How to Succeed at Buying a Kohala Coast Short Sale or Foreclosure
It is increasingly difficult to find short sale or foreclosure opportunities at the Kohala Coast Resorts. We’ve already closed on a few this year; there are two dozen resort condo short sales with accepted offers (several with approval in actual escrow) and one REO in escrow at Kolea. I find myself in the eye-opening situation of having buyers in town with their checkbooks open…and nothing suitable to show them let alone write an offer on!
If you are looking to buy a distressed property on the Kohala Coast, here is your short list. There are a total of 5 active short sales and 4 active bank-owned (REO or foreclosure) listings between the three resorts north of A-Bay…plus a lingering short sale listing at the Hainoa Villas at Hualalai Resort now reduced to $1,150,000 (MLS# 223930), and a newer short sale listing on a lot at Kukio for $1 million (MLS# 249722).
If you are interested in getting a distressed property at a fantastic price at Hualalai or Kukio, remember that privileges come with a price that is not at distress-sale levels. If the carrying costs are in your budget, a short sale on an entry-level property may or may not be your most attractive option.
Mauna Kea Resort – One Short Sale, One Foreclosure
View from the “L” building at Wai’ula’ula at Mauna Kea Resort – short sale and foreclosure for sale
At Wai’ula’ula at Mauna Kea Resort, you have your choice of a short sale listing and a bank-owned unit for sale side by side. I like the “L” building’s sense of privacy as it is situated in such a way that from these upstairs units you don’t have anyone else looking into your lanai or windows, just a sweet view across the golf course to Kawaihae Harbor and Maui.
The REO (MLS# 247979) is listed for $767,800 and the short sale (MLS# 247266) asking $795,000. Both are in the range of sold comps, but given they each have been on the market for over 6 months, the timing might be right for an aggressive offer.
Mauna Lani Resort – One Short Sale, One Foreclosure
Fairways at Mauna Lani short sale has built-in BBQ on the lanai
Moving south to the Mauna Lani Resort, the bank-owned unit at Villages at Mauna Lani (MLS# 250751) has been on my deal list for a while…it is now on its second listing agent and listed at $729,900. Pam Deery and I just closed on a REO of the Maile floor plan at $725,000.
Next door at Fairways at Mauna Lani, there is a single short sale (MLS# 248024), the larger 2-bedroom floor plan listed at $443,500. This floor plan has 1,646 sq. ft. and the next cheapest Fairways condo for sale is the smaller 1,289 sq. ft. floor plan asking $449,000.
Waikoloa Beach Resort – Three Short Sales; 2 Oceanfront Foreclosure Listings
Steps to the beach from Lots 7 and 8 at Naupaka Place make these foreclosures rather unique
The two Waikoloa Beach Resort REOs (bank-owned properties) are vacant lots at beachfront Naupaka Place, each offered for $2,300,000 (MLS# 248560) and (MLS# 248561). Since the only residence built in this small, oceanfront community sold for $9,500,000 a little over two years ago, this would seem to be a development opportunity for someone…or just a great spot for a family compound if a buyer bought both these lots and the adjacent one for sale.
Full disclosure: I am the listing agent for the Naupaka lots. This is not a situation where we are dealing with a megalithic bank as the owner, so we can get an easy decision on the offer. Call me for specifics as Googling the owner sent one prospective buyer into panic!
The three short sale condos for sale at Waikoloa Beach Resort are in a slightly more affordable price point.
One is the lowest priced unit available at Halii Kai (MLS# 248005), asking price $350,000. Also my listing, I hesitate to include in this post as we have one offer in and another on the way. However, we have a good sense of what the bank will approve from a previous offer and we keep getting offers that are just too low to be worth submitting.
Rule #1 for how to succeed at buying a short sale is to submit an offer based on the actual sold comps because that is exactly how the bank will decide whether or not to approve the short sale.
The other two short sale listings are at Waikoloa Colony Villas. Both are the three-bedroom floor plan, but one is listed for $299,000 (MLS# 251235) and one for $355,000 (MLS# 252830). The last distress sale of this floor plan closed a year ago for $302,000 and that is the mark at which one listing agent has priced.
The higher-priced unit is my listing, and it is a cooperative short sale, meaning that Bank of America ordered an appraisal and set the list price. Appraisers are no longer checking the “declining market” box…in fact, appraisals are beginning to come in above previous sales. Their logic? Other sold comps from the past year range from $320,000 to $409,000…and the three active listings are priced $379,900 to $399,000.
By the way, cooperative short sales do work, in the sense that they shorten the decision process. We are opening escrow on one at Halii Kai where we got a decision in under a month. And no, you do not have to offer full asking price to succeed.
More Tips on How to Succeed at Buying a Short Sale or Foreclosure
You might have gathered from the above that I list and sell quite a few distressed properties and also have a good track record of getting them for my buyer clients. If you are working with a less experienced agent, here’s what you need to know:
- Be prepared with a prequalification letter from a bank if you plan to get a mortgage, or proof of funds if you plan to pay all cash. If you are financing, be sure you understand lender requirements for resort properties. For example, we’ve had to decline offers at Halii Kai because the prospective buyer could only afford to put 20% down, and lenders will require 30% down for resort condos.
- Don’t include furnishings in your offer price for a short sale. It is okay if you are bidding on a property that is already bank-owned. Even if you see them in the photos and the description says they may be available, the problem with including them in the offer is that the approval letter will state that every dollar from the sale must go to the bank, not their borrower. The lender only has a lien against the real estate, not the personal property, so very few sellers are willing to simply throw them in, when even at a garage sale price it might be the only money they make in the sale.
- Make it a clean offer. Whether in a short sale or REO, the bank will typically not approve seller paying for repairs, termite inspection, cleaning, pet treatment…or staking in the case of a lot or residence. They may not even include all of the normal seller escrow costs, so buyers need to be prepared to kick in a bit more to close, including, on occasion, delinquent HOA dues.
Good luck with your purchase!
A hui hou
Beth Thoma Robinson, R(B)