How much is enough?
If you’ve been keeping up with the Hawaii real estate market these past couple months, you’ve noticed that inventory is super low. There just aren’t that many available homes on the market. That means, all things being equal, that home sellers are in a position of relative power. It’s no secret that it’s a seller’s market right now.
So if you’re looking to buy a house in Hawaii, you need to think very carefully about your offer price, because right now there are many people bidding above asking price. These are the home buyers you have to compete with. Are you ready to stand toe to toe with them?
But before you consider increasing your offer price to nab that duplex in Kaimuki you’ve had your eye on, you have to ask yourself the very important question: how badly do you want this particular house? If a seller is asking $450,000 for a single family house in Kapolei, do you really need to offer $500,000? Or is it better to stick to offering a reasonable price and wait for a purchase you’re more comfortable with?
It’s a tough decision. After all, true market value is determined by sellers and buyers acting without undue duress or motivation. If overbidding is the norm, then it’s not really overbidding. A house is worth whatever someone is willing to buy it for, no matter whether we feel the prospective homebuyer is off their rocker or not.
What’s a Homebuyer To Do?
Here’s something to consider. Yes, interest rates are super low right now and median prices in Hawaii have steadily climbed upward. However, be careful not to fall into the trap of assuming this trend will continue. It appears likely, but as we learned in the not so distant past, nothing is assured. (AIG, anyone?)
If the time is right for you and your family to buy a house today, then you likely need to accept that you’ll have some competition. But that doesn’t mean being a lemming and throwing out ridiculous offers just because others may be doing so. Stick to your own level of fiscal responsibility (not someone else’s).
Perhaps you can stick with a reasonable offer on price but make your offer stronger by offering to buy a house “as is”. There are plenty of fixer uppers in Hawaii to choose from (trust me on this)! If your financing is all lined up, then you can offer a quick closing as well — 30 days or less. Of course, cash is still king, as they say.
Perhaps the best advice here is not to follow the crowd. Trust your instincts. Keep up to date with local Hawaii market conditions at the neighborhood level. Be prepared to act fast but responsibly. And be sure to buy a home you’ll love!