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May 1, 2009 - Newsletter for the Maui Market
Aloha! Here is your eNewsletter for the Maui Market from Jim Foster
Hot Buys for May - Short Sale at the Summit - price reduced from $2,495,000 to $1,800,000 for photos and details email Jim@JamesBFoster.com Lender says make an offer. This property sits atop the Kaanapali Resort, a double-gated community (within the Kaanapali Golf Estates) and provides some of the most enviable vistas in the islands. The Summit has developed into an enclave of custom homes designed and constructed by some of the most gifted architects and skilled builders in the country.
The are currently several Short Sales and REO properties for sale in the Maui Realtors Association Multiple Listing Service (MLS) and if you would like to have a list or are interest in these types of properties send an email to Jim@JamesBFoster.com
You are receiving this email because you subscribed to our e-newsletter email list. If you change your mind and wish to unsubscribe, please send an email to Won@JamesBFoster.com and request to be removed with the subject line, “Unsubscribe from Newsletter.”
Make sure you check out the Useful Internet Sites and Real Estate Tips at the end of this newsletter which includes some valuable information on Tax Deferred Exchanges, Replacement Property and Net Proceeds Statements.
Don't forget! We provide a free Automatic E-mail Notification Service that goes out to recipients whenever a new listing becomes available for a particular condominium complex. Each of these notifications includes a link to view the details of the brand new listing in the MLS. We DO NOT SHARE YOUR EMAIL ADDRESS or your contact information with anyone. To subscribe to our Automatic E-mail Notification Service, please send Won an email at Won@JamesBFoster.com with your first and last name, your email address, and the condominium property you wish to be notified of.
Vacation Rental Management – Exciting News at Chase N Rainbows Real Estate
After running two software programs side by side for the last year, CNR is switching over 100% to the new version for Instant Software V12. In 2007, Instant Software launched the initial "market" version of V12.NET. V12.NET is a fully browser-based system designed to be the most powerful and robust property management system in the market. It incorporates the most useful and dynamic features from all of our market leading applications such as First Resort, PropertyPlus, and Entech, with an intuitive and easy-to-use interface accessible anywhere, anytime on the web. V12.NET is backed by the vacation rental industry’s leading technology provider with the greatest experience, broadest web distribution capabilities, and the most financial stability. The solution offers the most comprehensive and integrated features available for you to market and manage vacation rentals. Some of the unique features in V12.NET that are not available in other solutions include:
- Fully Customizable Rate Categories
- Promotion Based Rates - (AAA, AARP) etc..
- Net Wholesaler/Tour Operator Rates
- Tax Inclusive Rate Functions
- Full GL & Trust Accounting
- Unlimited Deposit Policies
- Intelligent Booking Rules
- Comprehensive Cleaning & Housekeeping scheduling
- Work Order system that allows multiple assignments & policies with full GL & Accounting Integration
- ISILink Connectivity for web distribution to over 45 million potential travelers per month
- Kaba Lock Interface
- Integrated Electronic Document Signing
- Remote Call Accounting Interface, including Hosted Systems
One trend of the recession and slow down in Hawaii and the Maui market is that many owners have decided to switch to long term rentals and take their unit, on a temporary basis, out of the short rental program. CNR has been working with owners who would like to rent long term for the next six to twelve months or more to help cover operating expense during this temporary downturn. To receive information on long term rental program email Jim@JamesBFoster.com or Mindy@ChaseNRainbows.com and put in the Subject Line in the email, Long Term Rental Information.
If you would like more information about vacation rental management for your condominium send me an email at Jim@JamesBFoster.com
Maui Real Estate - Is this the best time to buy or should I wait?
Although we now have an excellent inventory of properties for sale in Maui, currently on the market, Buyers who wait to purchase may have a limited selection.
Real Estate statistics only tell part of the story, and they can be as much as 90 days behind the curve when it comes to price and sales volume. The statistical reports published in any given month will report on sales through the end of the previous month; however, those reports may be reflecting sales that originated as much as three months earlier and only closed in the month in which they were finally reported. This information can create a false sense of the current market, as it represents a backward look at what may have happened much earlier in the year.
