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FAQ - Frequently Asked Questions About Big Island Real Estate

FAQ

Frequently Asked Questions

  • FAQ Disclaimer

    The following FAQ’s are some of the questions frequently asked in some, but not all of the areas the author(s) of this content are familiar with. The questions and answers are not intended to be exhaustive and do not constitute legal or tax advice in any such manner. Content is subject to occasional amendments without notice.

    It does not create an agent-client relationship for your particular question, issue, or concern. The questions and answers do not create any agent-client relationship or duty to assist you.

    The information is intended to be helpful and to get you thinking in a more sophisticated manner pertaining to the buying or selling real estate. Moreover, you are encouraged to contact Penn to dialog further on your issues pertaining to matters of real estate.

  • Home Inspectors in Kona
  • Pest & Termite Companies in Kona

    Bowman Termite & Pest Management
    (808) 329-3215 | Email

    Hitman Exterminators
    (808) 329-9505

    Veteran Termite and Pest Control
    (808) 327-3313 | Email

    Akamai Pest Solutions
    (808) 937-5051 | Email

    Aloha Pest Solutions
    (808) 964-3100

    Mason Termite & Pest Control
    (808) 557-3333 | Email

    Hawaii Fumigation
    (808) 326-7117 | Email

    Kona Coast Pest Control
    (808) 334-1900 | Email

    Smart Pest Prevention
    (808) 887-6278

    Terminix
    (808) 484-4738

  • Can my pet be quarantined on the Big Island?

    Yes. There is a satellite quarantine station located on the east side of Hawaii Island in Keaau (Near Hilo), about a 2-hr drive from Kona. It is a privately run business with excellent facilities for your pets.  Both of Penn’s Dogs were quarantined here in 2001 for 30-days.  The 4-lbs ‘Tiki’ lost prior to travel was quickly regained (and then some) after discovering avocados from the tree located in the quarantine courtyard!

    *You must make arrangements with them directly, well ahead of time.

    Bar-King Dog Kennel
    P.O. Box 1184
    Keaau, HI 96749
    Phone: (808) 966-8733

    If your pet is being quarantined at a satellite kennel, your pet must first go to the Animal Quarantine Station on Oahu for positive identification and examination. Pets usually stay in Honolulu for at least two* days before being transferred. (* Due to a limited number of inter-island flights, pets arriving on Thursday or Friday may not be transferred until the following Monday.)

    Owners must pay fees to the Animal Quarantine Station prior to the pet being transferred to the satellite facility.  In addition, owners are responsible to pay for fees charged by satellite facilities. ($120-day quarantine costs – approximately $136, plus satellite station fees).

    >> Learn More About Hawaii Pet Quarantine

  • What happens to my pet upon arrival in Hawaii?

    Once your pet arrives in Hawaii, they will be transported to the Airport Animal Quarantine Holding Facility (AAQHF) by airport personnel for inspection.

    They’ll then be relocated into indoor kennels and given fresh water (food is provided at your request).

    If they arrive early enough during the day, they’ll be transferred to the main station in Halawa Valley, where they may be eligible for direct release. Pets arriving in Honolulu after 3:30 p.m. will spend the night at the airport facility and either be ready for release the next morning or taken to the Animal Quarantine Station (for unqualified animals).   

    >> Learn More About Hawaii Pet Quarantine

  • How much does Hawaii pet quarantine cost?

    • Direct Airport Release ($185)
    • 5-Day-or-Less program ($244)
    • Neighborhood Island Inspection Permit ($165)
    • Arriving early before eligible for 5-Day-or-Less ($14.30/each day early + $244)
    • 120-Day program ($1,080)

    *Prices can fluctuate and are subject to change

    Pet owners must pay the fee prior to arrival, and there are no discounts for multiple pets.

    Guide dogs for the blind and certified service dogs do not have to pay this fee. Active-duty U.S. military members may also qualify for fee reimbursement from the U.S. Department of Defense.

    >> Learn More About Hawaii Pet Quarantine

  • What things CAN’T I bring with me to Hawaii?

    Invasive species (animals & plants), and hazardous materials.

    >> Helpful Resources for Moving to the Big Island

  • How much does shipping a container to Hawaii cost?

    Expect to pay anywhere from $4,500 – $9,000 for shipping household goods to Hawaii. Four main factors will influence the price:  Location, Weight, Size, and Contents.

    • 20-Foot Container – Generally fits the contents of a 2-BR condo
    • 40-Foot Container – Generally fits the contents of a 3-BR house

    Here is a helpful post providing details from Royal Hawaiian Movers

    >> Additional Resources for Moving to the Big Island

  • How long does it take to ship a container to Hawaii?

    Generally, 2-weeks.  Depending on the company, the service you select, and a bit of luck – it could arrive in a week.  Or sometimes, it may take 3-4 weeks. A lot of it depends on when your container arrives at the port relative to the vessels scheduled departure date and how busy they are.

    >> Helpful Resources for Moving to the Big Island

  • How much does it cost to ship a car to Hawaii?

    $900 – $2,000, depending on vehicle size, where you are shipping it from, and how fast you need it to arrive by. You can choose between shipping your vehicle in a container, specific auto carriers, or in secure stowage on the vessel.

