Real Estate Agent Induced Anguish

Real Estate Agent Induced Anguish

Would You Hire this Real Estate Agent to Sell Your House?

I recently went to an open house in Hawaii Kai. It’s a 4 bedroom and 2.5 bathroom home with 2,000 SF of living space and 14,000 SF land.

Properties in Mariner’s Valley

The house is not in excellent condition. You can tell the foundation is bad. The bathroom in the master bedroom is “dinty” (not just small).

The “gourmet kitchen” that they claim is a joke. The kitchen is quite good size with plenty of so-called new cabinets. Looks nice in the picture…but when you see it in person, it’s nothing to desire for. The cabinets do look new but looks like a 12-year-old did it for a school project. One of the cabinet by the door is obviously crooked.

Then, there’s a “bonus room” that the listing agent proudly showed off to visitors are the Open House. First of all, this “bonus room” is an extension from the kitchen with its own entrance. The big room with a closet looking enclosure, which is obviously still under construction. The listing agent cannot tell what this enclosure is going to be “is it going to be a bathroom or a walk-in closet?”

That’s not the worst yet…she claims there’s a permit for this construction from here to here only, gesturing from one side of the room to the other side. When asked “what’s the permit for?” she just ignored me. When I asked “so does that mean part of this is illegal?” she ignored me again.

One nice thing about this house is there’s a big back yard and no neighbor in the back. So we asked “what’s in the back behind the fence? Reservation land? Vacant lot? Alien testing ground?”

“I don’t know” was the answer we got.

Oh well…sorry that I asked.

These are important things I need to know if you want me to dough out “$1,200,000” for this piece of work that I still need to put another at least $100,000 to fix before I can move in.

Did I say she is the “listing agent”? Which means it’s her “fiduciary duty” to know all these things.

By the way, this property is NOT worth $1,200,000. A block from this property, there’s another similar home in a lot greater condition and they’re asking for only $960,000.

Properties in Koko Head Terrace

$1.2 million for an old house in Hawaii Kai with illegal structure?

No, thank you…I’ll pass.

The sad thing is, in Hawaii, everyone just hires their cousins or neighbor’s kid, who’s a real estate agent to buy or sell. So this lady is probably somehow related to the seller. And that's how these people can still be in business.

Remember, knowledge is power.

For Sale by Owner Makes Perfect Sense

Where Buyers Find their Homes

Did you know you do not need a real estate agent or broker in a real estate transaction?

If you think about it, buying and selling real estate property is like buying and selling a car, you can do it yourself.

Real estate agents and brokers are just car sales men in the real estate. They just want to make money from you.

For sale by owner makes sense and saves you lots of money.

And here’s how.

The median single family homes in Hawaii is $750,000. The average commission for a real estate transaction with a real estate agent or broker is 6%. You’re paying $45,000 for a random joe to sell your home. If your home is worth a million (which is majority of the homes in Honolulu), you’re paying this random joe $60,000 to push papers for you.

How about you save the $60,000 and hire an attorney, who can draft your purchase contract and give you legal advise about your estate planning and tax at the same time.

People are afraid of lawyers because they think they cost too much, which is true. They do charge a lot for good reasons, they have your ass cover when the time comes.

My attorney charges $400 an hour. The $60,000 commission you pay for your real estate agent, who does not provide any legal advice because they don’t know anything, will buy you 150 hours of attorney time.

My attorney went to 4-year undergrad, 2-year law school and passed his BAR exam, and is entitled to charge $400 an hour for legal fee, which is consider expensive.

A real estate agent (may or may not have a college degree) went to real estate agent prelicensing course for 60 hours and passed the real estate salesperson license test.

Say your real estate agent spends 50 hours for your listing…I don’t know, they may do 1 or 2 open house (4 hours each), writing listing description, etc, etc. Let’s say 50 hours, that’s $1,200 an hour.


Unless you make more than $1,200 an hour, I would do it myself.

Did you know how easy it is to sell your home on your own. The hardest part is marketing.

Read “How to Market Your Real Estate Property?”

Chances are if you’ll need your attorney to draft the purchase contract and go over your trust and estate planning stuff, you’ll probably needs a few hours of your attorney’s time, which probably would cost you a few thousand.

