Prediction fulfilled: despite foreclosures and short sales, prices are higher at beachfront Kolea this year.
Back in January of this year (2010), I made a bold prediction that prices were headed up at the beachfront Kolea condominium, and home community on the Big Island’s Kohala Coast. That might have seemed like a bit of hype given that of six Kolea condos sold in 2009, five of them were REO (bank-owned), and the sixth was an unusually sweet deal ($1,050,000 for the largest floor plan) on a non-distressed villa that I was able to identify for lucky buyer clients.
However, with 6 weeks to go in 2010, here’s the breakdown of the 11 sales to date:
- Only three were REO, all the smaller interior 2/2 floor plan, at prices from $350,000 to $459,900
- Another three were short sales: one interior 2/2, one larger corner 2/2, and one, the same floor plan as my “sweet deal” of 2009, closed for $325,000 MORE than my buyer paid 3 months earlier!
- Five of those sales were not distress sales—in other words, almost half of the transactions were not in the foreclosure pipeline. The two-bedroom floor plan sold for as high as $760,000, and the penthouse for a whopping $2,550,000. Granted the sellers of these properties had paid over $1 million and $3 million, respectively, but buyers were willing to pay significantly more than previous distress sales, and therefore, importantly appraised values at Kolea are actually trending up.
Currently, there are six Kolea condos with accepted offers; of them four are short sales, and it will be interesting to see what prices lenders are willing to approve.
Are Bidding Wars the New Trend on the Kohala Coast?
Which brings me to the next development: bidding wars! It appears that I am not alone in having a number of clients writing multiple offers in search of a non-distressed seller who will accept a price that, while slightly more than recent comparable sales, does not represent yet another significant jump over them. When Kolea 10D, ground floor 3-bedroom, directly opposite the Beach Club, hit the MLS priced at only $779,900 as an REO last week, I knew I was going to be preparing the offer paperwork even before my clients had returned my (6am Hawaii time) call.
The bank took ownership after a failed attempt to short sale. The short sale listing price was $1,399,000, and I was told it failed because of a “low-ball offer.” HELLOOOOO!! For the short sale, I had been trying to round up an offer around the $1 million mark, and fully expected that’s where the REO would be priced. No wonder buyers are becoming reluctant to tie themselves up on a short sale, when there is the possibility that they can get a better deal waiting for a mis-priced REO.
Of course, there is a good reason to try the short sale—you may not win the bidding war on the REO! My clients offered what we felt was a strong premium over the asking price on Kolea 10D, and it was an all-cash 14-day close with no contingencies. According to the listing agent, there were four strong offers, and the one accepted was at a significantly higher price than the rest.
Kolea 10F, the penthouse unit directly above, also failed as a short sale, and is going to auction. Any guesses where it will be priced?
P.S. If you want help in discerning where the next great buy will be, don’t hesitate to contact me directly!
A hui hou,
Beth Thoma Robinson, R(B)