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Update on Hawi Mansion Foreclosure Auction

The first auction sale date came and went without offers, but as of today there is a bid showing in the second round of the on-line auction on the Hawi mansion (MLS# 244454) that is for sale by the bank after foreclosure. The current bid price is $4,224,000…which implies to me that there may be more than one bidder since the starting price was $2,900,000.

The auction.com website also notes that the reserve price has not been met. Since the listing price in the MLS is $4,999,995, let’s use that number as a working hypothesis as to the reserve price. The bank may or may not be realistic in its reserve price, but we can look at some comps to see whether you might want to jump in above the current high bidder—or at least we can look at some points of reference as I’m not sure there is a property on the Big Island directly comparable to the oceanfront Hawi estate.

(MLS# 244454) has 13,143 sq ft, 6 bedrooms, and a 21.5 acre lot…listed at $4,999,995

There are no recently sold comps in luxury homes nearby. Last year’s highest residential sales in the Hawi area were both in Puakea Bay Ranch, but neither one was directly oceanfront. What does make them comparable is that both were distress sales, which sold for far less than the $3 million or so the sellers had invested in the homes.

Making adjustments as an appraiser might, the top Puakea Bay Ranch sale was $1,800,000 for 4,728 sq. ft. Subtracting off $350,000 for a lot (which is about where the lowest priced lots for sale at Puakea Bay Ranch are currently listed, gives us $305/sq. ft. (like I said, with construction costs running $350-$500/sq. ft. for the Puakea Bay Ranch level of home, and more than that for this Hawi auction property, residential real estate is available at less than the cost of construction). Taking that figure times the square footage in the estate home being auctioned, we get just over $4 million for the home.

Then, we would need to estimate the value of the land. The adjacent 20-acre lot sold in 2009 for $1,050,000 and there are two nearly oceanfront lots in the subdivision listed for $1,100,000 and $1,150,000. There is an oceanfront parcel of 17.5 acres just across the gulch listed for $1,445,000 after a recent price reduction. Assuming that a distress sale price would put the value of the lot at around $1,000,000…we get a total of around $5 million.

Hence, the bank’s asking price.

There are other ways to look at the comps, so if you are considering jumping in to the auction, or scooping the property if it fails to sell at the end of the on-line auction (which closes Wednesday, May 11th at 6:30 p.m. Pacific, 3:30 p.m. Hawai’i time), there is still time to work with a local Realtor on your bid., and don’t forget the winning auction bidder pays a 5% premium to the auction house above their bid price.

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