HB2078 CD1 Affects Owner/Operators of Vacation Rentals
The Hawaii Legislature has wrapped up their 2012 session and have returned to sipping cocktails on the beach or whatever they do when they are not in session. During the session this year a numbers of bills were passed relating to things such as tourism, athletic trainers (the people not the sneaker), seawater air-conditioning, boiler and elevator safety, land conservation and many more (see full list here). One of particular interest relates directly to those who owners/operators of properties used as transient rentals, or vacation rentals (HB2078 CD1)
HB2078 CD1 attempts to clarify landlord-tenant code for transient rentals and zeroes in on operators of vacation rentals that are not in compliance with state and local laws (read tax laws). The final bill, as sent to Governor Abercrombie, can be read here. Below are some highlights and how this law will affect you if you own/operate a vacation rental in the State of Hawaii or are anticipating doing so:
- All vacation rentals must be registered with the state and the registration number assigned by the state to a property must be made available on advertisements and websites promoting the rental of the property.
- All vacation rentals must provide relevant contact information for a local person or company on the island that the subject property is located on.
- Owner/operators must provide homeowner associations (or any non-governmental entity that has covenants or by-laws and is associated with the subject property) with the relevant contact information for the on-island contact.
- The HOA, or other entity in turn will provide this information to the state. This information will be provided annually and any changes in this information must be updated within 60-days.
Fun huh? Effective date for this bill is July 1, 2012. Anyway, now back to reading each and every one of the new laws passed this year (not really). Aloha!
The Griggs Report – May 15, 2012
Here is the latest Griggs Report along with commentary by Mr. Michael Griggs himself 
. I will be publishing my report on the first half of 2012 in early July which is just barely over a month away. Can you believe it?
- The Condo median price continues to drift lower. The improvement in Condo pending ratio should mean this trend is about to end.
- At the top of page 2 you will see comments about improved activity in the upper price ranges over $700,000. Also on page 2 is new chart showing the distribution of Pending Sales by Price Range.
- REO and Short Sale data seems to show a slowdown in the improving trend. North Kona is stable while there is increased percentages and REO numbers in South Kohala and Hilo.
You may view the entire report (with a new and improved format) here. Mahalo!
The Overpriced Listing
Whenever the decision is made to sell a home there is always the temptation to pick a listing price just a little bit north of where it should be. After all, no one wants to leave money on the table and we all know that our homes are way better than all of our neighbors homes anyway. Besides we have poured countless dollars and sweat into our homes over the years so it totally justifies the inflated listing price… Right?
As a homeowner and someone that has bought and sold many times I completely get it. I’ve been there, done that and now workout in the proverbial T-shirt. Fact is, in some markets lucky sellers can set just about any price they want and can be fairly certain of getting their price… eventually. These market conditions however are far and few between.
So why not reach for the stars and list your home for more than the market will bear? Here are some facts that you should consider.
Let’s assume the following: Homes in your area are typically 3 bedroom, 3 bath with around 2000 square feet and ocean views. Homes for sale in your area fitting this criteria are listed for between $375,000 and $450,000 and and selling for between $350,000 and $425,000. You just listed your home at $475,000.
- Most agents are quite familiar with the market they work in and what homes in any given area should be priced at. This is particularly true in a smaller markets like Kona. Agents see new listings come across the MLS and typically know what will sell and what is overpriced right away.
- Most buyers today are using a buyers agent to represent them and help them find a home. As the local real estate expert and the buyers representative, the buyers agent has a duty to the buyer to let them know when a home is overpriced by showing them what else is selling in the area and for what prices.
- Let’s say an agent is working with a buyer that is looking for a home like yours. Their client has told them they want to pay cash and can pay between $425,000 and $450,000. The agent sets up a search for 3 bedroom, 3 bath homes with at least 2000 square feet and an ocean view. They set the max price at $450,000… Guess whose home does not show up in the resulting list?
- Did you know that as many as 90% of buyers turn to the internet first for their home search? Internet savvy buyers are using property searches similar to real estate agents. As such they are also missing properties priced beyond their top line. In other cases they are seeing for themselves when a property is overpriced. When they see your home listed at $475,000 but there are 7 other almost identical homes nearby with an average listing price of $411,000 it will stand out to them.
- For reasons not completely understood and contrary to popular opinion buyers are not typically making ridiculously lowball offers. And on overpriced homes they are typically not making offers at all. Of course every home, transaction and buyer is a little different by when comparing apples to apples… and apples are plentiful… the buyer will often simply chose another property.
