Two Foreclosures Listed For Sale at Kolea; One Auction

I’ve been suggesting for around six months to be on the lookout for a pending foreclosure on a single family home at beachfront Kolea at Waikoloa Beach Resort. That REO (bank-owned) home was released for sale this week. In addition, a two-bedroom Kolea condo I’d written about when it was a short sale has also reappeared on the market after foreclosure. In both cases, pricing indicates, as expected, that in the current Kohala Coast real estate market, distress sales now reflect regular market prices rather than driving them.

If you want to make an offer on the Kolea single family residence, you have until Wednesday, October 15th to bid.

Kolea residence foreclosure: pool hasn’t been maintained and the home has been emptied of furnishings (MLS# 277775)

Kolea Single Family Home Foreclosure – Is It Still a Bargain?

The asking price on the bank-owned Kolea home is $3,600,000. Offers are to be made by on-line auction, with a minimum bid of $3,170,000. How high should an interested buyer be willing to go?

If you took the time to read my earlier post (here it is again: Kolea 1st Quarter Update), you know that four homes at Kolea were sold as either foreclosures or REOs to date. The median price on those sales was $2,900,000. You will also know that the only other listing at Kolea of a residence is on the market for $5,650,000.

Interestingly, the earlier foreclosures were not immediately snapped up. Perhaps the banks started out pricing too high for the market conditions at the time, the quickest sale took six months. The auction scenario may result in a much quicker sale. So let’s take a careful look at this home, which we will call Kolea Lot 14 even though it is a home not a vacant lot, because it is on Lot #14 of the 17 home sites at Kolea.

First, location. Lots 1-12 are oriented facing Anaeho’omalu Bay; Lot 13 turns the corner and Lots 14-17 face in the direction of Naupaka Place and the Hilton Waikoloa Beach Resort, thus offering more distant-if-any-ocean view. The home on Lot 16 sold last year as a short sale for only $2,800,000. The house on Lot 14 is 40% larger (4,770 sq. ft. versus only 3,389 sq. ft.); has a nicer design and better finishes, and a somewhat better location with a peekaboo view, and farther from the road noise along Waikoloa Beach Drive. Does that make it worth 30% more?

Kolea Lot 14 Home: Same pool, pre-foreclosure, with peekaboo ocean view in the background

Based upon condo listings that were purchased as distress sales and then resold recently in the current market, my best guess is overall we are up 20-25% for Kolea condos.

Or doing the arithmetic as an appraiser would, let’s first subtract out land cost. We have a good comp in that Lot 15 changed hands for $950,000 last year (also a REO). That would give a value of $546/sq. ft. for the 2013 Lot 16 residence sale. Applying those numbers to Lot 14, we get a market value $3,553,865. On that basis, and ignoring furnishings, $3,600,000 is basically flat from last year’s sale. However, one would also have to furnish, which depending on your tastes could add as much as $100/sq. ft. for Hualalai-Kukio level interior design.

Of course there is no harm in trying to get it for the lowest possible price. There is one other factor however. As I’ve written in other posts about real estate auctions, in an auction scenario the buyer pays a premium. With live auctions the buyer premium runs 8-10%. This on-line auction has a buyer premium of 4.5% paid at close of escrow.

For example, if the winning bid was the starting bid of $3,170,000, the price you pay is $3,312,650 plus customary closing costs. Contact me via phone or email and I can assist you with this process.

Lowest Priced Condo Listing at Kolea is Also Bank-Owned

Kolea 16D, ground floor 2-bedroom now listed after foreclosure, unfurnished (MLS# 277444)

I still have buyers wishing they could get into Kolea at a $500,000 price point. Some of them came my way inquiring when Kolea 16D was listed as a short sale and pending for many months before foreclosure. It was listed at $400,000 even though comparable sales for ground floor units had already cracked through the $500,000 barrier.

The bank chose to put Kolea 16D on the market at $657,900. The only other ground floor two-bedroom listing active at the moment is 15D, at $698,500. Which is the better buy?

Kolea 16D is being sold unfurnished, As Is. On the other hand, Kolea 15D (MLS# 269922) is a furnished, active vacation rental with future bookings in place. Looks to me like the REO listing agent subtracted the cost of modest furnishings from 15D’s pricing.

Listed as a short sale requiring bank approval, 3rd floor Kolea 16F will come furnished (MLS# 275264)

On the other hand, 16F, two floors above 16D, is the same floorplan as 15D, except that it is a third floor, furnished, active vacation rental. Although it is a short sale, the listing agent assures me that it will be sold furnished, with the vacation rental bookings. Agent also assures the bank is comfortable around the asking price (which is well in line with upper floor sales comps). So for a buyer with the patience for the long short sale process, perhaps the best buy in a two-bedroom interior unit is actually Kolea 16F.

A hui hou,

Beth Thoma Robinson, R(B)
Direct: 808.443.4588
Email: beth@hawaiilife.com