    Note: You cannot pack your car with things you would like transported to Hawaii.  Most shipping companies require the vehicle to be completely empty of any belongings (except for maybe a child seat).

    >> Helpful Resources for Moving to the Big Island

  • How do I ship my stuff to Hawaii?

    Unlike shipping things on the mainland, there are only a few options to transport your things to Hawaii.

    • Shipping Containers, Crates, Pods, and Barges
    • FedEx, UPS, USPS
    • Air Cargo Aloha Cargo (from limited airports)

    Generally, a shipping company is the most cost-effective way to move most of your household items (big things like furniture, bikes, etc.).

    If you’ve successfully downsized to the point where a container is not necessary, then shipping your items by mail will be the way to go.  You can also supplement your container shipment by shipping important things via mail such that they arrive quickly.

    >> Helpful Resources for Moving to the Big Island

  • What things should I bring when moving to the Big Island?

    The bare minimum. Even if you have decided to get a container and ship your things to the Big Island, you simply don’t need everything you use on the Mainland.  Do yourself a favor and downsize your inventory. A quick Netflix binge of Marie Kondo could probably help with this.

    Relocating household items to Hawaii is a big process and can be expensive, so it will be important to thoroughly scrutinize which items to bring.  

    You will need to estimate how many things you want to move to the Big Island with to help determine what type of shipping method is necessary (freight forwarder, cargo, mail, or a container) in order to get an appropriate quote and timeline.

    If you are trying to simplify, here are the key items to address:

    • Pets | Relocating with Pets
    • Valuables (photos, jewelry, etc.)
    • Clothing items (minimized!)
    • Documents, laptops, cameras, etc.
    • Can’t live without items (ie. bicycle)
    • Your car

    *If you opt to use a shipping container, then you can bring furniture and a lot of things with you – which could either be a blessing or a curse.

    >> Helpful Resources for Moving to the Big Island

  • What is a 'Cash Offer'?

    A cash offer is an all-cash bid, meaning a buyer wants to purchase the property without a mortgage loan or other financing. These offers are often more attractive to sellers, as they mean no buyer financing fall-through risk and, usually, a faster closing time.

    Most financed transactions in Hawaii take a minimum of 30-days and often 45 to 60-days to close. In comparison, a cash transaction could potentially close within a couple of weeks, so long as escrow has time to prepare documents for proper recording of the deed.

    For most buyers, all-cash offers are not a viable option. However, since cash offers will often times be for less than the seller’s asking price – there’s still a chance for a non-cash buyer to woo the seller with an attractive ‘financed offer’.  Purchase offers that include a pre-approval letter and proof of funds, combined with a well-written cover letter can carry a lot of weight with the seller.

  • What is a Termite Inspection Contingency?

    Most Purchase Contracts include the right for a buyer to select a professional termite inspector to complete a termite inspection and review the written report within a specific time period.

    The seller is generally responsible for the cost up to a certain amount, per the terms of the contract. If the termite inspection report reveals live termite infestation, the seller will be responsible for the treatment of the live infestation (not repair of the damage) within a certain time period.

    The buyer’s purchase of the property is contingent on the delivery of the termite inspection report to the buyer within the specified time period stating there is no visible evidence of live termite infestation – or the treatment of the live termite infestation within a certain time period.

    If neither occurs within the time periods specified, the buyer may elect to terminate the contract in writing and within the specified time period, otherwise, the buyer will have waived this contingency.

  • What is 'Seller Financing'?

    When a property has no underlying mortgage, or only a very small balance that could easily be paid off, the owner of the property (seller) could act as ‘the bank’ and extend financing to the buyer, where then the buyer would make monthly mortgage payments to the seller.

    Seller Financing is fairly uncommon (especially during times of low-interest rates) since most sellers prefer to get the proceeds of the sale and avoid the potential risks involved.

  • What is the Seller's Disclosure Statement?

    The mandatory Seller’s Real Property Disclosure Statement (SRPDS) is a written statement that must be completed by the seller, to the best of the seller’s knowledge, and must fully and accurately disclose all material facts relating to the property for sale.

    Material facts’ refers to any fact, condition or defect, past or present, that could measurably affect the value of the property for sale to a reasonable person.

    Sellers should not take their obligation to disclose lightly. Shellers should be as detailed and thorough as possible in their disclosure. A real estate purchase is a huge financial commitment for any buyer, and they tend to look favorably to a seller’s attention to detail in completing the disclosure. More importantly, it’s the best way to minimize risk for potential issues down the road, or even a lawsuit.

    Additionally, the seller must amend the SRPDS with any later discovered information during the escrow time period.

    If the buyer is not satisfied with the SRPDS, or the amended SRPDS, the buyer may terminate the contract in writing and within the specified time period of receipt, otherwise the buyer will have waived this contingency.

