. The median price for a single-family home dropped 5.77% year over year from $710,000 in 2019 to $669,000 in 2020. Condo prices rose by 21.85% from $325,000 last year to $396,000 in 2020. Year to date data shows a median single-family home price increase of 13.92% and for condos prices are up by 2.3%.

In South Kohala, single family home sales dropped 33% year over year from 30 sales in 2019 to 20 in 2020. Condo sales were flat with both 2019 and 2020 having 24 sales in August. Median prices for single family homes dropped 2.6% from $582,000 last year compared to $570,000 last month. Condo median sales prices rose 29% year over year with $525,000 in August 2019 and $680,000 in 2020.

The good news is demand has remained strong, even with many buyers not able to travel to the island to view properties.

“The buyers are coming in because of the historic low interest rates– that’s the No. 1 reason,” said Lawrence Yuen, chief economist of the National Association of REALTORS® (NAR). “The secondary demand is coming from the work-at-home phenomenon that has people looking for bigger homes and caring less about commuting time.”

The supply of homes on the market in the U.S. was the lowest for any July since NAR started tracking the data about five decades ago, Yuen said.

MORTGAGE RATES, STILL HISTORICALLY LOW, BEGIN TICKING UPWARD

executive@westhawaiirealtors.com (Taylor Rodamer) — Thu, 27 Aug 2020 00:24:39 GMT

BY JIM DALRYMPLE II | Inman News, August 20, 2020

Low rates have helped fuel an extraordinarily active summer for real estate. Although they remain historically low, a gradual trend upward could be less than stellar news for consumers. Mortgage rates inched upward last week, according to a new report from Freddie Mac, potentially raising questions about the future of what has turned out to be a bonanza for real estate over the past few months.

The report shows that for the seven-day period ending Thursday, 30-year fix rate mortgages had an average rate of 2.99 percent. That’s up from 2.96 percent one week prior. For a 15-year mortgage, rates averaged 2.54 percent, up from 2.46 percent a week ago.

Obviously, those are still great rates. The report itself notes that one year ago 30-year mortgages had an average rate of 3.55 percent, and 15-year mortgages had an average rate of 3.03 percent — both of which figures were themselves considered quite low at the time. The fact that today’s rates remain well below last year’s should give potential home buyers some reassurance.

However, there is evidence that even small upticks in rates can have a cooling effect on the sector. For example, on Wednesday a report from the Mortgage Bankers Association (MBA) revealed that mortgage applications dropped 3.3 percent over the past week. Refinance applications dropped 5 percent.

Joel Kan, a vice president at the MBA, said in the report that a “rise in rates dampened refinance activity.”

“Positive economic data reported last week on retail sales, as well as a large U.S. Treasury auction, drove mortgage rates to their highest level in two weeks,” Kan said.

The report goes on to note that the number of mortgage applications remains up significantly year over year, but these relatively small changes offer a kind of thought experiment as to what might happen if rates started trending upward. So far at least, real estate has overall done exceptionally well during the most recent months of the coronavirus pandemic. Agents have reported explosive activity and bidding wars, and buyers have been left scratching their heads as prices keep going up in the face of a broader economic downturn.

Low mortgage rates have played a key roll in those trends. Indeed, speaking to Inman last week about bidding wars, realtor.com senior economist George Ratiu pointed out that “real estate is really having a hot summer” thanks to “demand fueled by historically low mortgage rates.”

Rates moving in the opposite direction, then, should consequently have the opposite effect on the market, namely slowing things down.

For the time being, though, that scenario is mostly hypothetical. Speaking to Inman Thursday, Keith Gumbinger — vice president of mortgage resource firm HSH — said the rate changes so far appear to be a “minor bounce off of the bottom.” That bounce has been influenced by several trends, including positive economic news and a strong stock market

On the other hand, Gumbinger said the Federal Housing Finance Agency recently allowed Fannie Mae and Freddie Mac to impose a half-point fee on refinances. The fee could impact lenders in the short term and end up being passed on to consumers in the future. And it represents risk in the market, especially related to mortgage forbearance programs.

“Fannie and Freddie have said there are still tremendous risks in the marketplace that they’re seeing,” Gumbinger said.

Still, risks not withstanding, Gumbinger said “we are in some pretty fantastic times in terms of borrow costs.” And Kan, in the MBA report, described housing as “a bright spot in the current economic recovery.”

And perhaps most importantly of all, Gumbinger doesn’t see small rate changes fundamentally altering consumer behavior.

“For the vast majority of borrowers,” he said, “this doesn’t change the equation whether they’re going to buy a house.”

State Land Use Commission takes up Hawaii County’s STVR law

executive@westhawaiirealtors.com (Taylor Rodamer) — Thu, 30 Jul 2020 03:57:47 GMT

The question of whether Hawaii County can prohibit short-term vacation rentals on land classified as agriculture is now in the hands of the state Land Use Commission.