Even if you use a lot of your attorney’s time chit-chatting, say 50 hours, you’ll still come out only $20,000 on attorney fees.

Remember, the commission you pay your broker or real estate agent is just one of the closing cost. You still have more to worry about when you close.

If you used a real estate agent or broker, his/her only tasks are writing you listing description, list in MLS, find a new agent to do open house for them, answer calls from other agents about showing. Most of the time, it’s the buyer’s agent who show up to showing, so your agent just sits pretty in the office waiting for an offer to come through, and get you to say “yes” to the first offer that come through, so he/she can close and pocket the commission.

Once you have an agreement with the buyer, signed the contract and start escrow. There’s not much left to do - schedule home inspection, and just wait.

Real estate agent or brokers are not allow to give any legal advice. The standard Hawaii realtor’s Purchase Contract specifically provides that your real estate agent is not providing you with legal advice, and you should seek legal counsel. So, you are might as well hire an attorney from the beginning.

You know what’s worst?

Of course in Hawaii, everyone knows a friend or a relative who is a real estate agent. Hiring a Hawaii realtor is especially inefficient when the sale is between family members, and both sides are using a family friend to be the dual agency broker. That “family friend or relative” may receive a six percent (6%) commission for processing paperwork, even though as a dual agent they have probably utilized the standard “Dual Agency” disclosure which provides that he/she cannot really take sides. So who does he/she work for?

They can't give legal advise, and they can't take sides. So why are you pay this person?

Related article: Real Estate Agent…Absurd?

Anyway, if you decide to sell your real estate property on your own and put up a for sale by owner sign in your front yard, the process is really simple.

Advertise your real estate property like you would selling your car. Seriously, do you hire someone to sell your car?

Write a very descriptive ads from your property.

Show your property to potential buyers. You can do a open house event or private showing.

When you have a potential buyer, contact your real estate attorney to have him/her draft your real estate purchase contract.

Have both parties signed.

You’ll contact an escrow company to open escrow. Actually, the buyer opens escrow. When I purchase my last real estate property, I went to Downtown to the escrow company myself. My agent did nothing.

Your buyer should contact a home inspector for home inspection. This is a buyer’s expense. It’s up to the buyer to have an home inspection.

If you’re a condo owner, you’ll contact your property manager to have condo doc send over to your buyer.

The escrow and title company will make sure the transaction goes smoothly and both parties get what they agreed upon.

The other advantage of selling the real estate property on your own is that you know the property best. You get to meet the buyer directly, interact and negotiate with them directly without a third or fourth person involved.

According to the National Board of REaltors, 44% of buyers find their homes online (not from an agent).

Related article: Simple Home Selling Tips to Sell Your Home FAST.

There are many available sites to market your real estate property for sale. Here’s are a few that I use. If you type in “for sale by owner” in Google, more sites would show up.

Craigslist allows your listing to be posted in your local MLS.

For Sale By Owner on Zillow

Don’t forget social media. Share your postings on Facebook, Twitter, Instagram, wherever your people hang out.

Having hard time selling your real estate property? Let us help

Related article: Sell Your Home Fast

Sell Your Home as Rent-to-Own

Rent-to-own homes

Rent-to-own, also known as lease option, is an investing strategy that can be benefit both home buyers and home sellers.
For home sellers, rent-to-own may be the perfect solution to ensure you get top dollar for your home in a buyer’s market. It may even generates some extra income for the seller before the actual sale of the home. The rent-to-own strategy also increases the number of potential buyers for your home to include those who do not qualify for the conventional mortgage from banks.
In a rent-to-own or lease option, the homeowner rents his/her property to a potential buyer (lessee) with the exclusive right to purchase the home within a certain time period, usually 3 years or longer. The homeowner cannot legally sell the property to anyone else during the period defined by the lease option. The homeowner and lessee would negotiate in the beginning of the lease the term of the lease to include the purchase price, option or earnest money, monthly payment in addition to the rent.

Decide if a rent-to-own is for you. Rent-to-own isn't for everybody. If you need all the money from the sale of your home right away, you're better off with a straight sale. In addition, the majority of rent-to-own aren't exercised, so you may have to begin the process of selling your home all over again after the lease terminates.

