The listing contract will specify how long the listing will last, who will be the agent and broker, how much the home will be sold for, and what rights the agent has to market the home. The Hawaii Real Estate contract specifies the amount of the commission, the nature of the listing, whether it is an exclusive listing or an open listing, and much more.
Your listing contract is important because it tells the listor if there is anything excluded from the sale, such an appliance or a chandelier. The listing agent is given the right to market the property in various ways, and also to show the property to potential clients at a reasonable time.
The listing can not usually be cancelled for a certain amount of time after you sign it, but I think most Realtors won’t try to force you to sell the house if you don’t want to anymore. The thing that Realtors are trying to avoid is spending money to market your house only to have you cancel 1 month into the process. Since it takes time to get all the various forms of marketing going, you should give it at least a few months to see how the activity is.
Price and Terms of Sale
The sales price and terms are not in the listing but in the DROA, or deposit receipt and offer acceptance. It’s typical to see all sorts of different terms in a contract, such as negotiated credits, repairs, closing dates, included or excluded personal items like appliances, and financing terms.
The best situation as a seller is to have multiple offers so you can be strong with your negotiations. To get multiple offers, the home should be priced right and should stand out as unique. After all if there are 3 other houses just like yours listed in the same Kailua neighborhood, why would there be multiple offers?
Every listing should have a lockbox, period. Even on multimillion dollar mansions, you should have a lockbox so that it’s easy to see. Suppose a buyer flies in from Florida with very little notice wants to see your Kahala estate, but the listing agent is off island or sick? Do you send the buyer away even if they have all cash?
You think they will come back, but they may also end up buying another house that was available just because they couldn’t see yours. I encourage everyone to provide a lockbox not only for the agents with buyers but also for the termite inspector, appraiser, and other services that may be needed during escrow. Since the person using the code will have to call me to get it, I will have their contact information before they enter the home. For nervous Hawaii home owners, I can be present at showings also, and even then I recommend having the lockbox in case something happens and I can’t make it.
Real Estate Commission
The commission on Hawaii Real Estate transactions is usually earned at closing, although some discount brokers take their money up front. By the way they do so because they sell such a low percentage of their listings that they want the money up front so they get paid no matter what.
In a regular listing with a full service agent, the commission is paid through escrow from the proceeds of the sale. If a buyer’s agent is involved, they will usually get half the commission from the listing agent.
Multiple Listing Service
The Hawaii MLS and specifically, the Honolulu MLS, contain all the houses for sale by licensed Honolulu Hawaii Real Estate Agents. Honolulu has a separate MLS from Maui and Molokai, and so do Kauai and the Big Island of Hawaii. Each MLS has different listings, and all board members are required to input the real estate listings within 4 days of taking the listing. The MLS allows all Hawaii Realtors to look at every single house and condo for sale, as well as some rentals, commercial property sales, and vacant land. The MLS is by far the most powerful tool in selling a house, since all Realtors in Hawaii will look there first.
While every Hawaii Realtor will put your home in the MLS, not all will do it well. There are plenty of listings with terrible pictures or no pictures, lame descriptions, bad descriptions, and wrong descriptions. I have seen Realtors who do such a poor job that I am surprised if the house sells at all. For my part I use a professional photographer to get the best results and add virtual tours so the house looks its best.
Agency Duties of a Listing Agent
As a listing agent I have a fiduciary responsibility to my client, which means no matter what I have to act in my client’s best interest. This means I have to make decisions that may cause me to lose my sale, if it in the client’s best interest. Sometimes getting out of a transaction is the best thing to do, even though it means starting the selling process all over again.
As the listing agent I pledge to be honest, completely forthright about risks, and do everything I can to make sure the client’s best interest is achieved. In an extreme case if a client wanted me to do something unethical or illegal, I would have to cancel the listing contract because that would truly be in the best interest of the client – to stay out of jail and court.
Privacy has become a huge issues in the last several years and as a listing agent my duty is to keep my client’s affairs private to the extent that I can. Since there will be strangers in his home, it may not be possible to keep everything private, but the details of the contract and the listing that the seller doesn’t want to be made public can remain private most of the time.
One common misperception is that people think a Hawaii Realtor is not allowed to disclose to buyers the details of an offer already received. Actually this is not true, so long as the seller wants me to disclose it and the buyer has not specifically told me that I cannot disclose it. In fact it can really help a seller to get a better offer if I can tell the buyers what we already have in hand.
The bottom line is that as a Realtor my job is to everything I can for the client’s best interest.
Resolution of Disputes
In the Hawaii Real Estate Contract, the DROA, if there is any dispute among the parties, the buyers and sellers agree to go to mediation first, then to arbitration. If these 2 options are not workable then a civil suit may be filed. In my case I have never been involved in mediation, arbitration, or court. Thanks God for that!
Before any of these steps are taken, the best thing is to get the parties to talk openly about the dispute, and ask the brokers to negotiate an agreeable resolution to the problem. Sometimes this is all it takes for the parties to become agreeable.
I have been told that the process of mediation and arbitration are very tedious, time consuming, and stressful, and should be avoided at all costs. Worse than these of course is an actual court trial, where thousands upon thousands of dollars will be spent on legal fees.
The absolute best thing is to avoid problems altogether by having an airtight contract and clear disclosures, so that no such issues arise. Often a mediation or arbitration case in Hawaii arises because of a Realtor’s mistake.