    >> Helpful Big Island Real Estate Resources for Sellers

    >> Helpful Big Island Real Estate Resources for Buyers

  • Architects in Kona

    Hawaii Design Group
    (808) 326-7670

    Geesey Architects LLC
    (808) 756-5244

    H & S International
    (808) 329-3266

    Keith A Winnie Architects Inc
    (808) 756-7300

    Ali’i Architects Inc
    (808) 329-8777

    Bryan Lindsey, Architect
    (808) 333-6853

    Weigang/Marvick & Associates
    (808) 329-3755

    Paul Bleck Ltd
    (808) 326-1598

    Terrance J. Cisco, Architect
    (808) 937-8953

  • Land Surveyors in Kona
  • Home Builders in Kona

    Coming Soon

  • Waikoloa Schools

    A Small World Preschool
    (808) 885-4388 | Waimea

    Cole Academy (Preschool)
    (808) 731-3220 | Kohala Coast

    Waikoloa Elementary School
    (808) 883-6808 | Waikoloa (Public)

    Kanu O Ka Aina New Center Public Charter School
    (808) 887-1117 | Waimea
    Grades K-12 (Charter School)

    Waikoloa Middle School
    (808) 883-6808 | Waikoloa
    (Public)

    Parker School
    (808) 885-7933 | Waimea
    Grades K-12 (Private)

    Hawaii Preparatory Academy (HPA)
    (808) 885-7321 | Waimea
    Grades K-12 (Private)

    Waimea Country School
    (808) 885-0067 | Waimea
    Grades PreK-12 (Private)

    Waimea Middle Public Conversion CS
    (808) 887-6090 | Waimea
    Grades 6-8 (Charter School)

  • Waimea Schools

    A Small World Preschool
    (808) 885-4388 | Waimea

    Waimea Elementary
    (808) 887-7636 | Waimea
    (Public)

    Kanu O Ka Aina New Center Public Charter School
    (808) 887-1117 | Waimea
    Grades K-12 (Charter School)

    Waikoloa Middle School
    (808) 883-6808 | Waikoloa
    (Public)

    Parker School
    (808) 885-7933 | Waimea
    Grades K-12 (Private)

    Hawaii Preparatory Academy (HPA)
    (808) 885-7321 | Waimea
    Grades K-12 (Private)

    Waimea Country School
    (808) 885-0067 | Waimea
    Grades PreK-12 (Private)

    Waimea Middle Public Conversion CS
    (808) 887-6090 | Waimea
    Grades 6-8 (Charter School)

  • Insurance Companies in Kona
  • West Hawaii Private Schools

    Parker School
    (808) 885-7933 | Waimea
    Grades K-12

    Hawaii Preparatory Academy (HPA)
    (808) 885-7321 | Waimea
    Grades K-12

    Makua Lani Christian Academy
    (808) 329-3093 | Kailua-Kona
    Grades 8-12

    Kona Adventist Christian School
    (808) 323-2788 | Captain Cook
    Grades K-8

    Waimea Country School
    (808) 885-0067 | Waimea
    Grades PreK-12

  • West Hawaii Charter Schools

    Innovations Public Charter School
    (808) 331-3130 | Kailua-Kona
    Grades 1-8

    Hawaii Technology Academy
    (808) 676-5444 | Kailua-Kona
    Grades K-12

    West Hawaii Explorations Academy
    (808) 327-4751 | Kailua-Kona
    Grades 6-12

    Kona Pacific Public Charter School
    (808) 322-4900 | Kealakekua
    Grades K-8

    Kuleana Education
    (808) 989-0986 | Holualoa
    Grades K-8

    Waimea Middle Public Conversion CS
    (808) 887-6090 | Waimea
    Grades 6-8

    Kanu O Ka Aina New Center Public Charter School
    (808) 887-1117 | Waimea
    Grades K-12 (Charter School)

