Buyer's Process


Whether you're a first time home buyer or are upgrading to a larger home, the buying process takes effort, coordination, and know-how. Below is a brief outline of what to expect during the process. With a commitment to fast turn around in responding to your requests, your satisfaction in the home buying experience is my priority.


Please contact me at (808) 392-9799 or meip@betterhawaii.com for more information.

  • Initial Buyer Presentation � Understanding your needs and priorities, coordinating discussion of financing with lenders, identifying properties affordable for you, deciding on the buying strategy and home search criteria, selecting homes to view.
  • Loan prequalification - Determining your home search price range.
  • Property Search � Helping you find the ideal property based on your requirements and desires.
  • Submitting an offer � Offer is simply the method to communicate with the seller. After finding the right property for you, the next step is to make an offer. I will do market analysis and suggest an offering price to you. I will negotiate with the seller's agent for your best interest.
  • Escrow period � After you have reached agreement with the seller, we open escrow. Escrow agency is a neutral third party that holds all money deposits and documents during the period in which the deal is finalized by the buyer and the seller. It can take 30-60 days to complete all the steps involved in a home purchase. My team and I will work closely with escrow, title, lender, and all others to help ensure the transaction moves ahead as smoothly as possible.
  • Physical home inspection
  • Final Walk-through
  • Closing

Determining Your Offer Price

An offer is the written terms of your interest and intent to purchase the home. The offer includes details like the offer price, your down payment, conditions of purchase, and other terms. Of all the terms, the offer price is typically the most important factor that determines whether or not your offer is accepted.


It is important to check your offer price against price data for comparable homes in the neighborhood. For example if there is a house for sale similar in specifications and pricing to the one you are looking to buy and it has been on the market for 6 months, find out why. If there are no problems with the condition of the home or ownership maybe the asking price on the house is too high. A lower offer may be adequate for the home you are purchasing. On the same note if over the past few months comparable homes were selling at the homes' asking price, the asking price for the home you are considering may be a fair price. Keep in mind that no two homes are exactly alike, even if they are in the same area, and the same size, other factors may influence the price of the home such as recent renovations, lot location on the block, or landscaping. It is important to keep this in mind when comparing homes to one another, and deciding what your offer will be.


Factors the Influence Offer Price

Besides location and property size there are many factors which can influence a difference in price on homes. These factors should always be taken into consideration when putting an offer down.


Upgrades and Renovations: Upgrades performed on the house is an important factor when determining the offer price. If there are upgrades that need to be performed on the home to bring it to your liking, factor the upgrade costs into your purchase price. If many cosmetic (colors, fixtures, designs) or layout changes need to be made to the home it may be worth your time and money to consider a cheaper home that is in poorer condition since renovation work will need to be done in either case. It would be more cost effective to purchase a lower priced home in poorer condition that can be customized to your liking than to pay a premium for a house in better condition that you will tear apart anyway. In both cases material, labor, planning, and sweat will be involved so it makes little sense to pay for existing upgrades and renovations in the house that will be removed after you purchase the home.


On the other hand, if a higher priced home with all your desired renovations and customizations are available it should be considered. After factoring in your renovation costs along with your time and energy to see the project through to completion and the cost of inconveniences during the renovation period the price for the renovated home may be justified.


Market: The market also plays a role in your offer price. If you are in the process of looking for a home and there are many comparable homes in the market that meet your location, size and other criteria set, the available inventory affects your offer price. The seller may be more motivated to sell for a lower price than normal because he understands that the market is currently flooded with comparable homes. The seller's motivation also plays a role in your offer price. If the seller is in a difficult situation, leaving the island, or needs to sell the property quickly, lower offers may be more acceptable. On the flip side if the seller is not in any rush to sell the home, owns a desirable property, or there is great demand for the home a higher offer, even above asking price, would be appropriate.

Rent vs. Own

There are many aspects of a home to consider deciding if renting or buying a home is right for you. Aside from the basic functions a home serves like providing a safe environment for you and your family, there are other aspects of a home to consider when deciding whether it is better to rent or buy.


