I’ve noticed over the past couple of weeks a continual chatter back and forth between the members of the Big Island Hawaii Life team as we show and write offers on properties on the Big Island’s Kohala Coast—especially short sale and foreclosure properties.
Luckily, Hawaii Life prepared a Notice to Buyer Clients for us to share with our prospects that explains EXACTLY how we will operate on behalf of both our buyer clients and the sellers of properties we may have listed, in the situation where different agents or the same agent are representing multiple buyers with similar interests. (Contact us if you’d like to see a copy!)
But today a bigger problem unexpectedly reared its head. I have several prospects and clients in town wanting to see real estate best buys on the Kohala Coast, and I am running out of inventory to show! For example, at my favorite Waikoloa Beach Resort condo properties, there is only one active REO (bank-owned) listing at Kolea and the oceanfront one at Halii Kai. According to the listing agents they are getting multiple showings a day and at these prices it can only be a matter of a day or two before they have offers.
At Halii Kai today I had a prospect wanting to see our office’s two short sale listings, but they decided why bother because there already offers in on both listings. I have another client staying there who doesn’t want the smaller 2-bedroom, and the REO and most of the active short sales without offers are that floor plan—so, he told me today he’d rather look at Kolea and maybe Puako (there is one house in that $750,000 price range).
Ooops. I have for years kept Kolea resale spreadsheets and I happen to have several old ones. In July 2008, there were 32 active listings plus one unit, 3D, under contract. (As readers may recall, the economy crashed a month later and that was the last non-distress Kolea condo sale until my sale of 13E last month). In July 2009, there were 30 active listings at Kolea including the first REOs.
As of today, there are only 18 active listings including that single foreclosure, plus 4 condos in escrow (all short sale or REO). Aside from the REO, none of those eighteen units are listed anywhere near a price where they would appraise, given the recent sold comps. In other words, I have nothing to show at Kolea, although we do know of additional 2-bedroom units in the foreclosure pipeline.
I work as a real estate agent, but somewhere in my ancient past I earned a Ph.D. in economics and I just can’t help but apply the basic framework of supply and demand curves setting prices in a market. I’ve just painted a picture of abundant demand and limited supply. What usually happens next is prices trend up!
At Halii Kai, lenders are also indicating a change in perspective on the direction of prices. One of our short sale listings with an offer on it may be withdrawn from the market as the lender who had previously denied a loan modification just offered a reasonably attractive one, leaving our seller consulting his attorney for advice. On another short sale where I am representing the buyer, the lender came back throwing out one of the sold comps saying it had been under-priced and shouldn’t count! Their bottom line is they want more for the unit than recent sales in the same building would suggest is a fair price.
We’ve been wondering when appraisers would stop checking that “declining market” box and we may just have hit that inflection point.
A hui hou,
Beth Thoma Robinson, R(S)