In my recent post about the real estate market in the Hawi, North Kohala area, I noted that one area where I see the price curve adjusting upward is in direct oceanfront property.
My contention is that as more parcels get sold for conservation, they are permanently removed from the future resale market, thus increasing the value of properties within existing oceanfront subdivisions that are in private hands. That brings me to the Hawi oceanfront property that has been the subject of several of my other blog posts, an estate that is bank-owned after foreclosure.
Recently released with a new listing brokerage, but still the same mansion on 21 acres (MLS# 254112) now offered for $2,390,000
Buyer Beware: Foreclosures are Sold “AS IS” and “WHERE IS”
Every foreclosure auction notice, MLS REO listing, and bank seller’s addendum, makes it absolutely clear that the property is being sold “As Is” and “Where Is.” The “As Is” seems pretty clear, and in fact, there is a standard “As Is” addendum often included with standard sales to sweeten the deal. It means that while the buyer can have any inspections and do any due diligence during their inspection period, the bank selling is not responsible for repairing any damage, defects, or deferred maintenance found.
The “Where Is” part is usually not a big deal. It means the bank that owns the property will not pay for a staking or survey, nor deal with any encroachments found. Typically, these sorts of encroachments would involve something minor, like a neighbor’s fence or at worst a rock wall.
Which brings me to a huge “where is” not mentioned in the public listing description of this oceanfront property and only obliquely referred to in the private, agent-only remarks (something along the lines of seller being in receipt of encroachment agreements reviewed by their attorney.)
Regular readers may recall that I attend monthly meetings of the North Kohala Access Group, a subcommittee associated with the Community Development Plan (CDP) Action Committee working to implement the recently passed CDP.
In one of those meetings, it was reported in conjunction with progress on a designated mauka-makai public shoreline access, that details were being complicated by the discovery that a portion of the bank-owned oceanfront mansion is actually built on an adjacent lot sold by the previous owners just before they lost the house to foreclosure.
Take a look at the aerial photo above. See the set of two windows on the second floor, right hand side? Imagine a property line that cuts through the home and property just to the left of those windows.
How to “Fix” a 2,000 sq. ft. Encroachment
What would a buyer be expected to do about the encroachment? The first step would be to review the encroachment agreements referred to in the listing. An alternative in principle would be to negotiate a lot-line adjustment between the lots, although that could open other cans of worms.
Another alternative, in principle, would be to tear down the encroaching item. It’s not been easy to find a buyer for a home of this style in Hawai’i, so I got curious and consulted with a highly qualified contractor to find out how the heck one would go about removing 13,000 sq ft of granite-faced two-story construction.
The answer: “If no significant salvage was intended, it could be removed with heavy equipment: excavators and bulldozers; they would have it on the ground in a few days to a week. I’m reluctant to put a number on it, mostly because of the trucking costs and landfill dumping fees, which would be prodigious.” When pressed, he offered that under $100,000 would do the job.
The oceanfront location is stunning; the interior can always be remodeled if not to your taste
The Good News: “Where Is” is Direct Oceanfront
All joking aside, does it really make sense to tear down a home with top of the line finishes, Monier tile roof, an elevator, and Smart Home technology? It may not have a tiki-torch island sensibility, but that $100,000 is probably better spent taking care of deferred maintenance…and if the gold-plated crystal chandeliers are not your style, getting a good designer to help you visualize a remodel.
Another professional you would want to hire is a landscape designer who understands how to create appropriate windbreaks, soften the exterior from the view of neighbors, and begin restoring the oceanfront parcel you own to appropriate species for shoreline birds and erosion control. The other thing to understand is that at the time this subdivision was done, the planning department was requiring that the entire oceanfront get included in only one of the parcels…and this is it.
The foreclosed estate includes all the green. The orange (MLS# 231344) and yellow (MLS# 231267) parcels are each for sale for $1,095,000
Buyer Beware: just because you read it on the Internet doesn’t make it true.
When you look at the listing for this Hawi estate on the Hawaii Life website, keep in mind that the text was provided by the listing agent, not by us. While it is true that Hawi is “rich in history”, we’re not the ones who wrote that “Hawi is known for it’s beaches and sun-kissed warmth.”