Both the county and a group of 20 Kailua-Kona, Waimea and Captain Cook landowners have asked the LUC for a declaratory ruling. The commission considered the issue Thursday, then postponed the hearing until Aug. 12.

The ruling will have far-reaching ramifications. Some 1.2 million acres on Hawaii Island — almost half of the land mass — is classified as agriculture.

State law requires houses to be farm dwellings and have a connection to agriculture if they’re built on land classified under the state system as being in the agricultural district. The farm dwelling requirement took effect June 4, 1976, leading the county Planning Department to allow nonconforming use permits only for STVRs on lots created before that date.

Farm dwellings are defined in state law as single-family dwellings located on and used in connection with a farm or where agricultural activity provides income to the family occupying the dwelling.

“Farm dwellings may not be used as short-term vacation rentals,” Deputy Corporation Counsel John Mukai said. “Farm dwellings can only be used in connection with agricultural use and not for residential use.”

The property owners disagree.

“Contrary to the County’s understanding of Chapter 205, the laws governing the State Agricultural District do not regulate the length of rental agreements,” said Cal Chipchase, attorney for the property owners in filings. “Cutting through the doubletalk, County Ordinance No. 2018-114 allows anyone to rent a “farm dwelling” located in the State Agricultural District for residential or vacation purposes as long as the lease is for 31 days or more.”

Chipchase points to testimony by county Planning Director Michael Yee that the county considers buildings built on agricultural land to be farm dwellings as long as the owner signs a farm dwelling agreement. There is little, if any, enforcement afterward to see if there is indeed any farming going on.

Under grilling from two commissioners, Yee on Thursday tried to clarify the position. A farm dwelling, he said, is a permitted use on agricultural land, while an STVR is not.

If someone signed a farm dwelling agreement and then doesn’t farm, “they’d be in violation and we may not find out five years down the road, 10 years down the road,” but farm dwellings are still a permitted use, Yee said.

An STVR, on the other hand, isn’t a permitted use, Yee said, “just as we wouldn’t necessarily allow a junkyard on that land.”

Mary Alice Evans, director of the state Office of Planning, agreed with the county’s interpretation of the law.

“Even if the county has not been effective in its enforcement of HRS § 205-4.5(a)(4), i.e., to identify and prosecute owners/operators of farm dwellings operating as STVRs, the law has always required that a farm dwelling be used in connection with a farm, and not for just residential uses or STVR uses,” Evans said in a July 17 filing. “The inability of the county to enforce these statutory provisions does not render the law invalid nor does it render the violators of the law in compliance or not subject to the law. … Accordingly, it is incumbent on the Commission to protect the Agricultural District by upholding the purpose and intent of the State Land Use Law by declaring that a STVR is not a permitted use of a farm dwelling in the Agricultural District.”

West Hawaii Home Prices Rise 4% Month over Month Despite Pandemic

executive@westhawaiirealtors.com (Taylor Rodamer) — Thu, 09 Jul 2020 03:55:33 GMT

The real estate market in West Hawaii for well priced single family homes is hot. Twenty five homes in North Kona from June 1-30, 2020 spent less than 16 days on the market, while another 9 were on the market for less than 30 days. Even with the pandemic, the demand for homes is being fueled by record low interest rates and a continued pent up demand for homes.

However, the condo market has shown evidence of slowing. Available condos for sale are up while pending sales are down within the past two weeks. According to real time real estate data firm, Altos Research, we have a sellers market for single family homes in Kona and we have crossed into a buyers market for condos.

Data from the Hawaii Information Service, states that the number of sales year over year for single family homes in North Kona was 54 in June 2019 and 44 in June 2020, a drop of 18.5%. Year to date, single family home sales have dropped 16.67% compared to last year, while condos have dropped 35.89% from 248 sales in June 2019 to only 159 last month. However, prices have risen 4.38% year over year for single family homes in North Kona and 16% year to date. The median price for condos was up 4.82% year over year in June and dropped 4.17% year to date.

In South Kohala, sales for single family homes are down 31% year over year with prices rising 43% from $522,500 in June 2019 to $750,000 last month. Year to date, prices in South Kohala have risen only 4.44%, so the spike in home prices in June could be skewed by only 11 homes being purchased by high end home buyers. With only 11 condos sold in June, the median price spiked up 54.62% from $465,000 to $719,000 year over year.

Interesting to note, the sales volume for single family homes rose 39% year over year, while condo sales volume dropped 37% year over year.

WHARs GAC committee's 2020 Mayoral Interviews

executive@westhawaiirealtors.com (Taylor Rodamer) — Tue, 07 Jul 2020 03:52:36 GMT

Thank you to our Government Affairs Committee who diligently worked on interviews for 2020 Mayoral candidates. View the interviews here!

Market Update for May 2020

executive@westhawaiirealtors.com (Taylor Rodamer) — Thu, 18 Jun 2020 02:02:08 GMT

Number of Sales Drop as Prices Increase In West Hawaii

As the West Hawaii real estate industry has buckled down to deal with the COVID-19 crisis, the market has seen a marked drop in inventory and sales, but yet, the median price of single family homes has increased, as homes over $700,000 have outsold available lower priced inventory.

