HOW 2 BUY BANK OWNED PROPERTIES on the Big Island of Hawaii

There is a lot of people talking story about buying bank owned properties in Hawaii.  There’s lot of information being shared some good and some bad.  You’ll even find infomercials & seminars that will tell you how to get rich. (once you pay  for their “secret formula”).  The fact is, that there are no secrets, and to make money requires plenty of effort.

What’s an REO?

REO stands for “Real Estate Owned”.  These are properties that have gone through foreclosure and are now owned by the bank or mortgage company. The REO property did not find a buyer during foreclosure auction and the bank now owns it.  The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.  Do be aware that REO’s may be exempt from normal disclosure requirements.  In Hawaii, for example, banks are exempt from giving a Seller’s Disclosure Statement, a document that normally requires sellers to tell you about any defects they are aware of.

Is it a Bargain?

It’s commonly assumed that any REO must be a bargain and an opportunity for easy money.  This simply isn’t true.  You have to be very careful about buying a REO if your intent is to make money off of it.  While it’s true that the bank is typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for the property.  When considering the value of a REO, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the home for resale.  The bargains with money making potential exist, and many people do very well buying fixers.  You also need to remember there are also many REO’s that are not good buys and not likely to turn a profit.

Ready to Make an Offer?

Before making your offer, you’ll want to contact your Realtor to find out as much as you can about the property and what the banks process is for receiving offers.  Since banks almost always sell REO properties “as is”, you’ll want to be sure and include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it.  As with making any offer on real estate, you’ll make your offer more attractive if you can include a pre-approval letter from a local lender.  After you’ve made your offer, you can expect the bank to make a counter offer.  Then it will be up to you to accept their counter, or offer a counter to their counter offer.  Realize, you’ll be dealing with a process that probably involves multiple people at the bank on the mainland in different time zones and they don’t work evenings or weekends.  It’s not unusual for the process of offers and counter offers to take days or even weeks and sometimes these transactions can take several months to close.

Now you know the Secret to Buying REO’s. It is hard work and can take a lot of time.  If this type of challenge doesn’t scare you, then maybe investing in REO’s is for you.

For more information contact:

Howard DInits (R)S at RE/MAX Resort Realty

877-434-6487  or via e-mail Howard@HowardDinits.com

How 2 Qualify for a Home Loan.
 
Thinking of Buying a Home? It’s easy to Qualify for a loan in Hawaii, if you come prepared. It may take a few days to get all of your stuff together, but without them it can be near impossible to get a loan. Plus if you haven’t owned a home or condo in the last 3 years, our bruddah, President Obama, has a deal for you. What? You ask? A $8.000.00 tax credit if you buy a home in 2009.
 
As grandma always said, “Hard work pays off”, so make sure you have all of the necessary items organized and easily accessible in one folder.
 
            In general, the documentation you will need to qualify includes:
 
            Income & Assets
            Pay stubs for the last 60 days.
            
            For the past two years:
              Names and addresses of each employer.
W-2s, Statements for each bank, mutual fund,
            and/or investment account for the last three months.
            Estimated value of personal property and furniture.
            
 
            If you have made any large deposits to your accounts:
            Explanation and source for deposit.
 
            If large deposit was a gift:
            Signed gift letter (lender can supply).
             Copy of gift check & Copy of deposit receipt.
            
            If you own more than 25% of a business:
              Corporate or partnership tax returns.
            
            If self-employed:
              Tax returns for the last three years (with schedules).
 
            Year-to-Date Profit and Loss Statement prepared by an accountant.
            
            If you own rental property:
            Tax returns for the last two years and current rental agreements.
            
            If you are retired:  Pension Award Letter.
 
              If you receive Social Security:  Social Security Award Letter.
 
              If you are counting child support as income:
            Copy of divorce settlement.
            Copy of twelve months of cancelled child support checks.
 
          
            Debts
            Names, addresses, account numbers, balances and monthly payments on all current loans.
 
            Explanation of credit report anomalies, including: Late payments, credit inquiries in the last 90 days,             charge-offs, collections,  judgments and/or liens.
 
            Bankruptcy filed within last seven years (bring a copy of your bankruptcy papers).
 
            VA Loans
            Copy of DD Form 214, Report of Separation.
 
            Other Important Items needed:
            Photo ID and proof of Social Security number.
            Residence addresses for the past two years.
            If applicable, a copy of your divorce decree.
            If you are not a citizen, a copy of the front and back of your green card.
 
