Attention Hawaii Home Buyers: The List Price Will Not Be The Purchase Price (or Even Close)
If you’ve been searching for a home in Hawaii — or specifically Oahu — in the past year, you are most likely fully aware that this is an unprecedented seller’s market. This current real estate market has been gaining even more momentum over the past few months, and there seems to be no end in sight…at least from what we’ve witnessed.
While we agents feel horrible for buyers in general right now, we feel especially bad for those on their 7th, 8th, or even 12th+ offer. To their credit, these resilient buyers are not giving up, likely because interest rates are still historically low. If you don’t want to throw your money away in rent, you may as well buy sooner than later, as industry insiders don’t foresee prices going south any time soon. A former chief economist for one of the big local banks does not think this market is a “bubble.”
Oahu’s Competitive Real Estate Market
So if you’re trying to buy now, don’t give up! Stories about some buyers “beating the odds” getting their offer chosen over a strong cash offer…or a first-time buyer without a lot of savings and no appraisal clause (see my other blog) being chosen because of their compelling cover letter keep us encouraged and hopeful. As corny as it sounds, “when it’s meant to be, it will happen.” Sooner or later, your offer will be accepted when the time is right!
Offer Over the Asking Price
For those who are just entering the market, you should know that, for the most part, the list price is merely a starting point for offers. In order for your offer to be accepted, it may need to be $25K to $75K + over the asking price for a condo or townhome, PLUS, it should come with a corresponding strong appraisal clause. Single-family homes in even higher demand are selling for $100K-$200K higher since you’re competing with 10-25+ buyers with substantial savings.
That being the case, you may want to focus on a lower price point, knowing you will need to go substantially above the list price. Sadly, nowadays, a full-price offer is not even in the running anymore. Of course, it’s easy to get caught up in the competition to “win,” but make sure you are comfortable with your offer terms. Also, the amount you pay over “market value” should relate to the amount of time you plan to keep the property. The longer you plan to keep it, the more it may make sense to pay a premium for the home that will bring you lots of joy.
Here Are a Few “Sky High” Sales to Digest:
- 92-7151 Elele Street #1402 in Kapolei, 8 days on market, sold for $745,000, $75,000 over list price
- 811 20th Avenue in Kaimuki, 3 days on market, sold for $1,120,000, $225,000 over list price (tear down)
- 1196 Punua Place in Kailua, 7 days on market, sold for $1,560,000, $200,000 over list price
Please note that there are exceptions to this trend. If you want to concentrate on properties in less demand, look for homes that have been on the market for at least 2 weeks.
Good luck in YOUR home search! If you want help navigating through this market, contact me.