  • West Hawaii High Schools

    Kealakehe High School
    (808) 313-3600 | Kailua-Kona

    Konawaena High School
    (808) 323-4500 | Kealakekua

  • West Hawaii Middle Schools

    Kealakehe Intermediate School
    (808) 327-4314 | Kailua-Kona

    Konawaena Middle School
    (808) 323-4566 | Kealakekua

    Waikoloa Middle School
    (808) 883-6808 | Waikoloa

  • West Hawaii Elementary Schools

    Kahakai Elementary School
    (808) 313-6200 | Kailua-Kona

    Holualoa Elementary School
    (808) 313-3800 | Holualoa

    Konawaena Elementary School
    (808) 323-4555 | Kealakekua

    Kealakehe Elementary School
    (808) 327-4308 | Kailua-Kona

    Honaunau Elementary School
    (808) 328-2727 | Captain Cook

    Ho’okena Elementary
    (808) 328-2710 | Captain Cook

    Waikoloa Elementary School
    (808) 883-6808 | Waikoloa

    Waimea Elementary
    (808) 887-7636 | Waimea

  • West Hawaii Preschools

    Creative Day Preschool
    (808) 329-1323 | Kailua-Kona

    Alaka’i Academy
    (808) 331-8000 | Kailua-Kona

    Hawaii Montessori Schools
    (808) 329-0700 | Kailua-Kona

    Kamehameha Preschool
    (808) 322-5400 | Kailua-Kona

    Punana Leo o Kona
    (808) 323-8052 | Captain Cook

    University of the Nations Preschool
    (808) 326-4411 | Kailua-Kona

    A Small World Preschool
    (808) 885-4388 | Waimea

    Cole Academy
    (808) 731-3220 | Kohala Coast

  • Real Estate Attorneys in Kona

    Jung & Vassar
    (808) 326-4852

    Carlsmith Ball LLP
    (808) 329-6464

    Kona Law: Fagundes III Joseph
    (808) 326-9831

    Stephen D. Whittaker, Aal, LLC
    (808) 960-4536′

    Jewell & Krueger LLC
    (808) 326-7654

  • Real Estate Appraisers in Kona

    Big Island Inspections Services
    (808) 324-0722

    Franz Appraisals
    (808) 326-1901

    GP & Associates Inc.
    (808) 329-5050

    Hawaii Appraisal Group
    (808) 217-2501

    Kona Appraisal Service
    (808) 557-1013

    Hawaii Appraisal Group
    (808) 217-2501

  • Interior Designers in Kona

    Perino Designs
    (808) 325-5919

    Waters Designs
    (808) 987-7166

    Carol Ann LLC
    (808) 327-0088

    Jeanne Marie Imports
    (808) 329-4818

    Henderson Design Group
    (808) 315-8782

    Willman Interiors
    (808) 887-1719

    Fine Design Interiors, Inc.
    (808) 885-8992

    Trans-Pacific Design
    (808) 885-5587

    Peggy Chesnut & Co Inc
    (808) 322-7878

  • Title Companies in Kona
  • Mortgage Lenders in Kona

    Coming Soon

  • What’s the difference between a ‘Foreclosure’ and ‘Short Sale’?

    A Foreclosure is when the lien holder (generally the bank) files legal documents to take possession of the property because the homeowner defaulted on their payment obligation. The process takes time and is costly for the lien holder, and therefore the bank’s last and least favorable remedy.

    A Short Sale involves a lienholder willing to approve a sale even though the proceeds of the sale will not be enough to pay off the balance owed to the lien holder.

    Banks will often prefer a Short Sale, where the bank (or lienholder) will accept less than the balance owed in order to avoid having to foreclose on the property.

    The property owner will need to qualify for the Short Sale approval, by showing evidence of true financial hardship that makes it difficult to continue with the payment obligation for the property (job loss, income loss, etc.), and does not have the funds to make up the shortfall for the amount owed. 

    The lienholder typically orders an appraisal to determine the true market value and carefully scrutinizes the property owner’s financial hardship before approving the short sale. 

    >> Big Island Real Estate Resources for Home Sellers

    >> Big Island Real Estate Resources for Home Buyers

  • What is Hawaii's Escrow Process?

    The escrow process begins upon the Purchase Contract acceptance date and ends upon the date when the buyer takes ownership of the property (recordation date). This time period often ranging between 30 to 60 days depending on whether it’s a cash transaction or if the transaction is subject to financing.

    Escrow is ‘opened’ upon acceptance of the purchase offer (signed by buyer and seller) and the fully executed contract together with the buyer’s Earnest Money Deposit gets deposited with the escrow company.

    An escrow company is a confidential and impartial third-party that holds money and/or documents in safekeeping until such time that all conditions and terms have been satisfied. They represent neither the buyer nor seller.

    Numerous ‘contingencies’ exist within a purchase contract (conditions that must be satisfied, or events that must occur before a party is obligated to proceed). A few important contingencies include the home inspection contingency (J-1), financing contingency (H-3), title review contingency (G-2), review of Seller’s Disclosure (I-1), survey review contingency (K-2, K-3), termite inspection contingency (L-2), association and or condominium document review contingency (M-1).

    During escrow, an inspection may uncover unexpected items. The buyer and seller can negotiate repairs or credits before the inspection contingency (J-1) time period expires. The buyer may terminate the contract and receive a refund of his deposit, as long as the buyer cancels prior to the inspection contingency (J-1) time period expiration, per the cancellation provisions in the contract.

    Note: Sellers are not automatically obligated to repair defects unless otherwise agreed to in the purchase contract.

    Upon completion of all inspections, the buyer’s loan has been approved, all documents and reports have been reviewed and approved and all other contingencies have been removed, escrow will have the conveyance documents (deed) prepared.

    Both buyer and seller will sign the deed and other escrow closing documents, and the buyer may sign the mortgage loan documents as well. Rarely do buyers and sellers sit in the same room together for signing. Normally, the escrow officer will schedule separate appointments for the buyer and seller separately. Signing can be done out of state, as long as the original signed and notarized documents are returned to escrow for proper recordation.

    All signed and notarized conveyance documents and loan documents together with all funds (cash and loan) need to be received by escrow no later than 2-business days prior to recordation. Conveyance documents will be stamped and recorded at the Bureau of Conveyances in Honolulu on the morning of the closing date (recording date). Escrow will pay off any existing loans on the property, balance the file, pay any remaining bills, disburse funds and documents, and close escrow.

    Closing escrow for most transactions means the buyer receives ownership rights along with the keys to the property and the seller receives the proceeds of the sale. 

    >> Helpful Big Island Real Estate Resources for Home Buyers

    >> Helpful Big Island Real Estate Resources for Home Sellers

  • What are the different ways to hold title to property?

    Joint Tenancy – where two, or more persons have the same interest, commences the same time, by the same conveyance and held by the same possession. Allows the right of survivorship where the surviving joint tenant assumes the interest of the deceased tenant.

    Tenancy in Common – where two, or more persons have undivided interest, equal or unequal. Each tenant is entitled to their proportionate share of undivided possession of the property and is subject to the other tenants rights of possession. The tenants are able to sell their interest without the consent of the other tenants. No rights of survivorship.

