How to Be a Successful Buyer in Our Competitive Maui Real Estate Market
Since the beginning of the pandemic, Maui’s real estate market has exploded into a very heavy seller’s market with low supply and high demand. However, I’ve had quite a few clients (even financed clients), win out in multiple offer situations recently. How did they do it? Below are a few tips that won’t guarantee you’ll win, but may push the needle forward in your favor:
1. Getting preapproved with an experienced local lender/mortgage broker (if financed).
This is key, especially if you’re interested in vacation rentable properties, as many lenders on the mainland think they can loan on them, but often find out halfway through the deal that there are a lot more hoops to jump through than normal residential properties. Using a trusted local mortgage broker can also strengthen your offer in the eyes of an experienced listing agent, who have more than likely had some mishaps with mainland lenders in the past (I have many horror stories about this and I’m sure you’d hear a lot of others if you were to ask other seasoned agents). Not to say all mainland lenders don’t know what they’re doing, but if you’re able to avoid potential hiccups AND potentially strengthen your offer from the get-go, why wouldn’t you? Contact me for my preferred local mortgage broker list.
2. Escalation clauses can be a great tool to be competitive.
Instead of offering your highest and best offer out of the gates, escalation clauses allow the flexibility to offer at a certain price, and set an absolute highest bid you’d pay for a property. The verbiage basically says, “I’m offering this price, but will beat out another other bona fide offer by X amount all the way up to Y amount.” That way, there’s a sense of control knowing that you aren’t leaving any extra money on the table in the event that no one else gets close to your highest bid amount. Also, it gives you the opportunity to set an absolute highest amount that you would theoretically pay for a property. I tell my clients to set that number for an amount that if another offer were to come in and beat you, at that point you would say “they can have the property at that price, and I’m happy to walk away at that point”. There’s another tactic I’ve been utilizing lately for financed offers with escalation clauses in order to be more competitive with cash offers. Contact me for this info!
3. Appraisal verbiage can help tip the scales.
With prices rising as quickly as they have been, appraisals have been an issue for financed offers. One way to alleviate these concerns in a Seller’s eye is to (if you are able), write in verbiage that states that you will cover any necessary funds that are needed in the event of an appraisal shortfall in order to continue with the loan. If you do go this route, I definitely recommend chatting with your lender first to see how this would play out in various scenarios to make sure you do have the ability to do this financially. If you are able to add this in, this can push you above any other financed offers that don’t have this verbiage written in.
4. Find an agent that is not only experienced, but has a great reputation within our Maui Realtor community.
There are a lot of licensed Realtors on Maui – last I heard there were close to 2,000! However, only a small percentage of that do most of the business here. Working with an agent that not only treats being a Realtor as their career, but knows and has worked with most of the top “players” in the industry can make the difference in a competitive multiple offer situation. A listing agent recently told me that part of the reason why their Seller chose my Buyer’s offer was because she told her Seller that her and I worked on another deal recently and appreciated how smoothly the other transaction went. I don’t know if that was totally the deciding factor, but it sounds like it made a difference!
These are just a few tips and strategies that I’ve utilized with my Buyers recently, and sometimes they do make the difference in landing the deal or not. If you’d like more info or have any questions, I’d love to be a resource for you! Contact me today!