Information from the locally sourced, “Griggs Report” states that there is low inventory and low sales numbers in the price range below $700,000. The big year over year change is the increase in sales over $700,000, where the percentage has jumped from 41% to 51%.

Island wide, the number of sales have dropped in double digits in all communities.

Number of Sales

According to statistics from Hawaii Information Service for North Kona, sales of single family homes are down 56.67% from 60 homes sold in 2019 to 26 sold in 2020. Condos are down 69.77% year over year with 43 condos sold in May 2019 vs just 13 in May 2020.

In South Kohala, residential sales are down 83% year over year where 36 homes changed hands in 2019 and only 6 closed escrow in 2020 in May. Condos sales dropped 66% month over month from 30 sales in 2019 to 10 in 2020.

Median Sales Price

The median sales price for a single-family home in North Kona is $735,000, a 16.57% year over year increase since May 2019. Year to date, the median sales price has jumped 17.41%. For condo sales, however, prices have fallen 14% from $355,00 in May 2019 to $305,000 in 2020.

In South Kohala, home prices have risen 21% year over year from $569,500 to $693,000. The condo median sales price rose 17% from $530,000 to $622,500, but keeping in mind only ten condos sold during the month.

Nationally, the lack of available inventory, as sellers are holding their properties off the market due to the pandemic, combined with historic low interest rates and pent up demand compounded with a shortage of new homes being built, is driving prices up.

Locally, demand from mainland buyers is still evident, but many are holding off buying until they can sell their homes and then purchase in West Hawaii and many would-be buyers want to view the homes for themselves before purchasing.

The Griggs Report is published semi-monthly by Michael B. Griggs, PB, GRI

Market Update for May 2020

Fri, 05 Jun 2020 01:50:00 GMT

Number of Sales Drop as Prices Increase In West Hawaii

Island wide, the number of sales have dropped in double digits in all communities.

Number of Sales

According to statistics from Hawaii Information Service for North Kona , sales of single family homes are down 56.67% from 60 homes sold in 2019 to 26 sold in 2020. Condos are down 69.77% year over year with 43 condos sold in May 2019 vs just 13 in May 2020.

In South Kohala , residential sales are down 83% year over year where 36 homes changed hands in 2019 and only 6 closed escrow in 2020 in May. Condos sales dropped 66% month over month from 30 sales in 2019 to 10 in 2020.

Median Sales Price

The median sales price for a single-family home in North Kona is $ 735,000, a 16.57% year over year increase since May 2019. Year to date, the median sales price has jumped 17.41%. For condo sales, however, prices have fallen 14% from $355,00 in May 2019 to $305,000 in 2020.

In South Kohala , home prices have risen 21% year over year from $569,500 to $693,000. The condo median sales price rose 17% from $530,000 to $622,500, but keeping in mind only ten condos sold during the month.

The Griggs Report is published semi-monthly by Michael B. Griggs, PB, GRI

Market Update for April 2020

Mon, 11 May 2020 19:33:00 GMT

West Hawaii home sellers can take a deep breath. Despite the eager wishes of would be home buyers, home prices are ticking up during this corona virus crisis—instead of down, according to April statistics from the Hawaii Information Services.

According to the May 3, 2020 Griggs Report, the higher end price range of $900K to $1.5M has the largest increase in sales year over year. There has been an increase of 31 homes sales in that price range while the total number of home sales is up 14% from the previous 12 months. Pending sales have declined Island wide.

HIS stats show that the median price for single family homes in North Kona increased by 17.64% month over month and 17.43% year to date. Condominiums increased by .54% month over month and dropped 4.42% year to date. Condos took a big hit in sales for April with a 62% decrease. 59 condos sold in April 2019, while only 22 changed hands in 2020.

West Hawaii is not alone with our market trend. From Realtor.com, "The slight increase in prices is because prices are 'sticky,'" says Realtor.com Chief Economist Danielle Hale. "Home sellers are strongly resistant to lowering prices.”

That does not mean prices won't eventually fall, and many experts predict they soon will. In looking at days on market in North Kona and when homes that recently sold went under contract, many homes that closed in April, were in escrow in February, before the pandemic. Furthermore, many buyers are not able to get to Hawaii Island to look for homes. We may find that buyers will refuse to pay top dollar given the sharp economic downturn that has resulted in more than 30 million layoffs thus far.

Inventory has been extremely tight in West Hawaii for years. Then the pandemic hit, and the supply of properties declined as some sellers took their homes off the market. The Griggs Report states the number of new listings plummeted 43.1%.

Because of pent up demand, the homes that recently have hit the market are selling and there are quite a few “back on market” homes courtesy of sellers wishing to capture the continued interest of people looking to buy in North Kona.

The Griggs Report is published semi-monthly by Michael B. Griggs, PB, GRI