    Tenancy in Severalty – only one person has total interest in the property, severed from all others. Generally used by corporations. Upon the death of the owner, property goes to probate and passes to its heirs or devisee. Also known as Several Tenancy or Sole Tenancy.

    Tenants by the Entirety – available only to a husband and wife where each has an equal, undivided interest. Neither spouse can convey or partition their interest without the others consent. Only severed by divorce, joint conveyance, or mutual agreement. Upon a death, the surviving spouse succeeds to the entire property without the need for probate.

  • What is Title Insurance?

    Title insurance insures a property owner against loss resulting from a defect in title. A title insurance company will perform a search of public records and will assume the risk on certain items, such as:

    • Someone else owns an interest in your title.
    • Someone else has rights affecting your title arising out of leases, contracts, or options.
    • Another person claims to have rights affecting your title arising out of forgery.
    • Someone else has an easement on the land.
    • Another person has a recorded right to limit your use of the land.
    • Someone else has a recorded lien or encumbrance on your title.
    • You are forced to correct or remove an existing violation of any covenant, condition, or restriction affecting the land.
    • Because of an existing violation of a subdivision law or regulation affecting the land: you are unable to obtain a building permit; you are forced to correct or remove the violation; someone else has a legal right to, and does, refuse to perform a contract to purchase the land, lease it or make a mortgage loan on it.
    • You are forced to remove or remedy Your existing structures, or any part of them because any portion was built without obtaining a building permit.
    • You are forced to remove or remedy Your existing structures, or any part of them because they violate an existing zoning law or zoning regulation.
    • Your existing improvements made after the policy date, including lawns, shrubbery, or trees, are damaged because of the future exercise of a right to use the surface of the land for the extraction development of minerals, water, or any other substance.
    • Someone else tried to enforce a discriminatory covenant, condition, or restriction which is based upon race, color, religion, sex, handicap, familial status, or national origin.
    • A document upon which your title is based is invalid because it was not properly signed, sealed, acknowledged, delivered, or recorded.
    • The residence with the address shown is not located on the land.

  • Who pays escrow & title fees?

    Escrow fees are split 50/50 between the seller and buyer.

    Title fees are split 60% to the seller and 40% to the buyer.

  • What is escrow?

    Escrow is a confidential and impartial third-party who holds money and/or documents in safekeeping until such time that all conditions and terms have been satisfied. They represent neither the buyer nor seller.

    Escrow’s duties include: Receiving and holding deposits, ordering title searches and conveyance documents, clearing title, making pay-offs to existing lenders, providing a settlement statement, handling closings with buyers and sellers, recording documents, and disbursing all funds at close of escrow.

  • What are the down payment requirements?

    The amount of down payment required depends on how you intend to use the property, (eg. primary residence, 2nd home, investment.)

    Typical Down Payment Requirements:

    Primary Residence:

    • 0% VA
    • 3 % FHA
    • 3% – 3.5% HomePath
    • 20% Conventional
    • 25% Portfolio

    2nd Home

    • 3% – 10% HomePath
    • 20% Conventional
    • 30% Portfolio

    Investment

    • 3% – 10% HomePath
    • 30% – 35% Portfolio

    *Additional factors may affect down payment requirements. Your lender can help guide you through the various options.

  • Can I use a mainland lender?

    Yes, you can use a mainland lender

    However, it is advantageous to stick with a Hawaii-based lender familiar with the intricacies of Hawaii Real Estate to help fund your loan and get to closing on time as specified within the contract.

    Closing late can cost you money every day the transaction is extended should the seller charge you daily interest.

    Additionally, many mainland lenders will not approve loans for certain types of property in Hawaii, such as condos that allow for short-term vacation rentals.

  • Can I get financing on a leasehold property?

    Generally, yes. However, it may be required that an additional 5-years be remaining on the lease beyond the term of the loan. So, for a 30-year loan, there would need to be at least 35-years left on the lease.

  • Should I get pre-qualified or pre-approved?

    When you submit a purchase contract to the seller along with a pre-approval letter, your offer will hold more weight than doing so compared to being “pre-qualified”.

    Lenders do not verify employment information or credit history for pre-qualification.

    For pre-approval, you will be required to submit a loan application with required documentation (employment, financial, credit report) to be reviewed by the underwriter.

  • Where is NextHome Paradise Realty located?

    NextHome Paradise Realty
    75-170 Hualalai Road, Suite #D118
    Kailua-Kona, Hawaii 96740
    Get Directions |

    Phone: 808-345-6214 | Contact Penn Henderson

  • What is a CMA?

    A “Comparative Market Analysis” is an analysis of recently closed sales on the Multiple Listing Service (MLS) that are similar to the subject property. The report includes the bathrooms, bedrooms, closed sales price, days on market, interior square-feet, list price, and median sales price.

    Buyers use a CMA to determine a fair price to offer on a property.

    Sellers use it to determine the market value of their property to arrive at an appropriate list price.

    Note: A CMA is not the same as an “appraisal”, which is a thorough analysis & report generally used by Mortgage and appraisal companies for refinancing and appraisal purposes.

  • Who pays the commission to the real estate agents?