While inventory is plentiful at this time, it is certain that it will begin to reduce over time and result in higher prices as the supply tightens.
By waiting on the sidelines, buyers may find themselves faced with higher interest rates because of the need to ensure a higher rate of return on the purchase of U.S. Treasury Bonds by foreign investors. With each real estate cycle, Maui properties have maintained a greater share of their value, rebounded faster during downward cycles and continued to increase in price over time more than Mainland properties. Maui remains an international destination, a great value and a stunning location and now would be an excellent time to being the process of purchasing.
To view the 2007 & 2008 Year End Statistics go to http://www.jamesbfoster.com/condosales.php and click on Maui MLS Statistics 2007 & 2008.
The West Maui real estate market continues to favor Buyers with Sellers willing to negotiate their prices. The current inventory of West Maui condominiums for sale is now at 717 (at 5/1/09) and on the same month in 2007 it was 472. Properties are requiring more time to sell such as five to six months and Buyers have a much larger inventory of properties for sale to choose from. If you’re curious about current trends in Maui real estate and where the market is headed, the answer is - it depends on Location - it depends on if it is condominium or single-family residential - it depends on whether you look at volume, average or median prices. In the current Maui real estate market, the for sale inventory continues to increase and prices are typically flat or have decreased.
Condominiums for Sale
2007 - In the West Maui real estate market, at the beginning of January, 2007 there were 410 condominiums listed for sale with the total value of $372,238,031.00; February, 2007 - 431 condominiums with the total value of $393,681,669.00; March, 2007 - 458 condos with the total value of $420,941,268.00; April, 2007 - 479 condos with the total value of $429,708,159.00; May, 2007 - 472 condos with the total value of $424,095,260.00; June, 2007 - 455 condos with the total value of $415,187,129.00; July, 2007 - 475 condos with the total value of $432,797,008.00; August, 2007 - 469 condos with the total value of $420,479,301.00; September, 2007 - 474 condos with the total value of $430,914,408.00; October, 2007 - 471 condos with the total value of $423,631,002.00; November, 2007 - 466 condos with the total value of $416,008,907.00; and December, 2007 - 485 condos with the total value of $421,080,117.00. The average number of condominiums for sale on West Maui for 2007 was 462 and the average total value was $416,730,118.25.
2008 - At the beginning of January, 2008 there were 511 condominiums listed for sale with the total value of $445,656,447.00; February, 2008 there were 559 condos with the total value of $500,946,603.00; March, 2008 - 595 condos with the total value of $529,779,322.00; April, 2008 - 647 condos with the total value of $606,635,687.00; May, 2008 - 634 condos with the total value of $583,391,821.00; June, 2008 - 644 condos with the total value of $590,736,279.00; July, 2008 - 680 condos with the total value of $662,919,268.00; August, 2008 - 703 condos with the total value of $693,069,348.00; September, 2008 - 693 condos with the total value of $654,411,079.00; October, 2008 - 673 condos with the total value of $620,032,454.00; November, 2008 - 715 condos with the total value of $652,379,032.00; and December, 2008 - 729 condos with the total value of $660,335,998.00. The average number of condominiums for sale on West Maui for 2008 was 648 and the average total value was $604,191,111.50.
2009 - At the beginning of January, 2009 there were 742 condominiums listed for sale with the total value of $693,143,047.00; February, 2009 there were 757 Condos with the total value of $709,234,346; March, 2009 there were 787 Condos with the total value of $681,864,289; April, 2009 there were 805 Condos with the total value of $693,368,793; and in May, 2009 there are 717 Condos with the total value of $629,812,465.
The condominium for sale inventory since July, 2005 has been as low as 165 and is up to 717 for May 1, 2009. The “for sale” inventory on West Maui continues to increase.