Now that you are prepared and have all of the necessary items to get approved for a loan, take your information to a reputable lender. The lender will key in your information in a computer and get you an online approval. Once approved, you know what you can afford and are ready to go shopping.  Want to get that $8,000 credit? The good news is that it's easy to claim your tax credit. Buy and close on a new, "main" home before December 1, 2009 and Submit IRS Form 5405 with your 2009 tax returns in April 2010. That's it. Your next step, is to call a knowledgeable Realtor, a Certified Residential Specialist, to go shopping for your new home or condo.
 
Howard Dinits RS CRS
RE/MAX Resort Realty
808-874-0600 877-434-6487
http://www.BigIslandRealEstate.com

Foreclosures hit Hilo & Puna hard

http://www.BigIslandRealEstate.com

The Hilo/Puna region had one filing per 88 households in the first half of 2009

By Allison Schaefers

POSTED: 01:30 a.m. HST, Jul 30, 2009

Maui's main metro area was worse than the national foreclosure rate average while Honolulu appeared in the bottom half of nationwide rankings released today by RealtyTrac.

In the midyear data, there was one foreclosure filing for every 81 households in Kahului/Wailuku, Maui, which would have ranked No. 63 if the region had been considered urban enough to be included in the city listing, said Daren Blomquist, RealtyTrac's marketing manager.

In Honolulu, one in every 207 Honolulu homeowners was in foreclosure, earning the city a rank of 143 out of 203 cities, according to Irvine, Calif.-based RealtyTrac, an online foreclosure marketplace.

By midyear, 1,616 Honolulu homeowners had received a foreclosure notice, a 276 percent increase from the same period a year ago and a 31 percent increase from the prior six months.

But while Honolulu foreclosures are growing, overall the city has a limited foreclosure footprint as compared to the nation. RealtyTrac reported 1.5 million foreclosures in the nation during the first six months of the year, an average of one in every 84 U.S. households.

"We are seeing huge increases in activity in Honolulu, but it's still at a point where there are a lot of other cities that are worse off, Blomquist said.

The same could not be said for the neighbor islands, which have been harder hit by economic recession and had experienced higher price swings during the last real estate boom, said Howard Dinits, a Realtor with RE/MAX Resort Realty in Wailea, who specializes in Big Island and Maui sales.

"It's hard to know exactly what is going on in the neighbor islands and why those areas have significantly higher foreclosure rates than Honolulu, but they have less economic diversity and are more susceptible to changes in the economic climate," Blomquist said.

Declining real estate values and increased joblessness, combined with a tighter lending market and a depressed economy, have created the perfect neighbor island storm, said Dinits, who has had to switch real estate firms twice this year due to office closures.

"Get ready, it's just going to get worse," Dinits said. "California was littered with foreclosures last year and we tend to lag that market by six to nine months or more."

Hilo, which had one filing for every 88 households during the same time period, would have ranked No. 65 if it had been considered urban enough, he said.

Kapaa, Kauai, where one in every 98 housing units received a foreclosure filing during the first six months, would have been ranked No. 72, Blomquist said.

Phil Fudge, principal broker of Kauai Landmark Realty, said that the distressed market is driving Kauai sales.

The continuing drop in tourism has deeply affected Kauai's entire economy, he said.

"With our hotels running slow, many people are getting laid off," Fudge said. "We don't have any other major employers."

Kauai real estate agents are feeling the pinch, too, he said. Out of 650 agents, only 200 have made a sale through July, Fudge said.

"And, only 33 agents have sold the $2 million in real estate that it takes to earn at least $60,000," he said.

While Maui and Big Island agent rosters have gotten shorter, Dinits has survived by focusing on distressed sales, he said.

"My list of cute little old ladies with equity that want to sell is very short," Dinits said.

Maui's main metro area was worse than the national foreclosure rate average while Honolulu appeared in the bottom half of nationwide rankings released today by RealtyTrac.

BLOOMBERG NEWS

The average foreclosure rate per household in the United States during the first half of this year was one out of 84. Above, a foreclosure sign stood outside a home in Winchester, Va. Honolulu ranked No. 143 during the period, with a 1/207 ratio.

View Large Version >>

In the midyear data, there was one foreclosure filing for every 81 households in Kahului/Wailuku, Maui, which would have ranked No. 63 if the region had been considered urban enough to be included in the city listing, said Daren Blomquist, RealtyTrac's marketing manager.