    The seller pays a percentage of the sales price to the listing agent’s broker office, who then splits the amount 50/50 with the buyer agent’s broker office.

    Top-7 Reasons Why to Choose Penn Henderson as Your Kona REALTOR®

  • Who pays for survey & termite inspection?

    The seller is responsible (typically) for both the survey and termite inspection, and both are generally paid through escrow.

  • What is involved with a home inspection?

    Major structural components, plumbing, heating, and electrical systems are inspected for visual signs of nonfunctional performance, excessive wear, and general condition.

    Items inspected: Air conditioning, appliances, breaker panel, cabinets, ceilings, disposal, doors, exterior siding, floors, foundation, framing, heating system, insulation, outlets, roof, showers, sinks, smoke detectors, stairs, switches, toilets, tubs, walls, water heater, and windows.

  • What happens after my offer is accepted?

    Once a seller has accepted your purchase contract, escrow opens. The following items (paragraphs within the contract) are part of a typical escrow, with financing, as of the acceptance date:

    B1 Earnest money deposit within 3 business days
    H-4(a) Submit loan application within 2 business days
    H-4(b) Pre-qualification letter due within 3 business days
    H-1(a) Cash verification by buyer due within 3 business days
    L2 Termite selected within 5 days; delivered 10-days prior to closing
    E3 Inventory delivered within 5-days; 5-day review
    I1 Seller disclosure delivered within 5-days; 5-day review
    N1 Rental docs delivered within 5-days; 5-day review
    G1 Preliminary title report delivered within 7-days; 5-day review
    G3  Title & tenancy selected within 10 days
    J1 Home inspection approval within 10 days
    D2 Additional deposit by buyer due upon satisfaction of J1
    M1 AOAO/HOA docs delivered within 10-days; 5-day review
    H-4(c) Conditional loan approval due within 30 days
    H-4(d) Loan conditions satisfied within 37 days
    K2 Survey delivered within 30 days
    J8 Removal of seller personal property 5 days prior to closing
    J9 Interior cleaning 4 days prior to closing
    J10 Pet treatment 4 days prior to closing
    J3 Final walk-through inspection 3 days prior to closing
    D2 Balance of cash by buyer due 2 days prior to closing
    F2 Escrow closes within 45 days

  • How do I sign an offer if I don’t have a FAX?

    Faxing is quite uncommon nowadays. Most communication transpires through email, along with documents utilizing digital signatures via DocuSign® (http://docusign.com) where the paperwork is pre-filled with tabs so you only click with the mouse to initial, sign, and date.

  • What is an IRC 1031 Deferred Tax Exchange?

    Through a 1031 Exchange, the capital gains tax on the sale of an investment property is deferred until a future date as long as the replacement property, of like kind, is of equal or greater value.

    >> View IRS Fact Sheet on IRC 1031 Tax Exchange

  • How many days are required to claim Hawaii residency?

    200 days in Hawaii County (Big Island) to be eligible for residency. If you had your legal domicile in Hawaii for the whole tax year, or if you lived in Hawaii for at least 200 days (no matter where you had your domicile in this period), you are a resident of Hawaii. There are some exceptions, however: military employees and students are not considered residents if their domicile is outside Hawaii and if they resided in Hawaii for more than 200 days solely for educational or work purposes.

    >> Detailed Hawaii Residency Requirements

  • Property Values: Assessed vs Appraised vs Market

    Tax Assessed Value
    The tax assessor establishes an assessed value for the purpose of collecting the appropriate property taxes. Big Island assessed property values are established once every year on October 1 based on ‘comparable sales’ (similar size & location) that recorded prior to July 1st of a given year while also considering any market movements up until October 1.

    The assessed value on October 1 determines taxes for the following fiscal year, which begins the following year on July 1. That means tax assessed values lag behind the real market value by at least one year. Note: The tax assessor rarely inspects the inside/condition of the property, which means the tax assessor may lack information to consider such as expensive upgrades versus original or even tear down condition. Additionally, the tax assessor does not adjust for gorgeous ocean views, beautiful landscaping, or property frontage.

    For example, a property in Kona with great ocean views, spectacular landscaping, and stunning curb appeal might have the same tax assessed value as a ‘similar property on a nearby busy street with a dilapidated interior and no view of the ocean. While both properties might have the same tax assessed value, the true market value for both properties could differ substantially. Hence, one of the reasons why lenders don’t use assessed value in their loan calculations since it’s far from an ‘accurate’ or reliable indicator of the real market value.

    Appraised Value
    The appraised value (appraisal) is a professional value opinion completed for a fee by a licensed appraiser, often hired by mortgage lenders.  A licensed appraiser determines the appraised value by researching and comparing most recent (during the last few months) comparable sales (similar size & location) and uses certain predetermined detailed criteria to make adjustments for condition, upgrades, functionality, layout, etc. While appraisers have to be very detailed and follow specific formulas, 10 different appraisers still might come up with 10 different value opinions!   Keep in mind, that appraisals are subject to the person performing the appraisal (appraiser), and even with a high degree of detailed analysis and specific formulas used for calculations, the end result can often be different from one appraisal to the next.

    Real Market Value
    The real market value is the price that a willing and able buyer pays for a property at that time. This could be affected by several market dynamics. For example, if two or more buyers are interested in the same property at the same time, it is possible that the property could sell at a higher price than otherwise.