Condominium Sales
2006 - The total condominium sales on West Maui during the month of January, 2006 there were 42 sales and the total value was $28,574,643.00; February, 2006, there were 48 sales with total value of $32,995,078.00; March, 2006 - 40 sales with total value of $32,199,584.00; April, 2006 - 43 sales with total value of $41,898,525.00; May, 2006 - 51 sales with total value of $39,644,886.00; June, 2006 - 40 sales with total value of $32,533,500.00; July, 2006 - 30 sales with total value of $26,212,000.00; August, 2006 - 28 sales with total value of $31,885,500.00; September, 2006 - 30 sales with total value of $24,770,000.00; October, 2006 - 29 sales with total value of $23,359,299.00; November, 2006 - 22 sales with total value of $13,414,600.00; and December, 2006 there were 30 sales with total value of $23,169,999.00. For 2006, the monthly average sales were 36 sales per month with the average sales value of $29,221,467.83 per month.
2007 - The total condominium sales for West Maui during the month of January, 2007 there were 37 sales and the total value was $33,091,000.00; February, 2007 there were 26 sales with total value of $16,330,000.00; March, 2007 - 32 sales with total value of $24,121,000.00; April, 2007 - 27 sales with total value of $16,766,000.00; May, 2007 - 28 sales with total value of $30,774,929.00; June, 2007 - 28 sales with total value of $18,917,000.00; July, 2007 - 21 sales with total value of $13,314,200.00; August, 2007 - 32 sales with total value of $33,258,999.00; September, 2007 - 23 sales with total value of $24,701,900.00; October, 2007 - 42 sales with total value of $28,159,900.00, however this included a packaged sale of 19 units at Aina Nalu in Lahaina; November, 2007 - 15 sales with total value of $15,930,000.00; and December, 2007 there were 13 sales with total value of $13,335,500.00. For 2007, the Month of December saw the lowest number of sales in 2007. The monthly average sales were 27 sales per month with the average sales value of $22,391,702.33 per month.
2008 - The total condominium sales for West Maui during the month of January, 2008 there were 20 sales and the total value was $16,184,800.00; February, 2008 there were 20 sales and the total value was $14,414,584.00; March, 2008 - 26 sales and the total value was $20,079,000.00; April 2008 - 28 sales and the total value was $20,488,500.00; May 2008 - 22 sales and the total value was $20,055,000; June 2008 - 14 sales and the total value was $11,957,000; July 2008 - 10 sales and the total value was $6,955,999; August 2008 - 13 sales and the total value was $8,055,000; September 2008 - 12 sales and the total value was $6,707,122; October 2008 - 12 sales and the total value was $8,042,500; November 2008 - 10 sales and the total value was $8,444,000; and December 2008 there were 6 sales and the total value was $6,265,000. For 2008, the average monthly sales were 16 sales per month with the average sales value of $12,304,042.08 per month.
Condominium Sales in 2009 - The total condominium sales for West Maui during the month of January, 2009 there were 23 sales and the total value was $18,305,000.00; February, 2009 there were 18 sales and the total value was $26,880,650; March, 2009 there were 20 sales and the total value was $13,653,500; and April, 2009 there were 12 sales and the total value was $4,044,872. From January 1, 2009 to May 1, 2009, the average monthly sales were 18 sales per month with the average sales value of $15,721,006 per month.
We have gone in to the Maui MLS database and pulled information for 2000 through 2008. In 2000 - 654 condominium units sold in the West Maui area for a total value of $209,064,010; in 2001 - 605 condominium units sold for a total value of $271,681,337; in 2002 - 730 condominiums sold for a total value of $240,178,915; in 2003 - 737 condominiums sold for a total value of $319,748,466; In 2004 - 700 condominiums sold for a total value of $375,033,467; in 2005 - 682 condominiums for a total value of $408,582,315; in 2006 - 435 condominiums for a total value of $351,782,614; in 2007 - 327 condominiums for a total value of $271,290,428; in 2008, - 193 condominium units sold for a total value of $147,648,505; and from January 1, 2009 to May 1, 2009, - 63 condominium units sold in the West Maui area for a total sales value of $62,884,022.