In Honolulu, one in every 207 Honolulu homeowners was in foreclosure, earning the city a rank of 143 out of 203 cities, according to Irvine, Calif.-based RealtyTrac, an online foreclosure marketplace.

By midyear, 1,616 Honolulu homeowners had received a foreclosure notice, a 276 percent increase from the same period a year ago and a 31 percent increase from the prior six months.

But while Honolulu foreclosures are growing, overall the city has a limited foreclosure footprint as compared to the nation. RealtyTrac reported 1.5 million foreclosures in the nation during the first six months of the year, an average of one in every 84 U.S. households.

"We are seeing huge increases in activity in Honolulu, but it's still at a point where there are a lot of other cities that are worse off, Blomquist said.

The same could not be said for the neighbor islands, which have been harder hit by economic recession and had experienced higher price swings during the last real estate boom, said Howard Dinits, a Realtor with RE/MAX Resort Realty in Wailea, who specializes in Big Island and Maui sales.

"It's hard to know exactly what is going on in the neighbor islands and why those areas have significantly higher foreclosure rates than Honolulu, but they have less economic diversity and are more susceptible to changes in the economic climate," Blomquist said.

Declining real estate values and increased joblessness, combined with a tighter lending market and a depressed economy, have created the perfect neighbor island storm, said Dinits, who has had to switch real estate firms twice this year due to office closures.

"Get ready, it's just going to get worse," Dinits said. "California was littered with foreclosures last year and we tend to lag that market by six to nine months or more."

Hilo, which had one filing for every 88 households during the same time period, would have ranked No. 65 if it had been considered urban enough, he said.

Kapaa, Kauai, where one in every 98 housing units received a foreclosure filing during the first six months, would have been ranked No. 72, Blomquist said.

Phil Fudge, principal broker of Kauai Landmark Realty, said that the distressed market is driving Kauai sales.

The continuing drop in tourism has deeply affected Kauai's entire economy, he said.

"With our hotels running slow, many people are getting laid off," Fudge said. "We don't have any other major employers."

Kauai real estate agents are feeling the pinch, too, he said. Out of 650 agents, only 200 have made a sale through July, Fudge said.

"And, only 33 agents have sold the $2 million in real estate that it takes to earn at least $60,000," he said.

While Maui and Big Island agent rosters have gotten shorter, Dinits has survived by focusing on distressed sales, he said.

"My list of cute little old ladies with equity that want to sell is very short," Dinits said.

FORECLOSURE RANKINGS

RealtyTrac's midyear foreclosure rankings of cities nationwide:

Source: RealtyTrac

Neighbor isle home prices drop

http://www.BigIslandRealEstate.com

Mainland investors are showing more interest in properties on Kauai and the Big Island

By Allison Schaefers

POSTED: 01:30 a.m. HST, Jul 07, 2009

The quest for short sales and foreclosure properties dominated real estate activity on the Big Island and Kauai last month and continued to drive property prices down in most categories.

Falling prices, which dropped 13.5 percent for single-family homes on the Big Island and 36 percent for single-family homes on Kauai, created more interest in the market.

"Somebody who didn't jump in the pool just because everyone else was jumping now has a golden opportunity," said Howard Dinits, a Realtor with RE/MAX Maui, who also sells property on the Big Island. "Never have we seen a market where you can buy a house so cheaply and get an interest rate for less than 6 percent."

The median price paid for a single-family home on the Big Island dropped $44,285 to $285,000, according to statistics released yesterday by Hawaii Information Service. However, the median price paid for a Big Island condominium rose 2.9 percent to $310,500.

In Puna, where Dinits sells the bulk of his properties, the median price paid for a single-family home had dropped to $163,000. While foreign activity has slowed with the Big Island's real estate market, Dinits said mainland investors from California, Alaska, the Pacific Northwest, New York and New Hampshire have re-entered the market.

"Consumers are looking for deals," Dinits said. "There is a lot of demand and a lot of competition in the $100,000 to $175,000 range. And, yes, these days, that will get you a house."

Dinits just sold a bank-owed property in Hawaiian Paradise Park, which has been plagued by distressed sales, for slightly more than $109,900, he said. That same property traded for $260,000 in 2006, Dinits said.

Prices also have dropped steeply on Kauai, said Phil Fudge, principal broker of Kauai Landmark Realtor.

