Story # 1: A two-bedroom condominium goes on the market in the Mauna Lani Resort. Listing agent tells everyone they have two hours to do a virtual tour of the property before the renters check in for the next three weeks. Property comes on the market at $1.95 million and in two hours seven agents pour through the condo doing live virtual tours with their clients. There’s so much interest in the condo in two hours that the seller decides to raise the price of the condo even before the first offer is submitted. So, at two o’clock the condo is $1.95 million and by 4 p.m., yes, just two hours later, the seller raises the price to $2.1 million. Why? Because he can.
Story # 2: A piece of land comes on the market on a Friday morning. It’s 10 acres situated above Kona and it is able to be subdivided. By Friday night, the listing agent indicates there are multiple offers on the land. By Saturday morning, the listing agent calls for highest and best from all the parties who submitted an offer. By Sunday, the property is under contract, and by all accounts, it goes for more than $100,000 over asking price. This is extremely rare and a scenario we don’t usually see here in Hawai`i. We are used to the multiple offer scenario on residences, but rarely, if ever, do we see a bidding war on a piece of land. That should give you an indication of just how hot this market is.
I relay these stories to you to prepare you for what the NEW rules are for the real estate game in Hawai`i. If you’re thinking about making Hawai`i your permanent home, or a secondary home or just even a vacation spot, then you are now joining a very large pool of buyers which is growing every day. Demand does not seem to be slowing down and appreciation is continuing to skyrocket. So, if you want to be one of the people who has a rare piece of paradise, then I want to set the expectation for you, so you know how to play the game here and WIN!
Rule # 1 – work with professionals like us here at the Hawai`i team. Your real estate agent or team needs to know all the sub areas, all the pricing, all the history and all the backstory that comes with each residential subdivision and transaction. Basically, you need to have a real estate agent who is playing this game at a very high level, so you can win the property.
Rule # 2 – cash is king. I’m sure I didn’t have to tell you this, but I can’t emphasize enough how important it is to purchase with cash. Over 50% of the transactions on the island were cash transactions in the last 12 months. That must be a new record. Even from my real estate days of working in Denver and San Diego, at best we would see about 15% of the transactions be cash; 50% is eye popping. It’s not to say you can’t buy a property with a loan, you can. However, you are going to have to offer considerably over asking price in order to beat out the cash offers. In some cases, you’ll have to offer $100,000-$300,000 over asking price in order to beat out the cash offers. There are lots of ways to purchase with cash: you can use a home equity line, leverage a stock portfolio, and even use one of the many cash out re-fi programs they have now, like delayed financing which lets you re-fi the property the day after closing (happy to connect you with lenders who get deals done here in Hawai`i).
Rule # 3 – time is of the essence! You must move fast. You don’t have a lot of time to decide and in many cases, you probably aren’t even going to be able to sleep on the decision overnight. We tell every one of our buyers exactly the procedure that we follow so we can help them win the property. Here is what we do: when we find the property that matches your criteria – either it just came on the MLS or we found an off market deal – we send it to you via email for you to look at THAT day. We include pictures and sometimes a video tour. We will then call you to make sure you’ve seen it on your email and then ask whether you want us to go to the property THAT day to do a live virtual tour. Once we take you through the live virtual tour, you’ll either tell us you’d like to move forward, or you’re not interested. If you do want to move forward, then we need to write the contract THAT day. The point I’m emphasizing here is from the time we identify the property you have 24 to 48 hours to decide and win the property. We have an entire team behind the scenes on the administrative side to make sure we get all the paperwork done and to you quickly for review. Chris and I have adapted to moving this fast and winning properties for our clients, but we need you to be ready as well.
Now everything I’ve outlined here may seem somewhat uncomfortable for you or even scary but let me try to put your mind at ease. First, the Hawai`i real estate contract is extremely slanted in favor of the buyer; you have no less than six or seven outs in the contract. We’ve been doing this for a combined 24 years and never have we ever lost anyone’s earnest money, so you can feel comfortable with us on that score. In addition, most of our clients are buying second homes either for investment purposes or just to keep for themselves. If that’s the case, then remember this is not your primary residence and you’re not concerned about the location of the home to the dry cleaners, the bank or your kid’s school. All you’re looking for is a terrific vacation property that is close to all the amenities and beaches, and rents well. Trust me, Chris and I are not going to get you into something that doesn’t meet all your criteria.
We hope this has given you the knowledge you need; if you would like to go forward then by all means please contact us here at The Hawai`i Team. We would love to help you or at least have an initial consultation with you to answer all your questions.
Aloha, Dan and Chris
P.S. please don’t send us any emails asking us if there are any deals on the Island. I think you know the answer.
Dan Polimino is the owner of the Hawai`i Team in Kailua-Kona, Hawai`i. He and his team are the luxury residential experts for the Big Island. If you are thinking about buying or selling in Hawai`i, then please reach out to us at team@thehawaiiteam.com or call 808-913-0899.