For previous condo sale details, go to our web site, http://www.jamesbfoster.com/condosales.php then scroll down to your choice and click to open the ADOBE pdf. For the time period of 1/1/2009 to 3/31/2009 the average price for a home on Maui was $805,436 which is down 11% for the time period of 1/1/08 to 3/31/08 when the average price was $909,894. For the same time period the average price for a Fee Simple condo on Maui was $744,882 which is down 24% for the same time period when the average price was $974,351 according to the RAM (Realtor Assoc. of Maui) statistics. Condo sales in Wailea, Makena, Kapalua and Kaanapali are having an impact on the Fee Simple Condo average price by increasing it.
Mortgage Rates for week of May 1, 2009 - from First Hawaiian Mortgage - Rates: Houses & Condos Full docs: 4.500% 30yr fixed 2.125 pts (4.765 APR) 4.7500% 30yr fixed 1.250 pts (4.941 APR) 5.250% 30yr fixed -0- pts (5.332 APR) Stated Income - No longer available: Interest Only: 5.625% 30yr fixed 1.375 pts (5.786 APR) To $1M: No longer available 6.125% 30 yr fixed 1.875 points for condotels.(6.393 APR) (Points include origination fee)
Mortgage Rates for week of April 6, 2009 - from First Hawaiian Mortgage - Rates: Houses & Condos Full docs: 4.375% 30yr fixed 2.125 pts (4.571 APR) 4.625% 30yr fixed 1.00 pt (4.725 APR) 5.00% 30yr fixed -0- pts (5.013 APR) Stated Income - No longer available: Interest Only: 5.625% 30yr fixed 1.25 pts (5.74 APR) To $1M: No longer available 6.00% 30 yr fixed 1.875 points for condotels.(6.192 APR) (Points include origination fee)
Mortgage Rates for week of March 1, 2009 - from First Hawaiian Mortgage - Rates: Houses & Condos Full docs: 4.875% 30yr fixed 1.75 pts (5.112 APR) 5.125% 30yr fixed 1.00 pt (5.320 APR) 5.50% 30yr fixed -0- pts (5.529 APR) Stated Income - No longer available: Interest Only: 6.125% 30yr fixed 1.25 pts (6.259 APR) To $1M: 7.375% 30yr fixed 1.75 pt (7.571 APR) 6.75% 30 yr fixed 1.25 points for condotels.(6.905 APR) (Points include origination fee)
Mortgage Rates for week of February 5, 2009 - from First Hawaiian Mortgage - Rates: Houses & Condos Full docs: 4.875% 30yr fixed 1.75 pts (5.112 APR) 5.125% 30yr fixed 1.25 pt (5.320 APR) 5.375% 30yr fixed 1.00 pts (5.550 APR) Stated Income - No longer available: Interest Only: 6.375% 30yr fixed 1.125 pts (6.554 APR) To $1M: 7.375% 30yr fixed 1.00 pt (7.487 APR) 6.50% 30 yr fixed 1.50 points for condotels.(6.737 APR) (Points include origination fee)
If you would like to view the most current sales statistics for Maui or West Maui Condominiums, you can go to my web site www.JamesBFoster.com and click on Condo Sales in the upper left corner of the home page or go to www.JamesBFoster.com/condosales.php.
Some recent and past news about what is going on in Maui & Hawaii
Weather - As I am writing this newsletter today, May 2, 2009, it is about 80 degrees and light winds about 14 miles per hour, a perfect day. Over the next ten days we are expecting sunshine light winds and maybe rain around the 9th or 10th.
