Selling Property in Hawaii: Tips & Insights

Hawaii is a beautiful vacation destination. It is also a popular place to make real estate investments. Hawaii, however, is a bit different than the other 48 states when it comes to real estate. Despite things like Covid-19 and the threat of a recession, the housing market is still doing fine. In fact, it’s very hot.

If you are interested in selling your property, there are many things you should consider. The following information will help you decide how to proceed when you dive into the market. One of the most important steps is getting your house ready so it will fetch top dollar.

The Importance of a Financial Plan

This is the first and most important step. Get some advice from a good tax adviser. They can help you understand all of the ramifications regarding the financial aspects of home selling. What do you do with the proceeds of the sale? How do you get your property up to a fair market value? These are questions that a solid advisor should be able to answer.

Cost is always going to be at the top of the list. People want to know upfront what will it cost. Will there be broker’s fees, taxes, or other types of commissions? The answer is, likely, yes.

Although there is no definitive set brokerage fee, sellers should expect to pay a commission between 5-6%. The listing broker and buying broker will split the proceeds.

It should be noted that unless an exemption is applied, Hawaii imposes a conveyance tax. The amount varies and is based on the value of the property.

In the state of Hawaii, there is also the matter of title insurance. This insurance covers any defects related to the property. The cost is divided between the seller and the buyer.

Escrow fees also vary. They can range anywhere from $900 to $1,500. But it really comes down to the overall price of the home. The seller must also pay for a termite inspection. That can also be a few hundred dollars.

Take Advantage of the 1031 Exchange

Under this current tax law, you can upgrade your property to earn money. Take the investment property and convert it into a new investment. As long as you move the money you’ve earned from the sale into the property, you won’t have to pay capital gains tax.

Converting From Investment Property to Residence

This can actually save you a whole lot of money. The IRS Code Section 21 allows that if within a 5-year period, the home is used as the principal residence for two years, the homeowner will have a higher exclusion. The 1031 law is a bit complex so a professional investor or tax adviser should be able to explain it to you in more detail. If you are selling property in Hawaii, seek out a professional Hawaii real estate agent for help.

How to Set Your House Price

While many sellers think that upping the price of the home to get the quickest sale is good, not so fast. Even in the most inviting real estate market, people need to pump the brakes and consider a number of factors. You have to understand all of the nuances of home selling. Trying to get slick when selling your home may blow up in your face.

You could very well set the value of your property so high that it sits for a long time. Heck, it may never sell at all. Setting the proper value for your property will make it far more attractive to potential buyers. The best way to get the correct property value is by hiring someone to assess the property. They will give your house a walk-through both inside and out. They will look at your home’s condition, the market, and other features that may impact the value.

It is best to hire more than one assessor. Unfortunately, recent history shows that not all assessors are honest and fair. Do your due diligence. This will help you avoid any unnecessary headaches in the long run. You can also get a free market analysis from some websites. It takes the human element out of it. You can put in the information and find all the information you need. Conventional advice would be to take advantage of both.

Seller Disclosure Statement

This is also a very important part of the real estate contract. This statement of fact outlines everything that is needed to be known about the condition of the property. This includes items that may decrease the value of the home. Everything must be disclosed. People have and will get into serious trouble when they intentionally leave out information that a potential buyer needs to know. Putting false information on a seller disclosure statement, or leaving off pertinent information is a crime. The punishment can be severe.

Keep in mind that even if a property is being sold “As Is,” this does not exclude them from putting the proper information on the disclosure statement.

Getting Your Property Prepped For Sale

When you are preparing your property for sale, it is a good idea to hire an inspector. While the buyer usually does this, it wouldn’t hurt if you did it on your own. This way, you will know everything inside and outside of your home that needs to be repaired or replaced. An inspection can uncover a lot of hidden details. This will also keep you from being sued. If a person buys a house and major fixes are uncovered, you will be held liable.

Making sure the house is clean is another important aspect. Now no one is saying you should scrub the house from floor to ceiling, but you should make sure it is clean and presentable. If the house has been sitting for a while, it will accumulate dust and dirt. If it’s not too bad, you can do it yourself. If it’s something big, you can hire someone to sweep, mop, clean the windows, vacuum, or even touch up the paint.

And don’t forget about the yard. People are often turned off by yards with uncut grass and looking unkempt. Get a yard man to tidy up the landscaping. This also means hauling off any trash on the curb. Don’t go crazy. Only the necessary improvements will do. You should not spend any unnecessary money unless you are required to, per inspection results. Let that fall on the buyer. Once you have done your part as the seller, the rest is up to them.

Escrow

This is another important thing to consider when sealing the deal. The average escrow length is about 45 days. Unfortunately, there are times when issues arise with the title and other paperwork that can cause delays. In most cases, transactions go through without a hitch. As long as you are receiving good advice and have everything in order, you should be fine.

If you are interested in selling real estate in Hawaii, it’s best to seek out a competent Hawaii real estate professional or a qualified tax advisor for tips. The real estate market is very complex. And in certain states, like Hawaii, there are some different laws that must be followed. If you follow the advice and utilize a sound plan, you will likely be on the upside for a very profitable deal.

Good brokers are out there. You just have to find one who can help you get the best price on your home. They will definitely give you all the information you need and the experience you deserve.

 

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