5 Options to Consider if Your Home in Hawai’i Sells Before You Find a New One
Whether you’re putting your condo on the market so you can buy your first home in Hawai’i or considering selling your house and moving off island, today’s housing market is lucrative for sellers. This should be fantastic news… Unless your home sells before you can find a replacement property. With decreased supply and increased demand pushing prices up and accelerating sales across the chain of Hawaiian Islands, this scenario is more common than ever.
Across the state of Hawai’i, the allure of a hot seller’s market is opening the door for some homeowners list their house, while others are selling their home out of necessity. On Oahu specifically, many military personnel making a PCS move want to get their house on the market as soon as they receive their orders, and understandably so. Whatever the motivation may be, sellers will often get an offer on their Hawai’i property before they have found somewhere else to move to.
Let’s not deny the silver lining here: Once the sale is complete, the seller now knows exactly what they have in the bank for house-shopping and has the down payment money readily available.
On the other hand, the seller may be holding onto that down payment a lot longer than they anticipated! Even if they are getting top dollar for the home they are selling, it may prove difficult for the seller to find a replacement home in Hawai’i within their price range.
Such uncertainty about finding a new home is driving some sellers to hold off on accepting offers. As a seller, if you wait too long, you risk losing the sale – The buyer may lose patience and move on, making this a less than ideal approach.
Concerned that your home might sell before you can find a new one? Before you decide to hold off on an offer… or resign to camping on the beach on Maui or Hawai’i Island and sleeping in a hammock, let’s consider some other options!
In this article, we will look at what to do if you can’t find a home in Hawai’i before yours sells, some common solutions to this dilemma, and how to avoid the housing gap predicament in the first place.
Option 1: House-Sit in Hawai’i While You House Shop
Should you be unable to find a home before yours sells, you could opt for a house-sitting arrangement. There are several online companies across the chain of islands that match homeowners with dependable house-sitters. This is often a free arrangement, and when pet sitting is involved, it can be paid. If you aren’t an animal lover with experience caring for pets, this gig isn’t for you.
House-sitting may not be right for families with their own pets or with young children. And finding a house-sitting position in Hawai’i may take time and be competitive.
On the plus side, house-sitting provides the precious time that you need to house hunt. Just keep in mind that the homeowners will likely need a house-sitter for a predetermined amount of time, after which, they will return home and probably won’t want you as a roommate!
From the Big Island to Kauai and every island in between, there is a high potential that the seller will receive a premium for their property in Hawai’i. As the seller, you can put the extra funds toward staying at a hotel if your home sells before you find a new one (an efficiency room with a simple kitchen is recommended).
A short-term vacation rental is another affordable option. Even after factoring in moving expenses, storage fees, and the cost of a furnished rental, the math still works out and you’ll be able to afford your new Hawai’i property when you find it. This is preferable to signing a 6-month or year lease on an apartment and then breaking it before the lease is up.
If you’re interested in living in a Hawai’i vacation rental while in between houses, look for properties in our island communities that offer week or month-long bookings.
Option 3: Stay with Friends or Family in Hawai’i
Depending on where in Hawai’i you’re moving from or to, staying with friends or family may be the most cost-effective way to go if you need to buy some time after selling your home. And while you can’t beat a free place to stay, don’t forget that you may incur the cost of renting a storage unit for your belongings.
Since you don’t want to put a strain on personal relationships by wearing out your welcome, this option is best for a single person or couple who is certain that the living arrangement won’t drag on for months.
Whether you stay with family on Lanai or settle into a Molokai vacation rental, any of the above options may require that you pack up, rent a moving vehicle, move out of the sold house, put most of your belongings into storage, unpack the belongings needed for living in temporary housing, repack when a new home in Hawai’i is found, possibly rent another moving vehicle, and unpack (finally!) when the sale is complete.
Does the thought of all that packing, moving, and unpacking make your head spin? Then you’ll be happy to hear that there are a few more options!
Option 4: Sell Your Hawai’i Home and Stay Put
No, really! Hawai’i Association of Realtors (HAR) created the Post Closing Occupancy Contract, which offers the seller a way to rent back their sold property for a contracted period of time and instills confidence in the buyer. With the Post Closing Occupancy Contract, the Hawai’i Landlord Tenant Code does not apply since the sellers are regarded as holdover tenants.
An experienced Realtor can help you make sense of HAR’s contract and prioritize selling your home to someone who agrees to a rent-back (also known as a sale-leaseback or post-closing possession agreement). Your Hawai’i Life Realtor can also include this rental agreement as an addendum to the purchase contract, entitling you to continue living in the home for a specific period of time.
For the protection of the seller and buyer, the leaseback agreement must be carefully written. Since the agreement should have a fixed term with a daily fee for remaining beyond the specified period, as well as detail the financial obligations of the seller/tenant regarding rent, security deposit, utilities, insurance, and maintenance, and even cover the allowance of pets and other matters, your Realtor should craft the agreement.
What’s more, as an expert on Hawai’i real estate, your Realtor has the experience to plan ahead and the tools at their disposal to make the proposition a less stressful and more pleasant experience. Those tools may include (but are not limited to):
- Including a term in the seller’s counter offer, stating that the sale of the Hawai’i property is contingent upon them finding a suitable replacement property within a specified period of time. This term may not be appealing to buyers who are concerned about losing time while they wait for a seller who has not committed to the sale.
- Attaining a Post Closing Occupancy Contract out of the gate. Instead of the standard rental agreement, this form can be used to allow the seller to continue residing on the property after the closing provided that they pay rent to the buyer to cover the cost of the mortgage. For example, if a buyer and seller decide that the seller may reside on the property for a month while they shop for a new home in Hawai’i, they should sign an agreement stating that the seller can remain for that period of time.
- Negotiating a contingent offer separately or in addition to the Post Closing Occupancy Agreement.
If you’re concerned about selling your home before you find a new one, this might be the option for you!
If moving in with family, crashing with friends, living out of a suitcase, and paying for storage isn’t for you, the Post Closing Occupancy Agreement will enable you to shop for your new home across the Hawaiian Island chain from the comfort of your former house.
Option 5: Start House Hunting Before Listing Your Hawai’i Home
Don’t wait until the last minute to start house hunting – The best approach for any seller who anticipates needing a replacement property is to be proactive. Since the seller’s market in Hawai’i is so hot, odds are that you’ll be under contract soon after listing your home. With this in mind, consider shopping for a house before even putting your home on the market.
Given the lack of supply, preparing to sell your property while searching for a new house might seem overwhelming. But you don’t have to go it alone! Your Realtor is here to help you mitigate the risks and stress associated with selling and buying a home.
For anyone moving out of state, it’s especially beneficial to team up with a Hawai’i Life agent who can interview a leading RE agent and an affiliated brokerage. By working hand in hand with your agent, you can start the process before listing your primary property.
Wondering Which Option is Best for You?
When it comes to selling your house before you’ve found a replacement home in a Hawai’i Island community, remember that you have options, including renting back the sold home for a contracted period of time. To seamlessly navigate this or any contract, be sure to work with a Realtor who has the tools, experience, and knowledge to help you determine which temporary housing option is best for you and your family.