Maui Has a Sad Heart at the Loss of Glenn Coffey – Glenn Coffey (May 23, 1950 to April 22, 2009) was the General Manager for Central Pacific Bank located in the Lahaina Gateway Mall. Glenn was very active in community activities and had also been the Chair Person for the Cancer Society “Walk of Life”. Glenn fulfilled his dream two and a half years ago when moved to Lahaina. He died unexpectedly last week of a heart attack. His Hawaiian Memorial Service was Saturday, May 4th at Airport Beach Park and attended by his friends and family. It was a beautifully ceremony and Glenn would have been smiling as he was bid Aloha!
Hotel Occupancy on Maui – The occupancy rates fell nearly 10 percentage points when comparing the 85.1 percent level of hotel occupancy in February 2008 with the 75.8 percent rate recorded for the same month last year. Hotels statewide had their worst February occupancy rates in 18 years and since the fallout from the Persian Gulf War in February 1991. The average daily room rate for Maui dropped from $287.54 in February 2008 to $249.07 in the same month this year - a loss of $38.47. Revenue went from $244.61 to $188.74 per room for the same time period. Properties statewide posted the worst revenue per available room decline since the September 11, 2001 terrorist attacks, when the indicator dropped 26.9 percent to $74.26. Market drops were significant, particularly in the month of February which is normally the busiest month of the year. The good news is that Hawaii continues to be one of the strongest markets in the U.S. given that the recession has impaired all destinations globally.
Kaanapali 2020 works with the Community - Amfac works with community member to receive input for the development of its 4,000 acres stretching from Honokowai to Lahaina Civic Center. There was a lot of ill feeling toward Amfac, before they started the 2020 process and solicited input from the community. JMB Realty of Chicago bought Amfac in 1988 and is now known as Kaanapali Land Management Corp. (KLM). KLM and local manager Scott Nunokawa company formed a group of 64 people that met for three full days and looked at the past, the present and the future and what was envisioned in twenty years Eight committees were formed to advise on such matters as transportation, land planning, affordable housing, education, health and other concerns. Key participants have met virtually every month during the last ten years. Over the past five years the 2020 group has focused on the Pu’ukoli’i Village Mauka project in monthly meetings. This 240-acre, 940-unit project was recently approved.
Willie K Maui Artist – Willie was raised on Maui and you can read his bio on www.williek.com and has been referred to as a guitar virtuoso. In West Maui, Willie K now plays at the Rusty Harpoon in Kaanapali on Tuesdays from 7 to 9 p.m.
The guy who is perhaps Hawaii’s most talented, versatile and popular entertainer, as well as a Hawaiian Grammy nominee strums at lightning speed and plays on guitar or uke almost any kind of music — Hawaiian, falsetto, jazz, rock and roll, blues, R&B, Broadway and now opera. He has shared stages with Jimmy Buffet, BB King, Bonnie Raitt, Mick Fleetwood, Prince, and Crosby, Stills and Nash. He could be as famous as the stars he has played with nationally if he wanted to be. Although his joy has been to play whatever he wants, when he wants and play he also now talks story during his two-hour show, regaling audiences with funny tales about the early days in Lahaina or experiences on stage.
Hawaii has a 503% increase in Foreclosures - Foreclosure filings in Hawaii rose to their highest level since the present real estate market downturn began, soaring a record 503 percent to 724 from 120 in the same month last year. Among Hawaii counties, Honolulu had the highest overall number of filings at 323, but the lowest rate per households at one filing per 1,037 households. The Big Island had 175 filings, or one per 444 households. Maui had 178 filings, or one per 365 households. Kauai had 48 filings, or one per 608 households. While the general consensus from local economists and foreclosure attorneys remains that foreclosures are getting worse. The present level of foreclosures does not appear to be as bad as what occurred in the mid-1990s during the last economic slump and real estate market downturn that hit Hawaii. At that time there were typically 300 to 400 monthly foreclosures initiated usually by lawsuit, which made foreclosure cases easier to count. The Maui MLS now has a separate category for property searches that allows a real estate broker/agent to search for Short Sales and REO Properties (Bank owned properties after foreclosure).