The median price paid for a single-family home on Kauai dropped to $440,000, a $247,500 decline from the prior year, according to Hawaii Information Service. Similarly, the median price paid for a condominium on Kauai fell 46 percent to $375,000 from the year-prior $695,000.

"We are seeing activity, and it seems like the short sales and the foreclosures are driving the market," Fudge said. "Prices for properties that are not in short sale or foreclosure are being driven by the distressed market."

Fudge said Kauai's market has dropped so much that sellers are sometimes considering offers that fall more than $100,000 below the list price.

The market has fallen so much it's not unusual to see properties that sold for $750,000 a few years ago now listed for $559,000, he said.

"Our market is down to 2004 levels for residential and 2003 levels for condos," Fudge said.

As a result, Fudge said the number of offshore investors coming to Kauai from the West Coast to view and purchase properties has begun to rise.

"They've been looking for a while, but prices have finally fallen to a point that many are just now thinking that it's the time to act."

But even with bargain-hunters out in full force, single-family home and condominium sales on the Big Island and Kauai continued falling last month.

Single-family home sales on the Big Island fell 8.3 percent and condominium sales fell 12.5 percent, according to data from Hawaii Information Service. Likewise, single-family home sales fell 25 percent on Kauai, and condominium sales fell 37.5 percent.

Home sales

The median price and percentage change from the same month last year for homes sold on the Big Island and Kauai:

Source: Hawaii Information Service

The quest for short sales and foreclosure properties dominated real estate activity on the Big Island and Kauai last month and continued to drive property prices down in most categories.

Falling prices, which dropped 13.5 percent for single-family homes on the Big Island and 36 percent for single-family homes on Kauai, created more interest in the market.

"Somebody who didn't jump in the pool just because everyone else was jumping now has a golden opportunity," said Howard Dinits, a Realtor with RE/MAX Maui, who also sells property on the Big Island. "Never have we seen a market where you can buy a house so cheaply and get an interest rate for less than 6 percent."

The median price paid for a single-family home on the Big Island dropped $44,285 to $285,000, according to statistics released yesterday by Hawaii Information Service. However, the median price paid for a Big Island condominium rose 2.9 percent to $310,500.

In Puna, where Dinits sells the bulk of his properties, the median price paid for a single-family home had dropped to $163,000. While foreign activity has slowed with the Big Island's real estate market, Dinits said mainland investors from California, Alaska, the Pacific Northwest, New York and New Hampshire have re-entered the market.

"Consumers are looking for deals," Dinits said. "There is a lot of demand and a lot of competition in the $100,000 to $175,000 range. And, yes, these days, that will get you a house."

Dinits just sold a bank-owed property in Hawaiian Paradise Park, which has been plagued by distressed sales, for slightly more than $109,900, he said. That same property traded for $260,000 in 2006, Dinits said.

Prices also have dropped steeply on Kauai, said Phil Fudge, principal broker of Kauai Landmark Realtor.

The median price paid for a single-family home on Kauai dropped to $440,000, a $247,500 decline from the prior year, according to Hawaii Information Service. Similarly, the median price paid for a condominium on Kauai fell 46 percent to $375,000 from the year-prior $695,000.

"We are seeing activity, and it seems like the short sales and the foreclosures are driving the market," Fudge said. "Prices for properties that are not in short sale or foreclosure are being driven by the distressed market."

Fudge said Kauai's market has dropped so much that sellers are sometimes considering offers that fall more than $100,000 below the list price.

The market has fallen so much it's not unusual to see properties that sold for $750,000 a few years ago now listed for $559,000, he said.

"Our market is down to 2004 levels for residential and 2003 levels for condos," Fudge said.

As a result, Fudge said the number of offshore investors coming to Kauai from the West Coast to view and purchase properties has begun to rise.

"They've been looking for a while, but prices have finally fallen to a point that many are just now thinking that it's the time to act."

But even with bargain-hunters out in full force, single-family home and condominium sales on the Big Island and Kauai continued falling last month.

Single-family home sales on the Big Island fell 8.3 percent and condominium sales fell 12.5 percent, according to data from Hawaii Information Service. Likewise, single-family home sales fell 25 percent on Kauai, and condominium sales fell 37.5 percent.

Home sales

The median price and percentage change from the same month last year for homes sold on the Big Island and Kauai:

Source: Hawaii Information Service

http://www.BigIslandRealEstate.com

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.