Hawaii Homebuyer Myths

I read an interesting article in Sunday's Parade magazine, which discussed myths for home buyers.  Thinking about Hawaii's real estate market, I thought about how these myths affect us.  Here they are:

1) "The perfect home is out there."  Some buyers want everything right and may overlook all the positive features a home offers.  I remember looking at a particular townhome in Ko Olina, where the buyer liked everything except the kitchen cabinets.  If a home is hitting on other points, particularly price and location, don't let kitchen cabinets hold you back, especially in Hawaii. 

Hawaii is not like some other states, where there's an endless inventory of homes to choose from.  In the more affordable price ranges, it's a case of "write the offer now before someone else gets it."

2) "The listing information is always accurate."  Definitely not.  Much of the information in a listing is subjective, that is, up to the owner and listing agent.  For example, property condition.  An owner might think his property is in excellent condition while a buyer considers it average.  The listing agent might be somewhere in between on this. 

Maintenance fees on condos and townhomes often increase at the beginning of a new year.  An agent listing a property in November or December may not have known about maintenance fee adjustments in January.  The listing agent should inquire with the owner to keep this info updated. 

Real property tax assessed valuations are also overlooked at times.

3) "You should buy as much house as you can get."  Generally, the larger your house, the more time and money it will cost to upkeep.  Some people want 2,000 square feet interior to showcase their personal collections plus a garage for the extra cars, jet skiis etc.  That's fine if you can afford it and have the time to maintain things.  If the expense and maintenance will be a drag on your personal life, then consider going smaller.  Simplify. 

4) "If your offer was accepted right away, it was too much."  Buyer's remorse.  In the past couple of weeks I worked with one couple who wanted a hot property at Diamond Head.  They really wanted this condo and we talked about making an offer for about a week.  The only thing hanging them up was an offer amount.  They didn't want to pay too much.  After about ten days, the seller accepted an offer from someone else.  The buyers were immediately disappointed they missed out and were then ready to make a backup offer within $5,000 of the list price.  We'll have to wait and see if we're too late.

In this same two week period, I've been working with another buyer who wants to purchase at the Makaha Beach Cabanas.  He said he's ready to make an offer, told me the amount and... well it's way too low.  His planned offer is about 35% off the list price, lower than any sale in the last several years.  It won't work.   Owners who aren't distressed will not give up years of built up equity to a lowball offer.  If you really want a property, step up to the plate and make an offer that will work.  It's all about supply and demand and in Hawaii, demand exceeds supply.

5) "The value of the home will increase."  The article goes on to say don't expect big short term profits in real estate.  I agree that short term profits should not be the goal of a Hawaii real estate investor.  However, I do feel that most if not all Hawaii real estate will increase in value over the longer term.

The Honolulu Board of Realtors historical sales data shows from the year 1985 to 2010, Oahu's median home prices increased by 273%, which averages out to 5.4% per year.   There were definitely some bumps along that time range, however the trend is clear.  Property values in Hawaii are rising. 

Catch the wave!

Michael Bates (RA)

Hawaii Realtor