Native Hawaiian Wares New Store in Wailuku – This shop will showcase native arts, crafts, hands-on workshops and sales of fresh flower lei. It is to be a cultural design store or cultural resource center dedicated to the preservation and evolution of Hawaiian culture. They will offer wares ranging from holua sleds and pahu drums to konane games and images of indigenous birds. Artisans will include Niihau shell lei maker Ku'ulei Akeo of Kauai, Maui master stone carver Hoaka Delos Reyes, Maui woodworker Milton Rollins, lei hulu (feather lei) maker Makanaaloha San Nicolas and Hawaiian kapa makers Ka'iulani DeSilva and Dalani Tanahy. Hours of the store are 10 a.m. to 6 p.m. Monday to Saturday. For more information, call the shop at 249-2421 or visit at 45 N. Market St., Unit 3, and Wailuki.
Pasha looks to enter interisland market - Pasha Hawaii Transport Lines LLC, a new cargo carrier, wants to get into the interisland shipping business to provide service between Honolulu; Kahului, Maui; and Hilo on the Big Island using its 579-foot ship the Jean Anne. With the Superferry no longer in business the islands could use some new competition. They currently provide cargo service from the West Coast to Honolulu, Hilo and Kahului. But the company does not have regulatory approval to pick up and drop off shipments among the three local ports. Pasha plans to make interisland shipments every 14 days. Pasha Hawaii has provided West Coast-to-Hawaii service since 2005.
With more than 140,000 square feet of cargo space, the Jean Anne is much larger than the vessels currently employed in the interisland transportation market. The ship can carry up to 3,000 vehicles.
Attempt to Raid the Transient Accommodations Tax (TAT) - A budget-balancing proposal by House Speaker Calvin Say for the TAT, or the hotel tax as it's commonly known, would have taken away $18 million in revenue from Maui County's 2010 fiscal year budget. In anticipation of not having the money, County Council members have been scrambling to raise fees and utility rates as well as freeze hiring and eliminate road paving along with other spending cutbacks. Over the next two fiscal years, the state expects to have $2 billion less to work with due to the ongoing recession and downturn in tourism. One way Oahu Democratic leaders proposed trying to fill the hole was by taking hotel room tax money away from all the counties. Without support of the Neighbor Island lawmakers and Oahu Republicans, even if the TAT takeaway passed the Legislature, Maui legislators doubted the Oahu Democrats would have enough votes to override the governor's veto. This is good news for Maui and the outer islands.
Hula Cookies & Ice Cream now on Front Street Lahaina – A new store for Hula Cookies & Ice Cream located in the historic Pioneer Inn at 655 Front St., it is the second Maui location of this successful and sweet shop. Fresh-from-the-oven cookies and Maui’s own Roselani Ice Cream and shave ice. Hula Cookies & Ice Cream Lahaina is open from 9:30 a.m. to 9 p.m. daily. www.hulacookies.com
Remodeling or Upgrading condominium or house - It is critical to have a licensed contractor and subcontractors with excellent references and experience working with Maui properties if you will be Remodeling or Upgrading a condominium or house Should you need assistance or referrals for a property you own or need an estimate for property you are contemplating purchasing, all Jim Foster on his toll free number 1-888-661-7994 or send him an email to Jim@JamesBFoster.com and we can provide names and contact information.
Real Estate & Financial Planning Tips:
Here are some questions sellers and buyers of real estate might need to ask and be familiar: 1) What do I need to know about my PURCHASE CONTRACT in Hawaii? 2) Why are there contingencies in the PURCHASE CONTRACT and why are they important? 3) What information is required to open an escrow to complete a sale? 4) Why should my deposit check be held by escrow and not the seller? 5) What does the closing agent do with the deposit? 5) What papers need to be prepared and signed by both the buyer and the seller? 6) How will the real estate loan be processed if it is not an all cash transaction? 7) Which of the costs and fees of the transaction are negotiable and when should I start negotiating them? 8) What is title insurance and why is it necessary in the real estate transaction? 9) Why does it matter how I take title to the property? 10) What problems might arise during the closing process to prevent the sale or closing from taking place? 11) How can I be certain that the papers I will be signing are correct? 12) Who makes the decision regarding the closing date? 13) Can I change the way I hold title after the closing occurs? 14) What happens if my closing has to be cancelled?