You might also have to consider if you want to, or aren't able to, keep up with the responsibilities of continuing to own the home. In the a rent-to-own scenario, the homeowner must continue to pay property taxes and insurance and is generally still responsible for major repairs during the lease period.

Do a background and credit check on the applicants. At this point, you have to look at potential buyers as potential tenants, and you don't want to do a rent-to-own with somebody who you wouldn't rent to. Look for someone with good references, a steady source of income, and the ability to pay the rent plus, if applicable, the additional monthly option money.

As far as the applicant's credit history, you probably don't want someone with serious credit trouble, but at the same time you may want to be somewhat lenient. Many buyers who choose rent-to-own do so because they have some blemishes on their credit and want to improve their profile before applying for a loan.

Pre-qualify your lessee. It's a good idea to contact a loan officer or mortgage broker to at least discuss the potential buyer's prospects for obtaining a mortgage at the end of the lease term. There is more uncertainty (and, hopefully, more chance of improvement) the longer the lease term, but both you and the potential buyer can get a realistic idea of whether they'll be able to buy the house.

This step is essential if it's important to you to sell the house at the end of the lease. But ethically, and perhaps legally, it's important regardless of your preference because if you take option money and above-market rent from a tenant who can't possibly buy the house at the end of the lease, you're just ripping the tenant off.

Provide the potential buyer with a seller's disclosure form. The disclosure form lists any known problems with the house. You attest, to the best of your knowledge, to the condition of the house. This form is standard for other purchase transactions but is sometimes left out in a rent-to-own. Make sure you give the buyer this form to help him or her make an informed decision and to protect the integrity of the contract and sale. The buyer should also have an independent home inspection done.

Prepare a lease agreement with option to buy and collect option money. You can get fill-in-the-blank rent-to-own forms online, but you're better off getting them from a local real estate agent or attorney. The contract is sometimes added as an addendum to a standard sales contract. Unless you really know what you're doing, get help with the details of the contract from a real estate attorney, not a or broker.

The most important thing to remember is that you've got to cover not just the money issues but also who is responsible for what types of repairs and other complications that are bound to come up.

◦ Agree on the purchase price of the home, which should be fixed on the lease contract. You'll be obligated to sell at this price, so you want to make sure it's something you can live with. Ideally, the agreed-upon price should be at least at fair market value and maybe slightly more (especially for lease terms of 1 year or more) to compensate for the convenience to the buyer and for the likely appreciation of the property over the term. You and/or the buyer may want to pay for an appraisal to validate the price. Banks and other lenders will only loan against the appraised value, regardless of the price that you agreed on with the buyer.

◦ Determine how much option money to collect. Some states and municipalities have laws specifying a maximum amount of option money that can be taken, but in general the initial option money or option fee can be almost any amount. A typical figure is 2-4% of the purchase price. You will keep this money no matter what. If the lessee decides to buy, the money will be credited toward the down payment or the purchase price, and if the lessee doesn't buy, he or she forfeits the option money to you. Keep in mind that many buyers choose lease options because they can't come up with a big down payment, so don't expect to be able to get a huge amount of initial option money.

◦ Decide how much of the lessee's monthly payment will be credited toward the option. Anywhere from 0-100% of the monthly payments can be credited toward the purchase price, although the amount is sometimes subject to state or local laws. In general, the monthly payment will be calculated at fair rental value plus a set amount that will go toward the purchase price. This, like the initial option money, will either be credited toward the down payment or the purchase price or, if the tenant doesn't buy, will be forfeited to you.

◦ Decide on the term of the lease. Lease options typically run anywhere from 6-24 months. Less than six months usually doesn't make sense for the buyer, and more than 2 years (sometimes more than 1 year) may cause tax or legal complications. Shorter lease terms generally result in sales more than longer terms, simply because there are so many variables over the long term, but the length of the lease should be adequate to ensure that the lessee has time to get his or her financial ducks in a row. Keep in mind that if housing prices appreciate quickly, you may be getting a bad deal on a long lease, since you're obligated to sell at the agreed-upon price. If housing prices decline, however, you may be getting a good deal, but if they've declined significantly, the lessee is unlikely to buy the house. You still get to keep the option money, however.

Get the right home insurance coverage. Since you will no longer be the owner-occupant of the house, you may need to update your homeowners insurance policy to a dwelling policy. Check with your insurance agent to determine what policy is necessary and what coverage you need. Your tenant should also be insured to cover his or her liability and, depending on your state, any gaps in your coverage that may result from the lease option.

