- We've head Real Estate
professionals describe the buying frenzy here as "frightening."
And indeed it is, from several perspectives. People are pouring
in here from all over the country, most notably from the West
Coast, buying up everything in sight. Properties get listed and
sold the same day. The day a listing appears on the Multiple
Listing Service (MLS), there are usually several over-full-price
offers in place within hours. Matter of fact, most properties
are sold before their listings actually appear on the
MLS.
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- How does that work?
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- Simple. Say you want
to sell your Hilo home. You go to the Realtor of your choice,
that person takes the info and writes up a listing agreement.
Every Realtor has a long list of eager and waiting buyers, so
a few calls will bring in the offers, the lowest usually being
full price. After the dust settles form the Realtor writing up
the offers for her clients and presenting them to the seller,
she will eventually get around to the required task of typing
the listing in the MLS, even if the property is already sold.
That's how it works.
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- How does this all relate
to you as a person looking for that perfect Big Island property?
It means that you are wasting your time calling from the Mainland
about a property you see advertised somewhere, even if you find
it on the Internet. If you see it in print somewhere, it's long
gone. On the Internet, you might get lucky enough to call before
one of the offers already in place is accepted, but probably
not.
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- Don't even bother to
ask a Realtor to take your deposit on a property subject to your
coming over to inspect the property. No seller will be willing
to wait for you when s/he has several full-price offers on the
table.
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- About the only edge
you have in this market now is if you are here, you find out
about the property the instant it is listed, and you have the
cash on hand to make the purchase. By "cash on hand,"
I do not mean your ability to secure a mortgage. I mean that
if you're looking at a $250,000 house, you have $250,000 in cash
available-right now-to make the purchase.
- Sellers are getting
more savvy about the potential problems with purchases that involve
mortgages, particularly if the buyer requires a big mortgage.
By "big," I mean big compared to the price of the property.
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- When we have a property
for sale, we will not accept an offer from anyone who needs more
than a 70% mortgage. Sure, there are lots of people out there
who can easily qualify to borrow $225,000 on a $250,000 house.
Or at least, their credit report says they can. But there's more
to it than that. We had one property tied up in escrow for several
months while a strong buyer tried working with several lenders
to secure a mortgage. In the end, this buyer failed to perform,
and we had to start all over again. Fortunately, we had a full-price
cash backup offer from the beginning, but that full-price buyer
had to wait several anxious months for buyer #1 to drop out.
We got lucky; most backup buyers don't have the time or patience
for that sort of thing.
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- Just one of the reasons
even a highly qualified buyer might have to drop out after a
long time in escrow (this happens all the time) is that the house
doesn't appraise for enough to support such a high mortgage.
We've also seen a case where the house did appraise for enough,
but in the final hours of loan approval (again after months in
escrow), the lender went through the paperwork and discovered
that there was an addition to the house for which no permit was
shown on the County records. So the house had to be re-appraised,
and in this market, there's another three-week delay. When it
was re-appraised, it came in just low enough that it no longer
qualified for the big mortgage. The buyers were not willing to
come up with the difference in their down payment, so the deal
fell apart.
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- And so it goes. The
bottom line: Cash Talks.
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- The median home price
on the Big Island is now $197,000, meaning that there are still
lots of homes available for much less than that figure. But the
$100,000-and-under homes are now limited to homes in low-price
subdivisions and rural properties, usually far from any town.
- This crazy need for
so many people to relocate to Hawaii has caused great difficulty
for the folks who live here and have lived here for years. Many
of these people have been diligently saving money so that they
could buy a home one day. That dream is no longer viable for
many of them. The prices of homes in any of the more desirable
have just about doubled in the last two years. In the really
desirable areas, like the best parts of Hilo or Kona, or some
of the tourist-destination spots, prices have gone up unbelievably.
A little cabin in the once-spurned community of Vacationland
that only two or three years ago would have been a hard sell
at $75,000 will now bring $250,000 in a heartbeat.
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- It is our feeling that
a lot of these properties are being purchased in the heat of
some kind of misdirected emotional charge, and that within a
few years they'll be on the market again. People come over here
and get all psyched up about "living in Paradise,"
and they don't take the time of initiative to feel what it is
really like living here.
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- I go through a lot
of the realties of Island living in Affordable Paradise, and
in the near future I'll have another update on some good reasons
why NOT to move to Hawaii.
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- And one more time,
I would like to encourage those who are looking for Hawaii properties
just as investments, to please consider looking elsewhere. Investors
do nothing but drive prices up and wonderful people out. Hawaii
is a magical, special place that in our opinions should be reserved
for those who feel in their hearts that this is where they must
be. The March Issue of AARP Magazine has a great article on retiring
in Mexico!
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- If you have spent some
wonderful time in Hilo and have fond memories of the peaceful,
slow-moving energy there, you will be surpprised at the "new
Hilo." The sudden addition of a few thousand newcomers,
most of them from the mainland, have seriously changed the face
of our precious little town.
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- We have traffic jams
now, there are long lines wherever one goes, parking lots are
packed to the limit, and forget trying to find a table at a restaurant
and lunch time. Aloha is still alive and well, but it
is being diluted. That's why we respectfully ask everyone considering
this move to really think about it carefully. If you love Hawaii
for her feeling of Aloha, then you must be prepared to
live that life yourself. You cannot bring mainland ways to Hawaii
and expect that you will not have an influence on your new environment.
We must all honor and practice the ways of Aloha in our
own lives if we are to maintain that for which we seek to live
in Hawaii.
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- That's it for now!
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- A hui hou!
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- Skip Thomsen
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