You've decided to buy a home in Hawaii and maybe this is your first home purchase, or at least first time buying a home on Oahu, so you are unfamiliar with the process. What can you expect? What steps will occur? If you work with me, the buying a home in Hawaii process will go something like this:
1. Contact Me: If you are thinking about buying a home in Hawaii, first contact me. We can talk by phone or email and then, follow up emails by phone and/or in person. Before we talk - (A) Think about the basics of what you are looking for - how many bedrooms, square footage, etc. to narrow down your space and aesthetic requirements (B) consider your lifestyle, favorite activities, your tolerance for commute, and other considerations, such a schools, to narrow down your location requirements, (C) have a general idea of what you are qualified for and willing to spend on a home. Just a basic idea is neccessary at this point, to give me an idea of what is important to you in a home and the areas of the island and properties that might work for you. If you are like most buyers, A, B, and C may all change slightly during the actual "looking at homes" process.
2. Receive Listings Via Email: Based on your general requirements, I can set up one or more "Homes for Sale on Oahu" searches via the Hawaii Association of Realtors MLS (Mulitple Listing Service). Unlike in some other states, such as New York, there is one centralized MLS on Oahu and all REALTORS on the island have access to the same properties via the MLS. When you are buying a home in Hawaii, you can receive your property listings via email or on a special website portal set of specially for you. If you do not have email, I can make other arrangements. At the website, you may "Reject" properties, or mark them as "Favorites" or "Possibilities." You may also leave other comments.
3. Contact a Mortgage Lender/Broker: If you are not paying cash, you will need to find out what you actually are qualified to borrow. You also need to determine the cash funds you will have available for purchase. This would generally include an earnest money deposit, downpayment and Closing Costs in Hawaii. All of these factors will affect the maximum purchase price for your home. You will need to submit a loan application and obtain a prequalification letter from a lender of your choice. I can provide some names of Mortgage Brokers to work with if you need this.
3. Meet/Interview With Me: We will have an initial interview (hopefully in person, but perhaps, via phone, if you are on the mainland) to discuss mutual expectations and determine whether we will pursue a Broker-Client agency relationship for buying a home on Oahu.
Once a mutual decision is made to pursue the relationship, I request that my clients sign a Buyer's Agreement, which is a contract between the Buyer and myself, setting forth mutual expectations, the services I will provide, and compensation for my services. 99% of the time, my compensation for Buyer's Agent services is paid by the Broker of the Seller of property that is purchased by my Buyer. In rare circumstances, the Buyer will pay directly for my services (usually by wrapping it into the mortgage) -- such as with the sale of a For Sale By Owner property, where the Owner is not offering a Buyer's Agent commission. Typically, however, FSBO's do offer a Buyer's Agent commission and this is paid by the Seller-Owner of the property sold, and is part of the purchase price for the property.
Contrary to common myth, whether or not you are represented by a Buyer's Agent will rarely, if ever, affect the price you will pay for a home for sale in Hawaii. You do not "save money" or "get a better deal" by going into a home purchase without your own professional representation. In fact, you may lose money by making pricing or inspection mistakes. The Seller-Owner of a home has a written listing agreement that requires them to directly pay 100% of the total agreed upon commission (usually 5-6%) to the Seller's Broker, whether or not a Buyer is represented by a Broker. If the Buyer has no Broker, the Seller's Broker does not share the commission with anyone, but rather keeps the full agreed-upon commission and may go into a Dual Agency relationship, getting paid for both the Seller and the Buyer side of the transaction. So, bottom line is that the Buyer typically does not get a rebate or a better price because full commission is still paid by the Seller.
4. Viewing Properties: Before I take you out viewing homes on for sale on Oahu, you should have spoken with a lender and done the preliminary groundwork, to determine the amount you are willing to spend on your new home. There are two important reasons for this: (A) You can be sure that we are seeing the homes in the right price range, not to be disappointed to find out that the home you LOVE is out of your range and (B) you will be prepared to quickly obtain a pre-qualification letter, if you find a property you want to purchase, and lessen the chance of losing it to another buyer in the interim.
Prior to taking you to view homes on Oahu, I will prepare for the showings by sorting through your comments made via the MLS listing website. I will also personally identify other properties that you may like via the MLS. I very often will take a day or two and preview these, in person, if I have not already seen the property with another client or broker's open house, in advance to showing them to you. I will call all of the listing brokers and set up appointments to see them. This will often require 24-48 hours advance notice, since many properties are owner-occupied, requiring preparation, and not all are on lockbox. I will schedule the appointments, allowing time to see each home and for the drive between the various locations. We will go out for as long as our schedules and energy will permit. Typically, I will show Buyers between 4-6 homes in a session, but if scheduling or time on island is an issue, I can always show you more or less.