My broker-in-charge would never let me get away with that grammatical error…and I hope she’ll share her very funny story of what she told one of Hawi’s prominent citizens at the time he was her client looking to purchase in Kohala. Of course, he did buy here, but Katie’s caveat about the weather has become a long-running joke.
A hui hou,
Beth Thoma Robinson, R(B)
Direct: 808.443.4588
Email: beth@hawaiilife.com
Katie Minkus, R(BIC)
June 29, 2012
But Beth, “It ALWAYS rains in Kohala!!” I mean, how else does it stay green all the time?? 😉
All kidding aside, it’s true that when I sold him the property I told him at least 100 times, “It always rains in Kohala, are you sure you’re ready for that?” Turns out, 10 years later, that “always” actually means “it mostly rains at night and usually the days are gorgeous and sunny.” To me, it’s North Kohala’s little secret. It’s lush and green and gorgeous, and yes it does rain, but most days you’ll see sun, even when it does rain during the day you’re likely to have a few hours at least of sunshine and rain at night means cooler temperatures and better sleeping and those gorgeous green vistas that you don’t get in places like Kohala Ranch and south along the Kohala Coast. North Kohala weather in my opinion is, well, pretty close to perfect!
Katie Minkus, R(BIC)
June 29, 2012
But Beth, “It ALWAYS rains in Kohala!!” I mean, how else does it stay green all the time?? 😉
All kidding aside, it’s true that when I sold him the property I told him at least 100 times, “It always rains in Kohala, are you sure you’re ready for that?” Turns out, 10 years later, that “always” actually means “it mostly rains at night and usually the days are gorgeous and sunny.” To me, it’s North Kohala’s little secret. It’s lush and green and gorgeous, and yes it does rain, but most days you’ll see sun, even when it does rain during the day you’re likely to have a few hours at least of sunshine and rain at night means cooler temperatures and better sleeping and those gorgeous green vistas that you don’t get in places like Kohala Ranch and south along the Kohala Coast. North Kohala weather in my opinion is, well, pretty close to perfect!
Karen Bail, R(B)
June 29, 2012
The way the weather blows in and out of Kohala is magical, adding to the allure.
Actually, the Planing Department never required that all oceanfront (aka conservation zoned requiring an SMA minor or major) be in one parcel. The clever Real Estate attorney we all know and love did that in his work, may we call that his signature? The point is to have all the conservation zoned land, that land within the shoreline setbacks area, as one lot. That lot now consists of all the conservation zoned land and is allowed to build 5,000 sf of improvements, the definition of said improvements is subject to the whims of they who review. Then all the remaining lots are subject only to the regulations of Agriculture zoning, much more liberal and less onerous than conservation zoning.
It is pretty amazing that someone would buy the adjacent parcel without a survey, as was the case in that last sale. We know our happy broker would not let that happen, but they can’t all be lifers!
Karen Bail, R(B)
June 29, 2012
The way the weather blows in and out of Kohala is magical, adding to the allure.
Actually, the Planing Department never required that all oceanfront (aka conservation zoned requiring an SMA minor or major) be in one parcel. The clever Real Estate attorney we all know and love did that in his work, may we call that his signature? The point is to have all the conservation zoned land, that land within the shoreline setbacks area, as one lot. That lot now consists of all the conservation zoned land and is allowed to build 5,000 sf of improvements, the definition of said improvements is subject to the whims of they who review. Then all the remaining lots are subject only to the regulations of Agriculture zoning, much more liberal and less onerous than conservation zoning.
It is pretty amazing that someone would buy the adjacent parcel without a survey, as was the case in that last sale. We know our happy broker would not let that happen, but they can’t all be lifers!
Beth Thoma Robinson, R(B)
June 29, 2012
@ Katie Minkus–thanks for sharing that story. By the way, I just learned from a Hawi resident with a weather station that this June is the 4th wettest month since he began tracking a dozen years ago. VERY unusual for June.