Below are the answers to the questions above:
The Purchase Contract is the copyrighted Hawaii Association of Realtors ® Standard Form and is licensed for use by the entire real estate industry on condition that there shall be no alteration of the printed portions, pagination, or paragraph numbers or breaks. This is a twelve page contract that is used by the Buyer’s agent when preparing an offer for the Seller of a property. If you would like a copy of the contract emailed please send an email request. This is the document that is used when escrow is opened after mutual acceptance between a Buyer and Seller. If you currently own property or may purchase property in Hawaii it is a document that you should be familiar with.
An offer prepared on the PURCHASE CONTRACT form will typically be contingent upon the following: a) Contingency on Obtaining “Cash Funds” for the down payment of to purchase such as the sale of another property; b) Financing Contingencies, which means the Buyer will have to have a loan in order to purchase the property because they are not an all cash Buyer; c) Contingent on approval of the Preliminary Title Report; d) Contingent on the property being surveyed if land or a single family residence; e) Contingent on Buyer’s approval of Seller’s Disclosure within a specified time period; f) Inspection of the Property, often prepared by a professional inspection company; g) Termite Inspection Report prepared and no termites discovered; h) Satisfactory Appraisal which is ordered if a loan is involved; i) Review and acceptance of condominium or homeowners association documents, leasehold documents; Subdivision documents or other contracts affecting the property; j) Leases, short term vacation rental bookings or management contracts; or k) Additional deposits being paid in to escrow in addition to the initial good faith deposit which typically accompanies the DROA.
If the contingencies are not removed in writing by the Buyer then escrow may be cancelled and all deposit money returned or if Buyer fails to perform then escrow may be cancelled and the deposit would generally be forfeited to the Seller. Once the funds are in escrow they generally will not be released without a written release from both the Buyer and Seller.
Contingencies are important because it allows a Buyer, who is not familiar with the property the opportunity to confirm the representations made by the Seller and to confirm for the Seller the Buyer’s ability to perform.
In order to open escrow once there is mutual acceptance between Buyer and Seller what is required to open escrow is a copy of the contract and any addendums, detailed contact information for Buyer and Seller, Sale Price, Amount of Deposit, (the actual deposit). At this point, a preliminary title is ordered, a time line prepared of the critical due dates for items and various other details.
It is best to make the deposit check out to the escrow company so it is deposited directly in to the escrow companies trust account. The deposit should never be given directly to the seller.
Specific questions pertaining to escrow or the transaction can generally be answered by the Buyer or Seller’s agent or the escrow person assigned to the specific escrow number.
The first papers signed by the Buyer and Seller will be the Listing Agreement signed by the Seller and then the PURCHASE CONTRACT signed by both Buyer and Seller. When escrow is opened all of the other documents will be prepared. Both the Seller and Buyer should always receive a copy of the draft closing documents and a Net Proceeds Statement to be reviewed by themselves and advisors prior to signing closing documents. Many of the transactions in Hawaii have all of the papers sent via fax, FedEx or often by email and the documents are signed and notarized where the Buyer and Seller reside and the Buyer and Seller do not actually appear in person at the closing.
If a loan is involved in the transaction it starts with the loan application, verification of information, underwriter approvals of appraisals, termite inspection reports and etc. After final loan approval the documents are drawn and sent to escrow to be signed with the other closing documents. Again it is important to see draft copies of the loan documents before signing. The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. The purpose of RESPA is to provide a Good Faith Estimate (GFE) of settlement costs for a loan so the borrower knows in advance what their approximate costs will be. The escrow company can also provide an estimate of closing cost prior to closing of the transaction.
