So you think you know a lot about real estate? Maybe you own multiple properties, and have done a lot of buying and selling. Still, intelligent people often have dangerous misconceptions about a subject that can really hit them in the wallet. Here’s your chance to see if you can make the grade – or will you flunk out of class? Real estate is a complicated field and includes many specialties. The focus of this quiz will be Hawaii residential buying, selling, renting, and ownership issues.
Answers are at the end of the column. Have fun, and no cheating!
True or False
1. Honolulu is one of the ten most expensive metropolitan areas in the nation.
2. Realtors are generally employees of the firms where they work.
3. When you purchase a house, the seller is not required to provide a termite inspection or a survey of the property.
4. Selling “As-Is” is a good way to avoid the expense and hassle of doing repairs before you sell.
5. Once the buyer and seller sign all sale documents with the escrow company, the sale is final.
6. You own a rental property and want the tenant to move out. If the tenant is on a month-to-month agreement, you are required give them a written 30 day notice to vacate.
7. The law prohibits a landlord from collecting a security deposit of one month’s rent, plus an additional pet deposit.
8. When selling, it’s important for your property to be advertised in the newspaper even when an Open House is not scheduled.
9. Over half of all home buyers look at real estate information on the internet before contacting a real estate professional.
10. Shopping for a mortgage on the internet is a good way to find low interest rates from U.S. mainland firms.
11. Declining sales means that home prices have fallen.
12. Statistical data for my neighborhood will show me approximately how much my home’s value has changed.
13. The Mortgage Credit Certificate Program is a new program for low income buyers.
14. Most married couples selling their home can keep up to $500,000 profit from the sale of their principal residence, tax-free.
15. If one property owner passes away, the other owner can sell the property.
A) Always true B) Sometimes true C) Never true
16. Recent changes in mortgage lending have made 100% financing available for whom?
A) No one B) Only for veterans through VA financing C) Veterans and civilians alike D) Only Donald Trump
17. Oahu’s single-family homes resales have changed since a year ago by going:
A) Up 5% B) Down 3% C) Down 12.5% D) Up and down like a roller coaster
18. Median condo resale prices on Oahu have changed since a year ago by going:
A) Up 1.5 % B) Down 8% C) Down 18%
19. Which of these neighborhoods show notably higher single-family home prices this year compared to this time last year? Choose from the list after question 20.
20. Which show the biggest drops?
A) Hawaii Kai B) Waialae Kahala C) North Shore D) Wahiawa E) Ewa Plain F) Pearl City/Aiea
Answers: 1. True. According to Forbes Magazine, a recent survey shows that the ten most expensive cities are New York, Los Angeles, Miami, Honolulu, San Francisco, Chicago, White Plains, NY, Houston (?), Boston, and Washington, D.C. Sadly, Honolulu is now #4 on the list. Remember that this ranking is not merely the cost of homes, but includes over 200 goods and services including taxes, rental cost, food, and utilities. I bet they didn’t credit us for the best weather, free beaches and pubic libraries and cheap plate lunches - not to mention the aloha spirit. See the full report at http://www.forbes.com/realestate/2008/07/23/cities-america-expensive-forbeslife-cx_ls_0724expensive_us_slide.html
2. False. Most Realtors are independent contractors affiliated with a brokerage firm, but not employed by one. They earn income only when they make a sale, and pay their own business expenses like any other business owner.
3. True. The payment of these is negotiated in an offer. However most buyers request that the seller pay for these items in a single family home purchase and sellers usually do so.
4. False. It could cause the buyer to have concerns that problems exist on the property. And if you fail to make obvious repairs, you are likely to attach bargain shoppers. Even if an As-Is addendum is signed by both parties, further repairs might be requested after the buyer has their Home Inspection and after the Seller’s written disclosures are reviewed by the buyer.
5. False. In Hawaii your home sale will not be final until the change of ownership is recorded at the State Bureau of Conveyances several days later.
6. False. Hawaii state law requires renters receive 45 days notice to move; tenants can however give you just 28 days notice that they are departing.
7. True. The law only allows a total on one month’s rent for all deposits collected. This is an example of the State while trying to protect tenants but has caused more difficulty for pet owners and landlords alike.
8. False. 95%+ of the time this type of advertising generates zero results in the form of calls or inquiries. There are far better ways to reach serious buyers if an Open House cannot be scheduled.
9. True. The Internet has surpassed all other media in reaching real estate shoppers.
10. False. Borrowers are attracted by “too good-to-be-true” promises and may fall into the hands of unethical schemers. A real person with a local presence and local office will be more likely to act in your best interest and be accountable in the future if problems arise.
11. False. Declining sales means that the number of sales has gone, not necessarily the sale prices. All areas of Oahu experienced a lower number of home sales in 2007 but some areas still experienced higher prices.
12. False. It takes a much closer look at what is selling and intimate knowledge of the market to determine what trend applies to homes like yours. Sometimes when median prices change, it is because the properties that are selling are newer or larger, skewing prices upward. For example, in the Ala Moana area many new large condos recently sold causing median prices to climb.
13. False. This program is for first time buyers with incomes up to $108,220 for families of 3 or more, subject to other requirements. The tax credits offered can save qualified borrowers up to $100 a month per $100,000 borrowed. This program has existed for many years but has recently been promoted by various reputable mortgage companies and banks. Ask me for details!
14. True. There is no requirement that you purchase another home. As always, ask your tax professional for details on taking advantage of this huge savings.
15. B. Another reason why it is crucial to arrange your property ownership with the help of an attorney specializing in estate planning. It is common for a surviving spouse to encounter problems or delays in selling a jointly-owned property if good legal advice was not obtained and followed.
16. C. 100% financing is still available for both veterans and civilians. Civilians need a credit score of 700 or above, a good debt-to-income ratio, and some reserve funds.
17. B. To be exact, year-to-date 2008 prices dropped 2.8% compared to last year at this time
18. A. Condo statistics have continued to show a slight rise of 1.5%.
19. A & F. Leading the home prices were Waialae Kahala at 12.1%, already the highest-priced neighborhood. Pearl City/Aiea came in second with a 6.3% rise.
20. C, D, & E in that order. Wahiawa was the biggest loser with prices down 14.1%, and second was the North Shore with about a 10% drop. Third place went to Ewa Plain with slump of almost 9%.
A: 18-20 Correct Answers – Kudos! You have probably been involved in a variety of successful real estate transactions. Keep it up!
B: 16-18 Correct – Good job! What you don’t know can hurt you, so be sure to consult with the best qualified professionals.
C: 13-15 Correct – So-so. You will need to lean heavily on others with the knowledge and experience to get you through.
D: 10-12 Correct – Weak. Don’t quit your day job. You know just enough to be dangerous.
E: Less than 10 – Embarrassing. Your ignorance could get you into big trouble! Give up, study up, or sign up - with the best Realtor you can find.
Note: Hawaii market trends questions refer to Oahu properties entered in the Multiple Listing Service (MLS), according to the Honolulu Board of Realtors and based on the first 7 months of 2008.
Disclaimer: This information is based on the author’s opinions and is offered to both educate and amuse. It is not guaranteed nor is it a substitute for legal or professional advice which readers are expressly advised to obtain.
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What an enjoyable and entertaining format in which to learn some important and fundamental (pardon the pun) factoids about residental real estate!