  • Fee Simple vs Leasehold

    Fee Simple (also known as Freehold) is the most complete form of ownership and most common throughout the United States and Hawaii. Fee Simple ownership includes the land and the buildings thereon. A Fee Simple condominium includes the actual condominium unit and the proportionate interest in the land underneath plus the proportionate interest in the common and limited common elements of the project. Common elements could include the lobby, elevator, walkways, swimming pool, etc. Fee Simple owners are responsible for their property taxes and sometimes association dues and or maintenance fees in the case of a condominium. 

    Leasehold ownership only includes the buildings, but not ownership of the land! A Leasehold condominium includes the actual condominium unit and the proportionate interest in the common and limited common elements of the project but not the ownership of the land. Someone else (the fee owner) owns the land and the Leasehold owner only leases (rents) the land at terms defined in the lease document. Prices for leasehold properties may appear very affordable, but remember, the price reflects a value without ownership in the land.

    Potential buyers of leasehold property should proceed with caution with a full understanding of leasehold terms: Leasehold owners pay a monthly lease rent to the landowner. Per the terms of the lease, the lease rent could increase over time and is payable above and beyond the property taxes and any possible association dues or maintenance fees. Per the terms of the Lease, there may be restrictions on property usage, alterations, and maintenance.

    Financing for Leasehold properties could be more difficult depending on how short the remaining lease term is. Generally, lenders require the lease to be at least 5 years longer than the loan term. So, a 15-year loan would tend to require at least 20 years remaining on the lease. The terms and details of the Lease can vary for different properties and the risks of ‘Step-Up Lease Rent’, ‘Lease Renegotiation’, and ‘Lease Expiration’ need to be carefully considered.

  • Hawaii Rental Income Taxes

    For any rental, regardless of how many days the rental period is, an owner is required to pay 4.712% tax on rental income, which is called GET (General Excise Tax) – similar to a consumption tax.

    Additionally, for rentals less than 180 days, an owner will also have to pay TAT (transient accommodation tax), which is 10.25% in addition to the 4.712% GET.

    Typically for rentals less than 180 days, an owner will pass on the GET and TAT to the tenant (just as they would pay these taxes when staying in a hotel), so net, there are no costs to the owner (charge the tenant and then pay the State’s tax office).

    >> State of Hawaii Rental Income Tax Brochure

  • How much are property taxes on the Big Island?

    Hawaii real property taxes are based on the fiscal year, running from July 1 – June 30 of the following year and are paid in 2 even installments: 1) Installment 1 is due August 20 (payment for July 1 – Dec 31 taxes) and 2) installment 2 is due February 20 (payment for January 1 – June 30 taxes of the following year).

    Assessed Value
    Property taxes are based on assessed value, which is a value the tax office’s appraisal team determines a property is worth, which is different from market value (what a Buyer is willing to pay).

    Existing Properties
    An appraiser at the tax office will typically review and analyze 5 comparable properties that have sold prior to July 1 of a given year (without actually visiting the property) and ideally not too many months prior to July 1 to determine what the value may be of a given property. The appraised value is the value on October 1 and since the appraiser only looks at sold data prior to July 1, the appraiser will also assess how much the market may have moved up or down in the 3-month period from July 1 to October 1 and use that as well in determining the property’s value on October 1. The assessed value on October 1 is used to calculate property taxes due the following fiscal year. Example: October 1, 2017, assessed value is the value used to determine property taxes for the fiscal year 2018, which runs July 1, 2018 – June 30, 2019. An owner can contest and appeal the assessed value in case an owner believes the assessed value is too high. *If you intend to appeal an assessment, make sure to have actual recent sold data to support your claim. Appeals can be filed online using this PDF form: RP Form 19-91 (Appeal Application)

    New Construction
    For new construction, not completed yet, the appraiser will typically look at the costs of the building permits the developer takes out at the County of Hawaii’s Department of Planning & Permitting, which is normally a fraction of actual market value and a major reason why new construction oftentimes have 1-year or longer with property taxes that are substantially below where property taxes should be, based on market value. Example: If a new home is completed in May 2019 the property taxes for the fiscal year 2019 (July 1, 2019 – June 30, 2020) will be based on assessed value on October 1, 2018, which is a date prior to the house being completed, and there is a good chance property taxes will be low, relative to market value, since the assessed value is determined in great part based on the costs of the builder’s building permits. Come October 1, 2019, there will be sales data (at the least May 2019 original sales prices) and it is likely the assessed value for fiscal 2020 (July 1, 2020 – June 30, 2021) will be much closer to the home’s market value.

    Hawaii County (Big Island) Property Tax Rates

    Property Class Taxable per/$1000
    Affordable Renting Housing $6.15
    Agricultural/Native Forests $9.35
    Apartment $11.70
    Commercial $10.70
    Conservation $11.55
    Homeowner $6.15
    Hotel/Resort $11.55
    Industrial $10.70
    Residential (less than $2M) $11.10
    Residential (more than $2M) $13.60
    (Fiscal Year Beginning July 1, 2020 to June 30, 2021)

    Review Property Assessed Values & Property Taxes
    Click here to review the assessed value of any property in Hawaii County. Select “Yes, I accept the above statement” and then click “Search by Site Address” and you can enter Street Number, Street Name, and Unit Information.

