This spring and summer season bring change to the Hawaii Real Estate Market. As Real Estate continues to show dramatic improvement in price recovery and the velocity of sales, there is another factor at play – there is a surplus of Buyers and a shortage of homes – a shift from a Buyer’s market of years past, to a Seller’s market.
Take charge when buying Hawaii Real Estate by using a home buying checklist
With low supply and high demand, be prepared to find yourself in multiple offer situations. It’s not the ideal situation when buying a home, as it can be emotionally charged. However, it is a reality in the heating up Hawaii market.
How to Differentiate Yourself from Other Buyers – Get YOUR Offer Accepted!
Buyers should be proactive and take charge. Put yourself in a position of strength, and set your self apart from other buyers. Be ahead of the curve; be READY to be in first position to get an accepted offer on your Hawaiian dream home!
Your dream home in Hawaii (MLS# 247761)
7 Hawaii Home Buying Tips
Here are some tips to help you become an appealing buyer and succeed in buying a home in the HOT Hawaiian Real Estate Market:
#1. Plan Ahead
When planning to purchase a home or condo it is important to plan four to six months before starting the search. During this time you want to:
- Check Your Credit – “You’ll want to check your credit score before applying for a mortgage, but you can keep your credit file up to date by checking your credit report regularly.” (Smart Money).
- Avoid Large Purchases
- Minimize Any Debt – Recent credit and debt history are crucial when applying for pre-approval on a bank loan, ensure that you are aware of your situation and give yourself time to maintain or increase your appeal with strong credit.
#2. Set a Budget
Planning your budget is crucial in buying a home. It is important to calculate the cost of the home and all the fees included including a down payment, title insurance, homeowners insurance, and closing costs.
When planning to buy a home, take into consideration:
- Cost of the home
- Down payment
- Closing costs
- Monthly mortgage payments
- Your nest egg
When it comes time to look at homes, look at homes within a 10% variance of your budget, it will make the process much smoother.
#3. Cash is King
It’s simple – CASH IS KING! When purchasing a home, with cash, you gain leverage against the competition in the following ways:
1. An ALL CASH offer to purchase can result in a ‘discount’ – as much as 10%. Sellers are very likely to accept an all cash offer for less money, over a financed offer for more money. A financed offer is more risky to a a Seller, as it can fall through near the end of escrow due to the Buyer’s inability to gain mortgage financing; further the Seller has incurred the opportunity cost of taking their home off the market for 30-60 days.
2. For an offer with financing, most mortgages require a 20% down payment in cash. An even greater down payment depicts an image that you are financially responsible and stable – qualities lenders and Sellers look for. This component ties back to #1 – plan ahead, make sure you save up to provide a sizeable down payment in cash.
3. Have a Proof of Cash funds in Hand when submitting an offer. This can be a bank statement(s) with your account blacked out, or a statement from your banker or financial advisor that your account balance(s) are sufficient to purchase the property outright, or 20% + to cover your down-payment. Sellers will be impressed with your Proof of Cash Funds, and put you in a position of strength in your purchasing power.
Getting a preapproval letter from a lender will tell you how much money is in your budget. You can simplify your search by weeding out the homes you can’t afford. When submitting an offer, having a pre-approval letter in hand makes you more appealing to a Seller, and in a better position to negotiate.
#5. Be Prepared for Today
Ensure that you are ready to buy – make sure you are able to follow through independent of all other decisions. For example, buying a home based on whether or not your current home sells, or increasing a budget because you are scheduled to receive a raise, is not the best way to may a decision for today. Things always change and sometimes it’s not in your favor, base this decision on what you have now and are able to offer.
Don’t be afraid to share your passion for the home – send a letter explaining why you love the house and why you want to buy it. This builds a connection to the home and differentiates you from the competition.
#7. Be Flexible
When buying a home it’s important to research, search around and be flexible, look at several homes, and make a move on the one you like. Having a home you love is the goal, but in a market with limited inventory, most homes likely will not have every feature on your checklist.
Be realistic about your must have list, and look at homes with a creative eye on how you can make it your own. In addition, be flexible on the closing timeline – each seller has a date they would like to close by, try to match that! In some cases, a quick close can be very appealing to sellers, and give you an edge over your competition.
Whether you are a first time home-Buyer or a seasoned Real Estate Investor, plan ahead and be prepared to successfully purchase your dream home in this HOT Hawaii Real Estate market!