Yeah, there’s no question that seasonality is a big thing when it comes to selling real estate. In fact, timing is everything in real estate. It’s right up there with location. So, timing and seasonality are two of the main questions that I constantly get from both buyers and Sellers looking to purchase here on the Big Island. And we are about 60 days from kicking off our season.
The selling season here on the Big Island starts just before Thanksgiving and runs through the end of April. That’s the time of year when we have the most people on the island, whether they be tourists or snowbirds. So, when someone asks me, when’s the best time to sell a home, I usually tell them between Thanksgiving and the end of April. That’s when your home will get the most exposure and the best chance of foot traffic. When buyers ask me when the best time to buy a home is, I tell them it’s during the slow season from May through September. When there are very few people on the island, inventory is up, and sellers are making price reductions because they realize they didn’t sell their home during the peak period. The selling season from Thanksgiving to April is when real estate agents earn much of their income. It’s not out of the realm of possibility that an agent will earn 65 to 70% of their income for a year during those six months.
So, with the season upon us, many of you will be asking yourselves: is now the right time to sell? Whether it is or not depends on who you talk to, but with the season starting, one thing is for sure: it gives you your best chance to sell. Some of the questions you may be grappling with about whether you should sell are probably the following.
1- Maybe you bought your property here on an emotional whim. You got caught up in the moment, you had a terrific vacation, and you wanted a place here permanently. Maybe that honeymoon has worn off, and you didn’t use it as much as you thought you were going to. This is primarily the number one reason people sell.
2- Maybe you didn’t buy it on a whim, and you thought that this would be a terrific investment and short-term vacation rental money maker. The truth is, the short-term vacation rental business has been down for the last few years, as we’ve seen fewer tourists visiting the island. Many properties aren’t even breaking even. So what initially looked like a solid investment may not be the cash flow you were hoping for. This is the second reason that most people sell.
3- Maybe you thought that owning a place in Hawaii would be easy to manage. Sure, we’re 2500 miles from the West Coast, but you can always find people on the island
to help you manage it. Now, after a period, you realize managing a property from afar, particularly in Hawaii, is not so easy. We don’t have many people who can help you manage it. Skilled labor and dependable help are the hardest things to come by here. And so, what you thought was easy to do turned out to be not so easy. The third reason people sell.
4- The sheer expense of it all. Yes, you knew that Hawaii was expensive. People talk about it all the time. But you didn’t realize the taxes would be that high. The HOA dues keep rising, not incrementally but in large jumps every year, and the HOA dues are almost a mortgage on themselves. And then, just when you turn around, the legislature is coming up with a new tax or a new fee. This is the fourth reason people sell.
I’m not sure if you fall into any of those categories at present time. But if you do, we should talk. The other thing you should know is it’s not cheap to sell your property. There are at least three different big types of taxes that you should know about that you’re going to be subject to upon the sale of your second home here in Hawaii. If this is NOT your primary residence, you’ll be subject to the HARPTA tax, which is a state capital gains tax. This is in addition to the federal capital gains tax. You can avoid both if you’re doing a 1031 exchange or an exchange into a DST (we can talk more about that over a phone call). The second tax you’re going to get hit with is a conveyance tax. This is a sales tax, and you can’t avoid it. The third tax you’ll get hit with is a proration of your property taxes for the year. Of course, there are title and closing fees along with your REALTOR commissions. But I wanted to be upfront and transparent, in case no one’s ever told you.
Some of these fees and taxes can be offset, and I’d be happy to explain how we do that here on the Hawaii team with our selling system. If you’d like to talk about selling your property this coming season, call me on my cell at 808-987-3306. I’ll pick up, and I look forward to speaking with you.
– Daniel Polimino