Title Insurance for a transaction is issued to protect the buyer and the lender. Insurance for the title is to guarantee the Buyer is actually buying what they think they are buying. Whether the Buyer or Seller pays varies from state to state. In Hawaii, usually the Buyer pays 40% and the Seller 60% of the Standard Title Insurance.
How a Buyer takes title to property depends on the individual circumstances and should be discussed with their attorney, accountant or financial advisor. After a transaction closes the Buyer can always change the way title is held by having the change completed and recorded, usually with minimal cost.
We have also assisted sellers (for sale by owners) who had buyers but needed someone to facilitate the sale and guide them through the process and assure them they were asking a current market value price for their properties.
In past newsletters, I have mentioned that the easiest way to minimize the tax impact when selling is a tax deferred exchange. If you are considering selling your property in Hawaii, a tax deferred exchange will exempt you from the 5% HARPTA withholding and also the Federal Capital Gains Tax. Planning in advance for the disposition or acquisition of assets is always a wise decision. Another invaluable tool for sellers in doing a tax deferred exchange is having the option of using tenant-in-common (TICs) that qualify for replacement properties.
If you want to learn more about Tenant In Common (TIC) interests and how they can solve the problem of sellers trying to complete a tax deferred exchange here is a web site that you can visit for a short and informative explanation of the process and how it can benefit you. www.ticstrategy.com
Many property owners who currently own underperforming assets can sell those assets and take advantage of tax deferred exchanges, turning an underperforming asset such as land into an income producing asset. Call me or send me an email if you would like additional information at 808-661-7994 or email Jim@JamesBFoster.com
If you are contemplating selling highly appreciated real estate during 2009 and would like for us to provide an analysis of how to best structure your transaction, please call us at 1-888-661-7994 or send us and email at Jim@JamesBFoster.com
Useful Internet Sites & Interesting DVDs:
DVD available on www.NetFlix.com or purchase on www.BarnesandNoble.com What the Bleep Do We Know!? The neurological processes and "quantum uncertainty" of life are explored in this film. Thrust from her mundane life into an Alice in Wonderland-like world, Amanda (Marlee Matlin) must develop a brand-new perception of the world and the people she interacts with. Interviews with various experts are interspersed throughout the film, which combines narrative, documentary and animation.
www.motivationalquotes.com Need some positive input to start your day or a snappy retort? Working on a speech and need a great quote? At this site you can find a huge keyword searchable collection of motivational and inspirational quotes, prayers, and positive affirmations. You can also check these out by specific topics or by name. There is no cost for this service.
www.chacha.com Answers to your question on just about anything in five minutes or less. They will answer any question you ask right on your cell phone. It is easy as and works like this: 1. Simply call the handy 800 number from your mobile phone. 2. Ask your question as if you are talking to a super smart friend. 3. Your question gets instantly routed to an expert on your topic.
www.pipl.com Did you ever try finding information on someone on the web and come up empty handed - or perhaps missing some vital information you need? This invisible web is a vast repository of underlying content, such as documents in online databases that is estimated to be 500 times larger than the surface web. This site provides a well designed robotic people search engine that reaches personal profiles, member directories, scientific publications, court records and numerous other deep-web sources.
www.wowbrary.org Information at this web site for free DVDs CDs and great books just for the asking in your neighborhood library. This great non-profit web place showcases the latest arrivals and allows you to click directly to the library website to get even more information about these freebies. You can get weekly emails and RSS feeds keeping you current for your local branch’s recent acquisitions.
www.gaisma.com/en If you want to know how much daylight time you’ll have on the trip you’re planning to Saskatoon in August or maybe Pago Pago in February, you can find it here. This site provides sunrise, sunset, dusk and dawn times for thousands of locations all over the world.
Kindest Regards, Jim Foster
Chase 'N Rainbows Real Estate, Inc.
Toll Free 888-661-7994
Direct Line 808-661-7994
Cell 808-870-5858
Fax 808-667-2957
Real Estate for Sale www.JamesBFoster.com
Vacation Rental www.ChaseNRainbows.com
Email Jim@JamesBFoster.com
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