This house sold last year for $529,000

This house is for sale right now for $569,000 as a Short Sale!

That’s right! This is a real live example of what you can come across on Oahu, Hawaii Short Sales in the market place right now. Of course I’ve changed the information and especially the photo so that I do not get the real sellers upset. But…this is a true example.

My point is that as a buyer and even a seller you better do your research before making an offer for a short sale as many of the asking prices for the Short Sales are just not making any sense as they are above Market Value in many cases.

This is probably because the lenders are trying to get back as much of their loan as possible. Believe me, the lender knows what the Market Value is.

Currently there are 31 Single Family Homes for sale that are Short Sales. There are 21 Condos for sale that are Short Sales. From week to week the numbers of Short Sales in Hawaii are increasing.

I have run a C.M.A. on all Short Sale properties for sale on Oahu and have found the following:

1) Out of 31 Single Family Home Short Sales For sale currently:

     A) 5 homes or 16% I could not find enough information to arrive at a current a market value. 
     B) 15 homes or 48% are currently listed below current market value.
     C) 7 homes or 23% are currently listed for over the current market value.
     D) 4 homes or 13% are currently at the current market value.

2) Out of 21 Condo Short Sales For Sale currently:

     A) 5 condos or 23% I could not find enough information to arrive at a current market value.
     B) 10 condos or 48% are currently listed below current market value.
     C) 6 condos or 29% are currently listed over current market value.
     D) 0 condos are currently listed at current market value.

Surprising, isn’t it?

What this shows us is that it is extremely important that when thinking of putting in an offer for a Short Sale property in Hawaii you thoroughly conduct research to arrive at the current market value.

You may also want to know what the particular neighborhood or building has been doing for the past 12 months in regards to the Average or Median Sold Prices so that you can deduct a decline from the current market value before putting in your offer to anticipate what the property will be worth when you close on it and own it. Remember, Short Sales in Hawaii are sometimes taking 2-3 months to consummate.

To help anticipate decline in value before you put in an offer let’s look at two examples.

You are preparing an offer for Single Family Home in Ewa. It is currently priced at $575,000 but the current market value is $560,000. You were able to get this information from a Realtor using a C.M.A. or Comparative Market Analysis.

Now you need to take into the account the last 12 months current rate of decline for Ewa Single Family Homes and if possible try to find the same information for the particular neighborhood in Ewa or project as this info may vary from the general information for all of Ewa.

Now we see that the rate of decline in the Median Sold Price for Ewa Single Family Homes for the past 12 months is -14%.

Today you are putting in an offer for this Ewa Single Family Home priced at $575,000 and your C.M.A. tells you that as of today it is really worth $560,000. You want to use 3 months as an estimate to close. You have no control over how long the lender is going to take to give you a final o.k. on the purchase and therefore the closing date. So you use a 3 month estimate at a rate of decline of -14% for 12 months or 1.17% / month.

Three months later when you close, your investment is probably going to be worth approximately $540,573.

The above example is an actual for sale home in Ewa right now.

I am not sure if the lender is going to see it this way, but I am sure you might want to take a look at it from this perspective. You may even want to share this information with the lender when making your offer to help convince them to take your offer.

Of course in the above example the Single Family Home was priced above the current market value.

Remember, 48% of the current inventory for sale of Short Sale Single Family Homes are priced for sale below current market value.

Say you want to buy a Short Sale Condo in Kailua and it is priced at $435,000. The current market value from your C.M.A. tells you that as of today it is worth $460,000.

You then look up what is happening in Kailua Condos and better yet what is specifically happening with the values over the past 12 months within the building or complex you are examining putting an offer.

So in the above graph we see an increase in the Median Sold Price for Kailua Condos of +16%. But wait! This is not an accurate picture because most of the sales this year for Kailua Condos and Town Homes have been in the upper for sale prices. Because of this we see a higher Median Sold Price!

In reality, most of the Median Sold Prices for Condos and Town Homes have declined this year in Kailua!

When it comes to anticipating the decline in home values do not stick with just large areas such as Ewa, Kailua, etc. You need more detail. You must deal with the data from within the neighborhood, development or building itself!

For more information on Short Sales or neighborhood and building stats please review other articles I written for Ocean/Time Warner or visit my website at http://www.hawaiirealestatestatistics.com/
 
 
I wish you much Aloha,
Mike Gallagher
Broker in Charge
RE/MAX Honolulu
mikeg@hawaii.rr.com
http://www.hawaiirealestatestatistics.com/
808-384-9015 Cell