Tips for Buying a Home in Hawaii
One of the dilemmas you may face when buying a house in Hawaii is whether to have a local real estate agent represent you or to hire the listing agent of the property that represents the seller. Not every real estate agent in Hawaii knows all of the neighborhoods on each island, and listing agents typically need to attend showings in different parts of Hawaii anyway. You may feel it is easier and cheaper to go with the latter.
On the other hand, it is generally a good idea to have your own representation during the homebuying process. Also, given Hawaii's distance from the rest of the country, you may have to rely on your agent a lot more than you would when purchasing a house on the mainland. For example, you might have the agent do the final walkthrough of the home before closing if you're living on the mainland while buying a home in Hawaii.
As you consider different properties, here are some topics to discuss with your agent, the listing agent, or both. Some are typical topics to consider as part of the homebuying process, while others are unique to buying a house in Hawaii.
Establishing the Home's Price
Even though your agent should have provided you with comparable sales, house prices can vary widely in some areas, especially based on the location and view. Ask how residential prices have fluctuated in a given neighborhood over the years. You can also look at the tax records from a title company. They do not offer a complete picture of the real estate market, but you should note whether prices have moved up or down.
If you haven't looked at homes in Hawaii, be prepared for some sticker shock, as it has some of the highest home prices in the country. The medical sales price for a single-family home was $723,125 as of September 2020, and the median sales price for a condo was $486,875.
Negotiating Upgrades and Furnishings
You may need to get information about how the seller is treating upgrades to the home and negotiate for terms that are more favorable to you. Sellers are known for trying to get back the full price of any improvements they make. In reality, that may not happen.
Separately, you may also need to negotiate furnishings and appliances. You will not be able to haul a sofa or other big furniture on a plane with you to Hawaii. Shipping is expensive, as are the local prices for furnishings (the cost of island life, where so much has to be imported). Negotiating for furniture and commodities to be included in the purchase price is not uncommon.
Understanding the Homeowner's Association
If you're moving into an area with a homeowner's association (HOA), try to get a complete understanding as to how it operates and use the information provided to inform your decisions.
Many homeowner's associations in Hawaii have restrictions on what owners can and cannot do. For instance, many restrict rentals to a 30-day maximum, so if you're planning to rent out your property for longer than that, you'll need to look for an HOA that allows it. They may have rules about pets.
HOAs also provide benefits to owners. For instance, in condominiums, these associations are often responsible for maintaining the exterior and front yard of the residence. They may also handle maintenance issues. If not, you should make sure to line up the needed services to help cover you if you're not planning to live on the island full-time.
If you are planning to buy a condominium or townhouse, have your agent ask how many other owners are in the complex or sub-division. You might not be able to obtain financing if the ratio of investors to owner-occupants is too high.
Expecting the Unexpected
No place in paradise is immune to Mother Nature, but some places are riskier than others. The Big Island of Hawaii, for example, still has earthquakes, tsunamis, floods, and volcanoes. Inquire about the frequency of natural disasters and what insurance will and will not cover. At a minimum, you'll likely need to purchase earthquake and flood insurance in addition to your standard homeowner's insurance policy.