- Average buyers today are seeing between 7 and 10 properties in their price range. As such they themselves become quite adept at being able to identify what they can get for their money in the current market. If your home is overpriced it will often become glaringly obvious and will seem inferior to higher priced homes that are priced right.
- So you listed at $475,000 anyway and lucky you a buyer come along that fell in love and was willing to pay your price. Congratulations! During escrow you are planning your move and looking forward to your next home when you find out that your home only appraised for $435,000 and the buyer was approved to a 90% LTV loan and had 10% to put down. The deal falls apart and your back to square one.
This has been a Kona Real Estate Now public service announcement. But in all seriousness it is not generally a really great idea to overprice listings. I see it happen again and again and I watch as the price slowly drops over time or the listing simply expires or is withdrawn. It is work to sell a home and few people I imagine really enjoy getting ready for showings again and again only to be repeatedly disappointed when they don’t see any offers. Like I said I have done this myself and have been through it. Work with your agent and they can really help you identify the fair market value of your home. Aloha and best of luck to you!
Beautiful Top-Floor Condo, Oceanfront Property Close to Kailua Village
This top floor condo is located in an oceanfront development on Ali’i Drive in Kailua Kona, Hawaii. It has been lovingly updated and is central to shopping, restaurants, bars, beaches and activities such as surfing, snorkeling, swimming, standup paddle boarding and more! This condo is offered fully furnished and is truly turnkey. It would make a perfect island retreat and vacation rental. Fresh and salt water pools are located on the lushly landscaped grounds as well as an entertainment pavilion with BBQ facilities and a sandy oceanfront beach area. MLS#253317 is offered at $229,000.
This condo will be open this Sunday afternoon until 4:00PM. Stop by and see it and all that Casa De Emdeko has to offer. 75-6082 Ali’i Drive, Unit B326 (Look for Clark Realty open house signs).
Green Life
I recently completed a continuing education course in which the subject matter was green homes. Real estate agents in Hawaii are required to take a certain number of hours of continuing education each year in order to retain our licenses and I tend to chose classes that are interesting to me or something that will help fill a gap in knowledge or otherwise help me in an area where I am not an expert.
Most of the subject matter in the green homes course was not new to me as we have been aware of our carbon footprint and ways we can reduce it and save energy for years. It was an excellent refresher however and really got me thinking about how we can apply green principals not only to our homes, but to our lives and lifestyles.
For the home, most islanders have done away with the standard incandescent lightbulbs and replaced them with much more efficient and long lasting compact florescent or LED bulbs. The compact florescent bulbs we use for our outdoor lights consume just 13 watts compared to the 60 watt bulb that is called for. This means we can run 4 lights for less than we could run 1 using the standard incandescent bulb.
Many island homes also have solar water heaters and it is required for all homes built after 2010. We’ve never once used electric to heat our water (though it is available) and we have a never ending supply of very hot water courtesy of the sun. We recently bought a LED flat screen TV for the master bedroom that uses less energy than a single incandescent light bulb and buying Energy Star rated appliances makes sense for both the environment and your wallet.
Interested in taking it a bit further? There are many ways that we can apply green concepts to our everyday lives.
A common phrase that you may have encountered is “reduce, reuse and recycle”. It really does describe the mindset for reducing your carbon footprint and living a greener lifestyle. Some simple things that everyone can do are:
- Buy and use cloth shopping bags. We keep them in the trunk so they are always handy and we even travel with them. They are also handy for carrying things to the beach!
- Everyone should be recycling. Hawaii makes recycling of number 1, 2 and 5 plastics, glass, aluminum and paper products SO easy to do.
- Buy and use a reusable water bottle. I drink a lot of water and mine is always with me.
Today there are so many products available for “green minded” individuals that want to do all that they can to reduce their impact upon our plant, and our beautiful islands and ocean. All it takes is a little bit of research, like a simple Google search.
For example, most major footwear manufacturers are now offering products with various degrees of recycled materials or green manufacturing methods and there are many companies have made green footwear all that they do. Billabong is producing board shorts made from recycled polyester and plastic water bottles. Moss Research is shaping and producing totally green and completely recyclable surfboards… and they are stronger than the alternative which are really kind of an environmental nightmare.
If you are looking for an island home that is is efficient and green let me know. I can help you identify home features that will use less energy, protect our island ‘aina and save you money. Happy Earth Day and Aloha!
