In my recent post about the real estate market in the Hawi, North Kohala area, I noted that one area where I see the price curve adjusting upward is in direct oceanfront property.
My contention is that as more parcels get sold for conservation, they are permanently removed from the future resale market, thus increasing the value of properties within existing oceanfront subdivisions that are in private hands. That brings me to the Hawi oceanfront property that has been the subject of several of my other blog posts, an estate that is bank-owned after foreclosure.
Recently released with a new listing brokerage, but still the same mansion on 21 acres (MLS# 254112) now offered for $2,390,000
Buyer Beware: Foreclosures are Sold “AS IS” and “WHERE IS”
Every foreclosure auction notice, MLS REO listing, and bank seller’s addendum, makes it absolutely clear that the property is being sold “As Is” and “Where Is.” The “As Is” seems pretty clear, and in fact, there is a standard “As Is” addendum often included with standard sales to sweeten the deal. It means that while the buyer can have any inspections and do any due diligence during their inspection period, the bank selling is not responsible for repairing any damage, defects, or deferred maintenance found.
The “Where Is” part is usually not a big deal. It means the bank that owns the property will not pay for a staking or survey, nor deal with any encroachments found. Typically, these sorts of encroachments would involve something minor, like a neighbor’s fence or at worst a rock wall.
Which brings me to a huge “where is” not mentioned in the public listing description of this oceanfront property and only obliquely referred to in the private, agent-only remarks (something along the lines of seller being in receipt of encroachment agreements reviewed by their attorney.)
Regular readers may recall that I attend monthly meetings of the North Kohala Access Group, a subcommittee associated with the Community Development Plan (CDP) Action Committee working to implement the recently passed CDP.
In one of those meetings, it was reported in conjunction with progress on a designated mauka-makai public shoreline access, that details were being complicated by the discovery that a portion of the bank-owned oceanfront mansion is actually built on an adjacent lot sold by the previous owners just before they lost the house to foreclosure.
Take a look at the aerial photo above. See the set of two windows on the second floor, right hand side? Imagine a property line that cuts through the home and property just to the left of those windows.
How to “Fix” a 2,000 sq. ft. Encroachment
What would a buyer be expected to do about the encroachment? The first step would be to review the encroachment agreements referred to in the listing. An alternative in principle would be to negotiate a lot-line adjustment between the lots, although that could open other cans of worms.
Another alternative, in principle, would be to tear down the encroaching item. It’s not been easy to find a buyer for a home of this style in Hawai’i, so I got curious and consulted with a highly qualified contractor to find out how the heck one would go about removing 13,000 sq ft of granite-faced two-story construction.
The answer: “If no significant salvage was intended, it could be removed with heavy equipment: excavators and bulldozers; they would have it on the ground in a few days to a week. I’m reluctant to put a number on it, mostly because of the trucking costs and landfill dumping fees, which would be prodigious.” When pressed, he offered that under $100,000 would do the job.
The oceanfront location is stunning; the interior can always be remodeled if not to your taste
The Good News: “Where Is” is Direct Oceanfront
All joking aside, does it really make sense to tear down a home with top of the line finishes, Monier tile roof, an elevator, and Smart Home technology? It may not have a tiki-torch island sensibility, but that $100,000 is probably better spent taking care of deferred maintenance…and if the gold-plated crystal chandeliers are not your style, getting a good designer to help you visualize a remodel.
Another professional you would want to hire is a landscape designer who understands how to create appropriate windbreaks, soften the exterior from the view of neighbors, and begin restoring the oceanfront parcel you own to appropriate species for shoreline birds and erosion control. The other thing to understand is that at the time this subdivision was done, the planning department was requiring that the entire oceanfront get included in only one of the parcels…and this is it.
Buyer Beware: just because you read it on the Internet doesn’t make it true.
When you look at the listing for this Hawi estate on the Hawaii Life website, keep in mind that the text was provided by the listing agent, not by us. While it is true that Hawi is “rich in history”, we’re not the ones who wrote that “Hawi is known for it’s beaches and sun-kissed warmth.”
My broker-in-charge would never let me get away with that grammatical error…and I hope she’ll share her very funny story of what she told one of Hawi’s prominent citizens at the time he was her client looking to purchase in Kohala. Of course, he did buy here, but Katie’s caveat about the weather has become a long-running joke.
A hui hou,
Beth Thoma Robinson, R(B)