Understanding the Selling Process
Selling a home in paradise like Hawaii isn’t as simple as putting a sign in the yard and waiting for buyers to come in. First, getting connected with a truly experienced listing agent from the start can make all the difference. A good real estate agent can provide priceless guidance. They help you put together a smart strategy to sell your home.
Traditional realtors take an average of 5.04% commission. By working with Clever Real Estate, you’ll pay an average of 1.5% in listing fees—saving thousands! In reality, the average agent listing fees in Hawaii are closer to 2.57% and buyer’s agents are at around 2.47%. Having these numbers in mind when planning your budget for agent expenses can help you spend wisely and save money.
Understanding local market conditions in Hawaii will be key to determining the best price point for your property. The real estate market is extremely nuanced and will largely depend on which island and/or neighborhood you are looking at. By knowing what’s popular, what’s trending, and what your home is worth, you can prepare your home to appeal to buyers.
Setting your home’s price appropriately from the outset can be the difference between selling fast and being on the market for an extended time. For example, looking into similar sales in your market gives you a baseline that can help inform your pricing.
Documentation and legal requirements are another critical piece of the selling process in Hawaii. Prepare for these owner’s policy costs. It ranges from $900 to $1,500 based on the sale price. Additionally, the closing process—the transfer of property ownership, which can take anywhere from three days to a week—includes a number of legal and tax-related steps.
Be on the lookout for federal capital gains taxes, which can go as high as 20%. Further, consider the state’s conveyance tax on property transfers. If you’re a foreign buyer, in addition to understanding the selling process, you need to be aware of the 15% FIRPTA withholding. These considerations further underscore the importance of hiring a knowledgeable, experienced real estate agent.
Having an agent who understands all the intricacies of the Hawaiian market can make all the difference. Effective negotiation ensures that you will maximize sale price and sale terms. An experienced agent will guide you through offers and counteroffers to ensure you receive every possible dollar from your sale.
They can counsel you on when to hold firm on your list price. Further, they can equip you to understand when you should be prepared to haggle to reach compromise and expedite a transaction. With the right negotiation, you can get the most profit from your home without disrupting the overall selling experience.
By interviewing several agents and judging their level of experience and ability to communicate, you can choose someone who best fits with your objectives.
Steps to Sell a House in Hawaii
Take these important steps before listing your home. Begin by addressing basic repairs, such as replacing leaky faucets or repairing holes in walls. A little bit of bright paint goes a long way, as well!
It’s worth hiring a professional home stager to make your home look its best. Not everyone has a great eye for staging, but professional staging can help set the scene, making your place more desirable. Homes which are properly staged will not only photograph better, but show better to potential buyers, making them more marketable and likely to sell quickly.
One of the most important steps to coming to the right sale price is conducting a comparative market analysis (CMA). This means looking into homes that are comparable to yours in size, location, and condition that have sold recently. You want to examine active listings and expired ones as well.
This data allows you to determine the current market demand and price your home to sell quickly but competitively. A competitive listing price will draw in more interested buyers and result in faster offers.
In Hawaii, listing platforms like Zillow, Redfin, or Realtor.com are key to reaching interested buyers. The Multiple Listing Service (MLS) is an incredible tool as well, as it provides exposure to more than 100 different real estate websites.
If you want to go the FSBO route, look into flat fee MLS services. Real estate websites such as Zillow and Craigslist offer free listing options that FSBO sellers can take advantage of. An old-fashioned “For Sale” yard sign does the trick!
In fact, 12% of sellers say that it is useful for FSBO sales. A professional photographer can have a huge impact on how quickly your home sells. Homes photographed by pros sell 32% faster.
Professional photos—especially aerial shots of multacountry estates—will help your listing shine and attract more attention from buyers using online home search tools. Keep in mind that these photos are usually your home’s first impression.
When it comes time to show your home, just put your best foot forward and create a welcoming environment. Make the house as clean and clutter-free as possible. Open blinds to let in natural light, and make sure the temperature is comfortable.
Considering offering some refreshments to give potential buyers a nice and welcoming experience. Each showing is a chance to make your home stand out in buyers’ memories. Pay attention to the minutia, it makes all the difference.
Lastly, the closing process in Hawaii consists of multiple steps. As the seller, you’ll typically sign your closing paperwork first. Note that the average closing timeline is around 45 days.
Even small problems with disclosures or title can extend this period by several days or a week. Have all required paperwork ready to go in advance. Keep a constant line of communication with your real estate agent so you can close without a hitch.
Pros and Cons of Selling Without a Realtor
Selling a home in Hawaii without using a realtor, typically referred to as For Sale By Owner (FSBO) sales, can save you a lot of money. One of the biggest draws by far is the savings on agent commissions. In Hawaii, sellers usually save at least 2.57% of the sale price on their home.
That can mean an outstanding $21,644 increase to your bottom line if you’re able to avoid paying a listing agent. That bump into your bottom line can be pretty attractive, particularly in a high-dollar market like Hawaii. When you sell on your own, you get to take home a lot more money from the sale. This can provide most sellers with a tremendous competitive edge.
Controlling every aspect of the sale is another advantage. Managing the sale by themselves also provides a degree of control and flexibility that many find appealing. You dictate the terms for showings and you control the process in negotiations and price setting.
