CRAIG T. KOJIMA / CKOJIMA@STARBULLETIN.COM Earl Lee, national head of Prudential Real Estate Affiliates Inc., says that growing up in Hawaii helped him succeed in the real estate profession, though he has had to overcome racial bias as well.

Sold on the islands

Prudential honcho Earl Lee says
local real estate will remain
a hot item

AS a local boy maneuvering in the mainland corporate world, Earl Lee knows the value of first impressions.

"You learn quickly that not everyone is going to accept you right when you walk through the door. Some of them will make a judgment call on how you look, the color of your skin," he said.

Apparently, Lee has mastered how to win over the room because he's now one of the highest-ranking Asian-Americans in the country's real estate business.

As president of Prudential Real Estate Affiliates Inc., the property-brokerage arm of Newark, N.J., giant Prudential Financial Inc., Lee is at the helm of a nationwide real estate network with more than 1,700 offices and 50,000 sales agents.

Not bad for a Makiki native and Roosevelt High School graduate. But Lee, who is now based in Irvine, Calif., said his success comes not in spite of his local background, but as a direct result of it.

"I've been a very fortunate individual in terms of my career, but a lot of my success stems from what I learned here in Hawaii in terms of dealing with different kinds of people. You just grow up with a different perspective on life when you live in a multicultural society," he said.

A 30-year real estate veteran, Lee's career caused him to move to the mainland about seven years ago but he retains a Honolulu home and returns a few times a year to visit his aging parents.

He's back again to deliver a speech on changes affecting the brokerage business this morning at the 2004 Pacific Rim Real Estate Conference at the Sheraton-Waikiki. He sat down yesterday to talk about his career and the real estate market:

What do you see ahead for Hawaii's real estate market?

I see it staying really vibrant for a number of reasons but one in particular. There are 75 million baby boomers in this great country of ours. A baby boomer turns 50 every seven seconds. And they are in the highest-earning period of their lives. They are looking for resorts, vacation homes and second homes.

Hawaii is an absolute draw for them. There are very few places like Hawaii anywhere, either in terms of the physical environment, the culture or the multi-ethnicity of the society. You really don't realize how great it is until you move away. And if you look at where people in the U.S. are moving, they are going to warmer climates -- Florida, the Southeast coast, Arizona and California. Hawaii is a natural extension of that.

Has your view of Hawaii's pricey real estate changed now that you have a national perspective?

Yes, it's changed significantly. Prices are certainly very high here from a historical perspective but not nearly as high as many, many areas on the mainland, especially when you look at the added costs of homeownership, like property taxes.

People tend to focus only on the sales price. But you only think about the price twice -- when you buy and when you sell. But you think about the monthly payment every single month. A Hawaii house might have a monthly property tax burden that adds up to only $2,000 a year, but that might be $7,500 in California or $16,000 in the Northeast. Plus in the north you have heating bills, and in the south you have high electric bills because you need air-conditioning.

So before you fret about the sticker shock, look at the total costs. An equivalent size house in an equivalent market on the mainland will cost significantly more.

Given Hawaii's sky-high prices and the ease of selling today, is the traditional 6 percent Realtor commission still relevant?

Realtor fees are rising as a function of the market. The market is much more active. We are in a cyclical business and there are down cycles for us too. But commissions become irrelevant to buyers when they absolutely have to sell their house and a Realtor can help them do that.

And what about if you're buying? In today's market you certainly need a good broker to go to bat for you.

Flat-rate brokers are gathering a growing amount of business. What is your view of them?

Well, it's a free country. But people need to ask themselves, do these companies provide the level of service they'll need? Are they going to be there for you when you run into a transaction problem down the road, maybe years later?

One of the problems a quality Realtor faces is that the best Realtors make the transaction look easy because they're working hard to cover all the bases.

Affordable housing is needed in Hawaii. Would the brokerage community welcome that?

Certainly. Sure, we want (to see prices to go up). But huge spikes in appreciation will price a lot of people out of the market. That hurts brokers because we make money on "turns," that is, the amount of times you can sell a property.

What sorts of things are you concentrating on in your current position?

One issue we have to get better at is use of technology. Consumers want contact with brokers 24/7 and technology allows you to do that.

That means e-mail, use of the Web to display properties, to collect info and to distribute it. Brokers are quick adapters but often have difficulty incorporating technology into their business. We're focusing on coming up with a fully integrated system to help make transactions more fluid, to make them simpler and save time for customers.

Will low-tech Realtors be squeezed out?

Possibly. Years ago the mantra was "technology will replace Realtors," but I think Realtors will be replaced by Realtors with technology. The business is always changing.

The fact that you have a high-level position would suggest diversity in the national brokerage community. Is that an accurate impression?

Actually, no. The Realtor community in general is not very diverse. Ninety-two percent of the Realtor population is white. But the big growth in home buying is coming from minorities. About 44 percent of first-time homebuyers are not born in United States.

Hawaii has great role models in the real estate business from every ethnicity. But we don't have that yet across this great country of ours.

Does the race issue still raise its head in your own work?

I'm one of the highest-ranking Asians in real estate but still sometimes, when I show up, there's that look, that instant where people see you for the first time and they're thinking, "what's happening here?" People have expressed surprise that I don't have an accent, and I say, "Well, when you only speak English, hopefully you don't have an accent."

I get less and less of that but at any rate growing up in multi-ethnic Hawaii helps prepares you for that kind of stuff.