When we meet, I will provide a schedule for the day and MLS Customer Reports for each home we see. I also usually will provide a CMA (Comparative Market Analysis) Report for all the homes we see which compares the listings by price per square foot. I will also provide other requested information. I will often drive you around the area and show you other points of interest, such and schools, recreation areas and shopping districts, that might be relevant to your home search.
If you wish, you can also see homes on your own, during Sunday Open Houses or Weekly Brokers' Open Houses. Brokers' Opens are on Wednesdays and Thursdays, depending upon area of the island. If my schedule permits and I am not sitting an Open House, I can attend these with you. I will provide you with cards that you may present to the listing broker at these Open Houses, so that you will not have to sign in with your personal information, and the listing brokers may contact me directly for feedback. It is important that we communicate frequently during this process, so that I may better identify the right homes for you.
5. Selecting Properties: When you have identified one or more properties that you are very interested in, I will provide more detailed information on the properties. This may include information or relevant comparable home sales on Oahu, Oahu property tax information, mortgage lien information, Oahu school information, disclosure information, etc. We may also go back for one or more additional showings, including possibly having a few contractors or other experts view the property.
6. Writing an Offer/Purchase Contract: Once you have selected the property you wish to buy on Oahu, you will make an offer. An offer is written up by your REALTOR and signed by you as the Buyer. In Hawaii, most offers are written using a standard Hawaii Association of Realtors (HAR) Purchase Contract (it used to be called the DROA, so you may still hear that term). The Purchase Contract will usually include various Addenda, which may include standard broker addenda, lead paint disclosures (on older properties), short sale addenda, etc. Most of the forms used are HAR Forms. Sometimes, you will see custom forms, such as with a sale in a new condo building or subdivision. Regardless of whether you are using a standard or custom form, all terms and conditions of a Purchase Contract are negotiable between Buyer and Seller. However, your offer typically will be viewed as stronger by a Seller, if it is fairly standard and not full of special or unusual terms and conditions.
In writing up an offer, you will need to consider not only the Purchase Price you will offer, but also other important terms such as Earnest Money, Down Payments, Closing Dates, Closing Costs (who pays what), Inspection Periods, Financing, any Contingencies, and any special terms required. I will cover each of these items and discuss preferred timing with you, with the goal of having every phase of the Purchase Contract during the escrow period, fall precisely into place.
In Hawaii, the main Contingencies and other items affecting the standard Purchase Contract are (1) Acceptance of Real Property Disclosures (2) Home Inspection (commonly referred to as C-51), (3) the Financing Contingency, (4) Title Report (5) Survey and (6) Termite Inspection. I can explain these is further detail, if you have questions.
7. Acceptance/Counter Offer: Upon receipt of your offer to purchase a home on Oahu (via Purchase Contract), the Seller will either accept the offer within the specified time frame, or reject the offer by either (a) submitting a Counter-Offer or (b) doing nothing, both also within the specified time frame. If there is a Counter-Offer, you may accept this or go back and forth with another Counter-Offer, until someone either accepts or ends the process by not responding. Reaching a signed agreement sometimes requires multiple Counter-Offers back and forth.
8. Escrow: Once an agreement is reached, the Earnest Money will be deposited, escrow will be opened on the property and timelines will start running as of the Acceptance Date, as indicated in the Purchase Contract. The Buyer will then select the Home Inspector and Termite Inspector (usually), as indicated in the Purchase Contract and begin the process of due dilligence on the property. The Buyer will also work on the Loan Contingency, if there is one, including obtaining any required property insurance policies. In the meantime, the Seller will be working to fulfill his obligations by providing disclosures, Home Owner Association documentation (if any), Survey and other contract requirements. I will attend and facilitate all inspections, unless otherwise requested, answer any questions, and provide all necessary transaction documentation to the Escrow Agent and the Lender, as required. Buyer will submit all additional down payment monies, under the timelines set forth in the Purchase Contract.
9. Closing: When all requirements are met and contingencies satisfied (or waived), closing documents will be signed by the parties. This is typically not done with Buyer and Seller together in one room. Sometimes it is done remotely, using email and express mail. Often, it occurs at the Escrow company with the Buyer and Seller signing separately. I will attend this to provide moral support, if needed, and help answer any questions, unless otherwise requested. Even if I am not in attendance, I will review the Estimated Closing Cost Statement and work with the Escrow Agent and Lender to help to answer any questions you may have regarding the closing documents.
10. Recordation: Typically, upon recordation, you may take possession and move into your new home. The transaction will not be recorded, usually, until a few to several days after signing of closing documents, and always after funding of the loan.
11. Congratulations!
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