Stability

Renting is often seen as a short term or temporary solution. When a lease or rental agreement is signed, an agreement is made to pay a designated rent amount for the use of a property for a fixed period. At the end of a lease, the property owner can raise rent rates, decide to sell their property, or choose not to renew the lease. All of these options leave the renter with the task of finding a new place to stay. To some this may not be an issue but for others the task of finding a new home to rent and moving is a large undertaking. Renting doesn't provide the long term stability that a purchased home offers because rental conditions and terms change and are decided by the owner/landlord of the unit.


Flexibility

Home ownership gives you the freedom to use your property and make changes as you see fit. As long as the use and changes of the property are within the law and codes and any association or community guidelines you are allowed to make changes to your property. From paint and color schemes to landscaping or even things often taken for granted like appliances or kitchen layouts, ownership provides the flexibilities to alter your property. Renters normally agree in writing not to alter the property in any significant way or without the landlords consent. Landlords can often be strict about simple things like holes made from hanging pictures or wall colors. These restrictions can hinder your lifestyle or enjoyment of your home and is something to consider when renting or buying.


Responsibility

The immediate advantage in renting is with responsibility and costs. The direct costs and responsibilities of maintaining and improving a home usually fall on the owner of the property. People who don't have the time, desire or resources to maintain or repair a property will find that renting is a good choice. Renters often have the flexibility to call their landlord or property management agent if anything goes wrong with the property and isn't directly caused by the tenant. The maintenance costs although not directly paid for by the tenant is usually part of the rents paid so the tenant is indirectly paying for property maintenance.


Costs and Investment

Because of high property values in Hawaii, rents are typically lower than mortgages when compared at the initial time of purchase. For example, a typical condo in Honolulu costs approximately $350,000. ?Even with exceptionally low interest rates and a 20% down payment, the monthly mortgage payment with taxes is approximately $1,800. If maintenance, association fees and repair costs are factored in, the monthly payment easily exceeds $2,200. Rent for this condo unit on the other hand is currently in the $1,700 range. The immediate rent savings is a few hundred dollars per month and can be applied toward other expenses or savings for the renter.

Fast forward a few years and the cost situation can change significantly with our scenario. Assuming a fixed term mortgage was used to purchase the property, the mortgage payment remains fixed and stays near $1,800. Property taxes change based on property value and tax rates but the mortgage payment is fixed for the term of the loan. With inflation and upward rent price movement, the rent will eventually exceed the mortgage amount and afterward continue to increase making the difference between rent and the fixed mortgage payment larger and larger. The great thing about buying a home is that with a fixed rate mortgage, for the next 30 years you know exactly how much you will pay every month on that mortgage and after the mortgage is paid off there will be no additional payment to be made for the mortgage. In addition to rents eventually exceeding mortgage payments, home ownership can also pay off as an investment.

Hawaii real estate has seen great appreciation over the past 50 years. There have been years where there has been 20% appreciation, and many years in which declines have been just as great. But it remains true that the Hawaii real estate market as a whole has appreciated. Home ownership allows you to take advantage of this appreciation and can at times offer significant returns on your investment. For example, if a home is purchased for $300,000 with 20% down payment the initial investment into the property is approximately $60,000. This $300,000 property can appreciate to $600,000 as seen in recent market movement which is a $300,000 gain. Based on the initial investment this would be a 500% return on the investment which is an exceptional return. This type of return is accomplished through leveraging where the mortgage allows you to increase the investments potential by allowing you to have a higher valued asset without making the full investment up front.

Savings on your Income Tax is also a consideration for many home owners. For those who qualify, the largest deduction on tax returns often comes from mortgage interest. The mortgage interest can be deducted on your federal and state tax returns, with certain limitations, and Honolulu city and county property taxes can also be deducted. The tax savings from these deductions can often be equal or exceed the cost difference between renting and buying which makes buying a better choice. Please check with your CPA or tax advisor regarding tax deductions and if the deductions apply in your situation.