I recently shared on social media an anecdote from the Denver real estate market I read in an industry newsletter. A home thatʻs — well, as old as I am — on the outskirts of Denver was listed for $370,000. It had 202 showings in four days; received 56 offers, all but one at or above list price; and sold for $477,000, 31% above asking.
Our market on Hawaiʻi Island is not quite that crazy, mainly because (1) we have an island population under 200,000 compared with almost 3 million residents in metropolitan Denver, and (2) a large percentage of our buyers are non-residents at the time of purchase.
Nevertheless, the current Kohala Coast market can be unnerving for both buyers and sellers. Hereʻs a short case study with some tips of how to navigate this market with your sanity intact.
How Sellers Can Stay Sane in this Real Estate Market
When our past clients approached us to list the Waikoloa Fairways condominium that had been their home since 2016, we knew it would attract a lot of interest. Waikoloa Fairways is an older (built in 1990) condominium complex which as the name suggests is surrounded by the Waikoloa Village golf course.
Our clientʻs first floor, 2-bedroom unit has one of the best golf course and ocean views in the complex.
Plus they had done a beautiful update of the kitchen and bathroom and as full-time residents were meticulous about maintenance.
Our advice to them was:
- Price aggressively, but not so high as to choke off showings. In this case, we started at $510,000. Only one Waikoloa Fairways condo had ever sold higher than $500,000, and that was in early 2008.
- Have all your proverbial ducks in a row prior to releasing the listing. We waited for professional photos, and meanwhile, Seller completed inventory and sellers disclosure forms so they would not need to feel stressed out by quick escrow timelines.
- Manage showing activity. Rather than face being disrupted for dozens of showings, we released the listing and set an Open House date for all agents to show, with clients or virtually. And seeing a line start forming outside their front door 20 minutes prior to the opening time was still disconcerting for the owners!
- Review offers on your time, not theirs. Some buyers or their agents seem to feel that putting super short response timelines on their offer will force the seller to respond more quickly. We advised our Sellers that they should take their time to get comfortable with the pros and cons of the offers they received and sleep on their decision.
How Buyers Can Stay Sane in this Real Estate Market
How can you as a buyer give your offer the best chance for success, and keep your sanity through the process?
- Do your homework. Work with an agent who is knowledgeable about the type of property and local market of interest to you. Makes sure you understand comparable sales, and the dynamics of a seller’s market. The Denver scenario above? The articleʻs writer observed sarcastically, “And, hats off to the one person who made an offer under the list price in Denver right now. That’s some positive thinking right there.” Even if you are looking at a listing that has been on the market for a while, it is likely that seller has been turning down offers waiting for the comps to increase and the competition to disappear. Feel free to make your offer at whatever price you want, but donʻt get upset if your lower-than-market offers donʻt get accepted.
- Have all your proverbial ducks in a row prior to writing an offer. If you are financing, work with a local lender for a prequalification letter, and it helps if you can check the box on the contract that says the lender has already reviewed income-supporting documentation. If you are offering all-cash, have your verification of funds available in PDF form, not something youʻll get to when you get back to the Mainland.
- Write a clean offer. The more complicated your offer, the more special terms that benefit you the buyer rather than the seller reviewing multiple offers, the lower the chances your offer will get accepted.
- Show aloha. This is Hawaiʻi and we have a way of doing business here. Even if our sellers are from somewhere else, and your agent and the sellerʻs agent were not born here, we choose to be here because we like doing business with aloha. If it comes down to offers that are similar in all other terms, the seller and their agent will do business with people they know, like, and trust. And I know that my good reputation is earned by being a tough negotiator on behalf of my client while being polite and super professional throughout the transaction. That doesnʻt mean you as a buyer are completely “behind the curtain”. We can always tell when despite the agentʻs professionalism the client is being difficult, so even the best agent reputation is not protection from you creating a distinct reputation as a buyer that can serve to disadvantage you in a competitive situation
Waikoloa Fairways A210: The Outcome
As it turned out, the excellent photos resulted in two offers even before the day of the Open House. The Sellers followed our advice to be patient, and after more than a dozen agents and their buyers toured that day, we ended up with nine offers. The winning offer was $535,000 cash and offered the sellers the ability to leaseback after closing while their new home is being built.
Note that the sellers actually turned down a higher offer for terms that made more sense for their situation. The escrow went smoothly, with courtesy and professionalism on all sides. The only party not entirely sure about things is the cat, who let us know that despite our efforts to keep everyone sane, she was not happy with this level of activity disturbing her quiet life!