Beth Thoma Robinson, R(B)
June 29, 2012
@ Katie Minkus–thanks for sharing that story. By the way, I just learned from a Hawi resident with a weather station that this June is the 4th wettest month since he began tracking a dozen years ago. VERY unusual for June.
Annie Mendoza, RS
July 1, 2012
Mahalo Beth! I enjoyed how your post presents just several of the intricacies of buying and selling. You’ve obviously done your homework on this property. I’m looking forward to chatting with you about if this property, (plus the cost of razing it or lot-line adjustments), can be compared in any way to other oceanfront parcels in TMK 3-5; such as the amazing bare 50 acre oceanfront listing by Lighthouse that you have now. Mahalo!
Annie Mendoza, RS
July 1, 2012
Mahalo Beth! I enjoyed how your post presents just several of the intricacies of buying and selling. You’ve obviously done your homework on this property. I’m looking forward to chatting with you about if this property, (plus the cost of razing it or lot-line adjustments), can be compared in any way to other oceanfront parcels in TMK 3-5; such as the amazing bare 50 acre oceanfront listing by Lighthouse that you have now. Mahalo!
Beth Thoma Robinson R(B)
July 1, 2012
@ Karen, thanks for reading and pointing out the importance of staking/survey when purchasing. Also, your comment reminds me to clarify that there is a difference between county zoning, and State coastal zone management law, which serves to create more stringent hurdles for developing or building on oceanfront parcels (regardless of zoning) than would zoning alone.
@ Annie, would love to talk oceanfront North Kohala!
Beth Thoma Robinson R(B)
July 1, 2012
@ Karen, thanks for reading and pointing out the importance of staking/survey when purchasing. Also, your comment reminds me to clarify that there is a difference between county zoning, and State coastal zone management law, which serves to create more stringent hurdles for developing or building on oceanfront parcels (regardless of zoning) than would zoning alone.
@ Annie, would love to talk oceanfront North Kohala!
Margaret
July 1, 2012
Great Information!
Margaret
July 1, 2012
Great Information!
Diane
July 5, 2012
Beth thank you for pointing out the limitations of this particular property.
Diane
July 5, 2012
Beth thank you for pointing out the limitations of this particular property.
Elaine
August 6, 2012
Wow! Looks like an amazing spot. Foreclosures are everywhere. No place seems immune.
Elaine
August 6, 2012
Wow! Looks like an amazing spot. Foreclosures are everywhere. No place seems immune.
Beth Thoma Robinson R(B)
August 9, 2012
@ Elaine – you are right, even luxury properties have not been immune. This one has had yet another price reduction!
Katie Minkus, R(B)
August 9, 2012
Wow. Beth, what’s the asking price now?
Beth Thoma Robinson R(B)
August 9, 2012
@ Elaine – you are right, even luxury properties have not been immune. This one has had yet another price reduction!
Katie Minkus, R(B)
August 9, 2012
Wow. Beth, what’s the asking price now?
Beth Thoma Robinson, R(B)
August 9, 2012
@ Katie Minkus – $1,999,999 ! Remember the $17 million listing days????
Katie Minkus, R(B)
August 9, 2012
Oh, I sure do…. can you believe??
Remember when the previous owners (and their Broker) laughed in my face when I told them it wouldn’t sell for over $7M, and they needed to repaint that salmon color inside and stage with modern furniture instead of that small frilly european old world stuff? Turns out it’s unlikely even those changes would have “saved” this property. Wonder how low it will go before it sells – back to lot price? Ouch.
Beth Thoma Robinson, R(B)
August 9, 2012
@ Katie Minkus – $1,999,999 ! Remember the $17 million listing days????
Katie Minkus, R(B)
August 9, 2012
Oh, I sure do…. can you believe??
Remember when the previous owners (and their Broker) laughed in my face when I told them it wouldn’t sell for over $7M, and they needed to repaint that salmon color inside and stage with modern furniture instead of that small frilly european old world stuff? Turns out it’s unlikely even those changes would have “saved” this property. Wonder how low it will go before it sells – back to lot price? Ouch.