  • Can I bring my Pet Cat or Dog to Hawaii?

    Yes. However, there are strict requirements you must follow before traveling to Hawaii with animals, in addition to post-arrival quarantine.

    Hawaii is rabies-free and the quarantine law is designed to protect residents and pets from potentially serious health problems associated with the introduction and spread of rabies.

    All dogs and cats, regardless of age (puppies and kittens included) or purpose, must comply with Hawaii’s dog and cat import requirements.

    Hawaii Administration Rules govern the importation of dogs, cats, and other carnivores into Hawaii. This law states that dogs and cats meeting specific pre-and post-arrival requirements may qualify for 5 Day Or Less quarantine program, which has a provision for direct release at Daniel K. Inouye International Airport (Honolulu) after inspection.

    Furthermore, the law requires dogs and cats that do not meet all of the specific 5 Day Or Less program requirements to be quarantined for up to 120 days upon arrival in Hawaii. 

    State Quarantine Details

    State Quarantine FAQ

  • What is Hawaii conveyance tax?

    Conveyance tax is imposed on all transfers of interest in real estate and is paid by the seller.

    The rates range from .10-$1.00 per $100 of value for property that is eligible for a real property tax homeowner’s exemption and .15-$1.25 per $100 of value for property that is not eligible for the exemption.

    Conveyance Tax Details

  • What is HARPTA and FIRPTA?

    HARPTA – non-Hawaii residents are subject to HARPTA (Hawaii Real Property Tax Act) which requires 7.25% of the sales price (not the gains) to be withheld for the payment of Hawaiian State Tax on the gain realized. If there will be a loss, escrow can submit form N-288B to waive this collection.

    HARPTA Details

    FIRPTA – non-US citizens are subject to FIRPTA (Foreign Investment in Real Property Tax Act) which requires 15% of the sales price (not gains) to be withheld for the payment of US Federal Taxes.

    If the buyer intends to occupy the property as their residence, the required withholding is reduced as follows:

    • 10% of the sales price for properties sold between $300,001 to $1,000,000.
    • 0% of the sales price for properties sold up to $300,000.

    Sellers may recoup some of the withholdings beyond the applicable capital gains tax by filing the appropriate form.

    FIRPTA Video Explanation (IRS)

  • What is TAT?

    If you rent your property less than 180 consecutive days (short-term) you would be responsible for paying TAT (Transient Accommodations Tax) of 10.25% on the gross rental income, in addition to paying GET (General Excise Tax).

    These taxes can be passed on to the renter.

    Transient Accommodations Tax Details

  • What is the General Excise Tax (GET)?

    Hawaii does not have sales tax, it has General Excise Tax which is assessed on all business income. The current GET rate for Big Island is 4.7120%.

    General Excise Tax Details

  • Can I rent my property through Airbnb on the Big Island?

    Maybe. You will need to obtain a short-term rental permit issued through the County of Hawaii.

    In addition, if you live off-island you will need to have an on-island agent to be the person of contact and responsible for the collection of taxes (GET, TAT) on the rental income.

    More Details and Permit Application

  • What are rental property management fees in Hawaii?

    Short-term management fees typically range from 22%-50% of the gross rents received, depending on services included and whether the front desk is on-site or off-site.

    Long-term management fees average 10% of the gross rents received.

  • What do property management companies do?

    Responsibilities of a rental property management company vary, but typical tasks include advertising, booking, processing payments, guest services, house cleaning and the payment of GET and TAT. Additional tasks include the payment of AOAO/HOA dues, real property taxes and electric bills. If the guest has any issues with the property, they would contact the rental management company for assistance.

  • What is considered a long-term rental on the Big Island?

    A rental term of at least 180 consecutive days.

  • Septic compared to cesspool?

    Septic – An on-site disposal and treatment system in the ground with a septic tank and a soil absorption area. Organic solid material (scum) floats to the surface and is converted to a liquid by the bacteria. Inorganic material (sludge) and the byproducts of the bacterial digestions sink to the bottom of the tank. Only clear water is to overflow into the absorption area. You should avoid allowing the following to enter the septic system as it will harm the bacteria: acids, bleaches, caustic drain openers, cleaning compounds, detergents, disinfectants, polishes, toilet cleaners. Accumulated sludge and scum should be removed regularly.

    Cesspool – Known as leaching pools, are encased within either cement block, brick, or concrete. Wastewater enters the cesspool and drains through the perforated walls into the surrounding soil, leaving the solids in the pool. Requires more maintenance than septic.

  • What is "catchment"?

    A method of collecting rain from the roof and transporting it to a storage container for domestic and agricultural use. It is recommended that at least three filters (sediment, carbon, calcite) are used to properly clean and treat the water. For potable water, a UV system should be installed after the third filter.

    More Info: http://ctahr.hawaii.edu/

  • Can I make an offer without viewing the property?

    Yes. You will need to submit a ‘Site Unseen Addendum’ with the Purchase Contract.

    It is recommended, however, that you view the property prior to submitting an offer whenever feasible.

  • Penn Henderson

    Kona Realtor® (RS-83962)

    Big Island Kona Realtor - Penn Henderson - NextHome Paradise Realty Hawaii

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