"Short sale, foreclosure or auction: which is currently the best buy in Big Island real estate?" was the question I client posed to me yesterday after receiving a mailing about the beachfront home and penthouse villas being auctioned at Kolea at Waikoloa Beach Resort on March 21st.
The only answer to the question is "it depends" and for a particular property, community or location on the Big Island, the only way to answer for sure is to know the market and recent comparable sales. The other important information to have concerns hidden costs in the different auction scenarios.
The first question to ask is who is conducting the auction. If it is an auction house rather than a foreclosure auction, the winning bidder must pay a "buyer's premium" of 8-10% of the purchase price to the auction house. Both the Kolea (Waikoloa) auction conducted by Concierge Auctions -the same company that auctioned Kukio and Hualalai Resort properties last year - and the auction this Saturday, March 12th, of properties by Premiere Estates in conjunction with the local Sotheby's real estate affiliate, are this type of sale.
You may be represented by a real estate agent at either of these auctions, and that agent's commission will be paid by the auction house, so your buyer representation is not an additional cost. In that case you have the best of both worlds. Whether you are also at the auction in person, or watching on the Internet and on the phone with your agent, you have someone to work with in advance to decide what your starting and top bids should be.
For both of these auctions, bidders must be prequalified. There is no such thing as just showing up at the auction location (Hilo for Saturday's auction and Waikoloa Beach Resort for March 21st). If you are interested in any of the properties being auctioned Saturday, you must have your $10,000 deposit wired by tomorrow, Friday March 11th.
To bid on either the condo or home at Kolea, you must wire $100,000 to Concierge Auctions by Friday March 18th.
On the other hand, if you want to pick up a "deal", recent experience shows that the best way to do that is make an offer on an REO that is going to auction. That means that the bank went through the foreclosure process, it reverted to lender at the foreclosure auction, they put it back on the market, and it failed to sell through multiple price reductions. There is a home at Puu Lani Ranch, equestrian community on the upper road between Kailua Kona and Waikoloa - Waimea, that will be auctioned off on Monday March 14th in this scenario.
The one Kolea foreclosure condo that was auctioned in this way was a 2-bedroom sold for $367,500. The next lowest sale was $421,000 for a short sale of the same floorplan.
For this kind of auction, you can show up with your deposit check in hand the day of the auction. There is still a buyers premium, and there is a reserve price.
Or save yourself the headache and the buyers premium, and have your real estate agent write an offer in advance of the auction. One of my Mauna Lani best buys recently went into contract in just this scenario.
A hui hou
Beth
Comments(0)