Collect monthly payments. Now, all you need to do is collect the payments each month. Keep track of the payments received so you'll have a record when the time comes for the lessee to exercise the option (or, in the the worst-case scenario, when you have to go to court to settle a dispute).

Sell the home. At the end of the lease term, the lessee can exercise the option to purchase your home for the price specified on or before the date specified. The total option money paid (including the initial option money plus any credit from the monthly payments) will go toward the down payment. Thus, the buyer already has equity in the home and should find it easier to qualify for a mortgage.

Read Buy Your Perfect Home with Rent-to-Own.

Buy Rent-to-Own Homes: Win-win for Both Buyers and Sellers

rent-to-own home buyers

Rent-to-own, also known as lease option, is an investing strategy that can be used by both home buyers and home sellers.

For home sellers, lease option may be the perfect solution to ensure you get top dollar for your home in a buyer’s market. It may even generates some extra income for the seller before the actual sale of the home. The rent-to-own strategies also increases the number of potential buyers for your home to include those who do not qualify for the conventional mortgage from banks.

In a rent-to-own or lease option, the homeowner rents his/her property to a potential buyer (lessee) with the exclusive right to purchase the home within a certain time period, usually 3 years or longer. The homeowner cannot legally sell the property to anyone else during the period defined by the lease option. The homeowner and lessee would negotiate in the beginning of the lease the term of the lease to include the purchase price, option or earnest money, monthly payment in addition to the rent.

For home buyers, rent-to-own make sense if you don’t qualify for conventional mortgage because you don’t have a down payment, poor credit score, limited employment history, high debt-to-income ratio. This allows home buyers time to save up the required down payment, improve credit scores, establish a longer job history, or whatever they need to do to get a mortgage.

Rent-to-own homes also allow family to move into their dream home and give them time to save enough for a d down payment to buy the home, without worrying that home being sold to someone else.

The rent-to-own or lease option is one strategy with 2 real estate transactions - the leasing portion and the option portion.

The lease portion is very similar to any lease agreement between the landlord and tenant. And, then, the is the option portion, which should be a separate agreement in which owner agrees to give the lessee exclusive right to purchase the property within a specific period of time and for a predetermined price.

Remember, the option agreement only grants the lessee the “option” to buy the home. The lessee is not obligated to buy the home. On the other hand, the homeowner is legally obligated to sell the home to the lessee under terms set forth in the option agreement. Therefore, the option is only binding for the homeowner.

In the rent-to-own or lease option home, there is an option fee, which is an up-front charge, similar to a down payment. The option fee can be whatever amount the homeowner and lessee agreed on, usually dependent upon the value of the home.

If you’re the buyer, it is in your best interest to negotiate the lowest fee possible. The option fee is generally non-refundable, but will be applied toward the lessee’s down payment when the time comes to apply for a mortgage.

If the lessee later decides to not execute the purchase option, the seller can keep the fee.

And if the parties do not renew the rent-to-own lease the buyer continues to live in the property as a month-to-month renter. Or, the homeowner can sell the home to a retail buyer.

Search Zillow’s Homes for Rent.

Real Estate Agent…Absurd?

Unless yours is like mine…

I have to laugh every time I see something in the media from the Board of Realtor that says something about how their “realtors” are real estate professionals, or “contact your local Realtor” if you need to learn more about the real estate market you’re interested in investing.

I’m sorry but the profession of real estate agent is such as joke. No matter how much they claim these are professional real estate agent with expertise knowledge in real estate, it just does not make it true.

You have to remember whatever pictures the Board of Realtor wants to paint the image of a real estate agent, they are still just sales persons, no different than a car sales person, the sales clerk at GNC. Their professional goal is the make money from your sales.

Have you ever been to any dealership and the sales person would tell you something like, this is a really ridiculous price for a car, and the safety rating is really poor. No…they are all trained to upsale to get you to pay as much as you can afford.

As you know my original profession is a nutritionist. I always laugh when a client came and told me that they bought some fancy supplements from GNC because the SALES CLERK says it is good for this and that. Does this sound ridiculous to you? Why would you take medical or scientific advice from a sales person? Their training is in sales, not nutrition or medicine.