This freedom gives you the flexibility to tailor the process to fit your individual needs and schedule. For do-it-yourselfers, this one is obvious: selling FSBO is ideal for independent-minded sellers. This increased potential to directly interact with potential buyers can not only help save on listing costs, but foster a more personal and transparent transaction.
However, there are significant dangers of going FSBO. Homeowners selling without a realtor typically get lower offers. In Hawaii, the average FSBO home sells for $380,000 compared to homes sold with the help of a realtor which go for an average of $435,000.
This disparity underscores the negotiation edge that seasoned agents can deliver. In addition, sellers may need to offer a 2-3% seller concession, further eating into any commission savings. Then there’s the legal and paperwork challenges to contend with.
In fact, a staggering 36% of FSBO sellers have made legal errors when they didn’t have the advice of a realtor, highlighting the risks involved. Inexperienced sellers may feel overwhelmed by the real estate process. From showing the property to negotiating a deal to addressing buyer questions, it’s an enormous time commitment.
FSBO sellers frequently underappreciate the complexity that goes into this, making mistakes that can be financially devastating. Additionally, sellers often find themselves unprepared for unexpected expenses. These costs can be things like professional photography, home staging and legal fees.
Unless you’re a professional negotiator, there’s a good chance buyers’ agents know how to hammer out a better deal for their clients.
Tips for Enhancing Property Appeal
Making your home more appealing to buyers, especially in Hawaii, can be one of the most important factors in enticing buyers to your home. One of the easiest ways to increase your home’s value is by tackling low-cost, high-impact repairs and upgrades. A new coat of neutral paint goes a long way to making a home feel warm and inviting. Most importantly, it helps potential buyers envision themselves in the space.
Maintaining a clean, clutter-free home is important. Instead, think about donating your unwanted household goods to local charities, such as Goodwill or Salvation Army. Replace furniture or appliances that don’t work. Think about temporarily renting a storage unit to hold your personal items and keep them out of sight during showings.
Don’t underestimate this important element. The curb appeal of your house is the initial impression that buyers will have. It establishes the mood for their visit overall. Make sure your yard is clean and the grass is mowed and/or plants are pruned. Little things count too—replacing the mailbox, putting out a small planter with fresh flowers, that sort of thing.
Hawaii’s natural lighting is an indescribable asset. Embrace it by opening up curtains and cleaning windows to allow the natural light to make your home shine. On showing days, turn on all lights, ceiling fans, and air conditioning to make the home feel cool, bright, and inviting. This relatively simple strategy can go a long way, considering that most buyers make a decision within 30 seconds of walking into a house.
In the digital age, getting the word out about your property isn’t just important—it’s crucial. High-quality professional photography will showcase all of your home’s best features and get your online listings noticed. In addition, the first photos in the MLS listing need to be the rooms or property’s most appealing aspects.
Try to use angles that accentuate what makes your home special—whether it’s a large lanai or an open-concept kitchen. Remember, these images will be the first impression potential buyers will receive, so make them count.
Focusing on what makes your property special will help it stand out from the rest of the homes for sale. Yet in Hawaii’s frenzied real estate market, many homes fly off the market with only a few simple updates. Promote the beautiful ocean view, proximity to local amenities, and the new energy-efficient upgrades you’ve made.
Don’t forget to highlight these info nuggets in showings too! These features do more than just set your home apart—they can make it possible to ask for a higher price.
Timing and Tax Considerations
Selling a house in Hawaii can be a rewarding opportunity, especially when you align your sale with peak market conditions. The state’s real estate market has been flush, as evidenced by positive trends in sales and sales volume. That means strong demand, which usually leads to higher sale prices and stronger overall market performance.
Intelligently timing your sale to line up with these boom times will dramatically improve your bottom line. Keeping a close eye on local economic trends is key, since variable factors such as tourism, job growth, and housing demand can immediately affect the market. For example, if more tourists flock to Florida, this might increase demand for vacation homes—which in turn raises the expected sale price.
Tax considerations are the second major factor to think about when selling a home in Hawaii. Understanding capital gains taxes is important, as these can take a bite out of your bottom line. In addition, the state capital gains tax rate in Hawaii’s capital is 7.25%.
Though Hawaii adheres to most IRS rules, the state provides significant benefits for home sellers. Individuals may exclude up to $250,000 of gain on sales of their homes, and married joint filers up to $500,000, provided the home was their principal residence for two of the five years preceding the sale. This can help lower your taxable amount by a lot.
Hawaii Real Property Tax Act (HARPTA) mandates that sellers who are not residents of Hawaii withhold a percentage of their sales price to cover possible state taxes. This piece of information is very important to your financial planning.
For taxpayers selling appreciated investment properties, a 1031 exchange is a powerful tax-deferral tool. By rolling your sales proceeds back into a similar property, you can defer capital gains taxes. This strategy allows you to maximize your net wealth.
You can further offset gains by increasing your property’s cost basis through well-documented improvements. These improvements, even if they add substantially to the property’s value, are usually amortized over time. If you have a second home that you rent out, you must satisfy certain personal use tests. Doing so is important to ensure continued positive tax treatment.
Therefore, consulting with a tax professional in your area is strongly encouraged, to help understand and navigate these complexities. They can help you save the most money and ensure you get the greatest return on your investment.
This means employing state-specific exemptions and offsetting gains with losses. Their guidance helps you avoid costly mistakes and helps you decide what’s right for you, your financial goals, and your tax obligations.
