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Kona Coast Real Estate Market Update January 2011

As a busy buyer’s agent here on the Kona Coast, I’d like to share some statistics that you might not hear about in the usual market reports. The statistic I’d like to focus on is the sales price (paid) vs. asking price for a property. We have seen a big change from this time last year, and it’s important for buyers to know so that they don’t miss out on the good deals that are still available.

In the first half of 2010 the average home here in Kona sold for 95.1% of its asking price. The largest discount was 51.9% off of asking. In the early months of last year I suggested my buyers start with aggressive offers. I knew that they had no competition so there was a chance their offer would be accepted. Often we could get them a home at 15% or more off the asking price.

Things have changed. Looking a the stats for Kona residential sales this past quarter the average is now slightly higher at 95.4% of asking, but the largest discount was much less at only 26.9% off of asking. Buyers still want to write low ball offers, but in this market, more often than not, they won’t even merit a counter offer from the sellers. They are simply ignored. The house ends up going to another buyer that made a more reasonable offer. Buyers are now competing with other buyers when it comes to good properties. One look at the stock market shows that everyone is feeling more confident that the worst is behind us.

So, for good properties why aren’t we seeing prices go up? Is it a seller’s market? Not yet. There is a dynamic working to keep prices down right now. Buyers, due to competition from other buyers, have had to bid up a property price in order to “win.” A new property listing comes onto the market. It’s well priced. Within days it has multiple offers. In order to get it you have to bid high. I suggest to all of my buyers, especially in this situation, that their offer is contingent upon appraisal.

Appraisers are currently very conservative. It is not unusual for the appraisal to come in 5% or more below the offer price in these situations. As the buyers’ agent, I negotiate with the sellers’ agent and often, although not always, we get a reduction in the price to the appraised value. I am convinced that without these conservative appraisers we would be seeing prices begin to rise in many popular neighborhoods. Banks are also using these same appraisers to help them price REO’s that they are putting on the market often at lower than what I would consider the market price.

So, what is a buyer to do?

  1. Be informed. That’s my job as your buyer’s agent. I need to educate you about the market so that you can make a smart offer. I need to let you know the second a well-priced quality home comes on the market in the price range and area in which you are interested.
  2. Be ready. Have a pre-qualification letter from your bank or mortgage broker, or if you will be paying cash have a letter or statement from you bank verifying funds. If we find the right property we often need to act quickly to get it. If we get an offer in first, it is well written and at an aggressive, but not extreme offering price, you have a better chance of getting a good discount.

2010 sales were up nearly 25% from 2009 while prices only dropped 5%. My expectation is that 2011 sales will continue to grow in volume, and prices will stabilize. The buyers that focus more on getting a good home for a good price rather than achieving the impossible will be happy and successful.

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Daniel

January 30, 2011

Aloha,
How are the Potential Short Sales in your area?

Daniel

January 30, 2011

Aloha,
How are the Potential Short Sales in your area?

Erik Hinshaw

January 31, 2011

Aloha Daniel, Kona was early to the short sale/ foreclosure crisis. Prices dropped quickly. Short sales dominated the market two years ago. Now foreclosures/REO properties are predominate. There are still short sales but not in the number there were even a year ago. The majority of short sales on the market currently, including two of my own listings, have been on the market for quite some time and are in the final stages of negotiation with the banks. Are you in the market for a short sale?

Erik Hinshaw

January 31, 2011

Aloha Daniel, Kona was early to the short sale/ foreclosure crisis. Prices dropped quickly. Short sales dominated the market two years ago. Now foreclosures/REO properties are predominate. There are still short sales but not in the number there were even a year ago. The majority of short sales on the market currently, including two of my own listings, have been on the market for quite some time and are in the final stages of negotiation with the banks. Are you in the market for a short sale?

Heidi White

January 31, 2011

Great blog Erik! I just closed a REO (bank owned Kanaloa unit) purchase for buyers who were trying to buy it having an accepted offer with the seller but the bank took it mid purchase. When it came on the market as a bank owned REO I saw it pop up at a crazy 4 am in the morning! (I get up early and it pays off)! It was priced low and I instructed my buyers to come in over full price. After thinking on it they agreed and we were the first offer in on it with 5 other offers to follow that day needless to say we got it. My Buyer’s were just here loving it and the Kona weather!
I am noticing in some areas the inventory is down too, so that stabilizes things for now, or makes it more competitive. The deals are out there but they do not last long! Buyers need a good Realtor for sure. Mahalo Erik!

Heidi White

January 31, 2011

Great blog Erik! I just closed a REO (bank owned Kanaloa unit) purchase for buyers who were trying to buy it having an accepted offer with the seller but the bank took it mid purchase. When it came on the market as a bank owned REO I saw it pop up at a crazy 4 am in the morning! (I get up early and it pays off)! It was priced low and I instructed my buyers to come in over full price. After thinking on it they agreed and we were the first offer in on it with 5 other offers to follow that day needless to say we got it. My Buyer’s were just here loving it and the Kona weather!
I am noticing in some areas the inventory is down too, so that stabilizes things for now, or makes it more competitive. The deals are out there but they do not last long! Buyers need a good Realtor for sure. Mahalo Erik!

Jene Green

January 31, 2011

Mahalo for this post Erik! So informative and oh so true!! Its so important to have a smart and knowledged Realtor to help you thru this market and you really know your stuff!!

Jene Green

January 31, 2011

Mahalo for this post Erik! So informative and oh so true!! Its so important to have a smart and knowledged Realtor to help you thru this market and you really know your stuff!!

Charlie Parry

February 2, 2011

Aloha Erik, Great information and timely too! I agree with your assessment and have seen the inventory of decent properties shrink in the lower price ranges. Keep up the good work.

Charlie Parry

February 2, 2011

Aloha Erik, Great information and timely too! I agree with your assessment and have seen the inventory of decent properties shrink in the lower price ranges. Keep up the good work.

Erik Hinshaw

February 2, 2011

Thanks Jene and Charlie. We have been seeing this at the lower end for a while but this month I have also seen a run on “my best buy’s” in the million dollar range as well. I think people are starting to cash out on the stock market and grab homes while prices and interest rates are down.

Erik Hinshaw

February 2, 2011

Thanks Jene and Charlie. We have been seeing this at the lower end for a while but this month I have also seen a run on “my best buy’s” in the million dollar range as well. I think people are starting to cash out on the stock market and grab homes while prices and interest rates are down.

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