Same for real estate agent. Their training is in sales. It is true that they have to get a license, the license only make sure that these sales people abide by the law. But after that all the training is about sales, how to make a sales.

If you think closely, the real estate agent’s objective is actually conflict with you as a buyer. The real estate agent’s goal is to make a sale and earn your commission in the least amount of time possible. Do you really think these people enjoy showing you properties after properties for months, and then negotiate on your behalf a good price for you. How many times you’ve heard your real estate agent told you that your offer price is too low? And threatened that the seller would reject the offer?

So what if the seller rejects the offer?

You, as the buyer, can make another offer or just move on to check out other properties.

Your real estate professional on the other hand, will become pissed because they miss another chance of earning your commission, and have to keep showing you properties.

People sometimes feel the pressure from their real estate agent to make a higher offer saying that properties like this is not easy to come by, or they’ll say this is a good property at a really good price. Of course, most people would trust them as ”they are supposed to be the expert”.

How many times I have contacted a real estate agent for a property that I’m interested in purchasing as an investment, and I would always ask for the rental income.

Many times that answer is “I’m not a property management and do not have that information available. Please contact a local property management company to find that information.”

If you think this is bad, get this one. I saw another property that I’m interested in so I contacted the agent on their website. I got a pretty quick response from email with the contact information of the listing agent, and I was told that I could contact the listing agent myself to set up the appointment for showing.

So you they want my business or what?

Another time I have to fire my real estate agent after I put in an offer. It is a pretty nice condo is Makiki. After some discussion with my real estate agent, he suggested that I put an offer a litter higher than the asking price. I mistakes I make was trusting him in “his expertise”. He did not even give me a list of comparables. The evening after I put in the offer, I talked to a friend of mind, and he told my offer was too high. I checked the comp online myself. BTW, you can easily check the comparables online nowadays without a real estate agent. All information are public. The property is not worth the price I offered. BTW, most sellers list their properties way too high for what it is worth.

Anyway, long story short, I call up my real estate agent to cancel my offer and fired him over the phone.

And after that, I do all my own research.

Here’s how real estate agent can screw you as a seller.

I can’t tell you how many times I’ve seen properties that are listed way too high of a price and ended up sitting on the market for months.

Again, real estate agent wants commission, which is tied to the sales price of the property. The higher the sales price the more commission they make. So they’ll let the property sits on the market a higher price. You know how people nowadays look up every thing online with a search criteria. If your property’s price is out of their search range, you have one less potential buyer.

But putting your property at a reasonable price will entice more potential buyer to want to look at the property. Many people do not know about negotiation and their real estate agent do not want to negotiate for you either, so they would not volunteer that to you. Most people look at the price as not affordable to them, and would not even bother to check it out. As the property sits on the market long enough, the new batch of potential homebuyers who see your property as something is wrong with this property otherwise, why would it be still on the market.

Another silly thing that real estate agent would suggest their seller to do is let test the market. So they list their client’s property in the MLS at a ridiculous price. What’s the purpose exactly? No one is going to look at the property because the price is too high. Then you withdraw the listing. Then when finally you’re ready to sell the property, people can see that you did try to sell the property before at a higher price. Now the potential buyers are thinking that you must be desperate to sell, and it didn’t happen a year ago. Now is their chance to lowball you.


Be a smart homeowner and real estate investor. Educate yourself. And if you do use a real estate agent, make them earn their commission – ask for comparables, sales history, shows you similar properties in the area to compare shop, negotiate – I always start my first offer at least 10% below the asking price. Don’t get bullied by real estate agent who complains your offer is too low. What they mean is their commission will be too low. Whose money are we dealing with?

My agent who helped me with last rental purchase told me my sale is his lowest sale, but it doesn't matter to him. He still treat my sale as any of his bigger sales, he answer my call right away, returns call promptly, schedule my showings the next day, negotiate on my behalf for at least 2 weeks before seller accept my offer, fight with me to make sure I did the right thing...he's a keeper.

I purchased my first condo at $65,000 below the initial asking price, that’s a 15% discount. Bought the next at 10% below initial asking price, and my timeshares for free.

Everything is possible...when you believe.

Related article: For Sale by Owner

Real Estate Agent...choose carefully.