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Seller FAQ's

 

Q:  How much time will it take to close the sale once we have an accepted offer?

A:  For a cash offer with no contingencies up to 30 days, but we normally estimate 45 to 60 days for closing if the buyer applies for a loan. However each property and each sale are unique. If there are time-consuming conditions to the contract, it will take that much longer to close and record the transaction. We recommend that you discuss this matter with your broker when you are considering offers to purchase, especially if "time is of the essence" and you must meet deadlines of your own outside of escrow, such as moving or purchasing another property.

 

Q:  How can I make my property more marketable?

A:  In general, a property that is clean, well-maintained, and in good order is most attractive to a buyer and brings the best price. Your agent will be able to help you identify specific issues that should be taken care of before marketing begins. In the meantime, there are some simple things you can do to help get a good price. Start by looking at your property through a buyer's eyes and you'll see what we mean: remove unnecessary furniture and stored items, eliminate clutter, get the landscaping in good shape, and re-paint where needed. This will make a prospective buyer's first impression a positive one. If you are not able to take on major repairs prior to listing, be realistic. Expect to receive a somewhat lower price for the property and reflect that in your listing price. Also note that you will be expected to fill in a full disclosure form on the condition of your property. Some buyers look specifically for "fixer upper" properties where they can invest "sweat equity" rather than paying top dollar. A buyer may be looking for exactly what you have to offer.

 

Q:  Real Property Disclosure Statement (RPDS)

A:  Under Hawaii law, a seller is obligated to fully and accurately disclose in writing to a buyer any fact, defect or condition, past or present, which materially affects the value of the property, to provide buyers with notice concerning the condition of the property and to assist buyers in evaluating the property. The Disclosure Statement is not a warranty of any kind by the seller or by any agent representing the seller of the property. It is not a substitute for any expert inspection, professional advice or warranty that the buyer may wish to obtain. Buyers are advised to obtain their own public records, professional advice and/or have an expert inspect the property. The Real Property Disclosure Statement is a statement concerning information relating to the condition of the property that (i) is within the knowledge or control of the seller; (ii) is disclosed by documents recorded in the Bureau of Conveyance; or (iii) can be observed from visible, accessible areas. The seller may be ignorant of problems affecting the property and the buyer should take care to protect his own interests by conducting thorough inspections and obtaining expert help in evaluating the property. Unless the buyer has been otherwise advised, the seller has not conducted any inspection of generally inaccessible areas of the property. There may be material facts of which the seller is not aware which qualified experts may be able to discover or time may reveal. A buyer is to have an agreed upon time period to examine the Real Property Disclosure Statement and to rescind the offer to purchase if the buyer disapproves of the sellers disclosures.

 

Q:  Why do I need a survey and why so early?

A:  Surveys are usually a standard part of every real estate sale. They protect the buyer's interest by defining the exact position and size of the property he is buying and assuring him that there are no encroachments or boundary problems. The survey is conducted early so that, should problems arise, they can be resolved in a timely manner and not unnecessarily delay the close of escrow. The cost of the survey is generally paid by the seller.

 

Q:  What is FIRPTA and HARPTA?

A:  FIRPTA (Foreign Investment in Real Property Tax Act) and HARPTA (Hawaii Real Property Tax Act) relate to tax payments due from sellers who are not residents of the United States or of Hawaii, respectively. FIRPTA "requires that if the seller is a foreign person, the buyer must withhold 10% of the amount realized by the seller to cover any seller tax liability. Residences below $300,000 that are going to be occupied by the buyer are exempt from this provision."HARPTA "requires every buyer of Hawaii real property to deduct and withhold from the non-resident seller's proceeds, 5% of the gross amount realized on the sale to be applied to any Hawaii income tax due from the seller with regards to the sale of the property. A buyer would be exempted from this requirement if the seller furnishes the buyer with affidavits stating that the seller is a resident (includes resident aliens), together with his taxpayers identification number…" [from Vitousek et al, Principles and Practices of Hawaiian Real Estate, Honolulu, HI, 1995.]Because of the strict deadlines and penalties associated with these laws, your agent and your escrow company will make sure you are fully compliant.

 

Q:  What should I expect to pay for closing costs?

A:  A good rule of thumb is 2% of the purchase price. Buyer and seller costs are listed in the standard terms of the sales contract. Additional items may be negotiated as special terms of the contract eg. furniture or other personal property. Individual situations can differ substantially, depending upon variables such as the level of market activity, the condition of your property and your motivation to sell. Your agent will give you a fairly close estimate and will work to make sure you are paying a fair price for the services provided.

 

Q:  Termite Inspections & Treatment

A:  We live in the tropics, and termites are a fact of life. A termite inspection is normally required by the lender just prior to close to determine if the property has evidence of live termite infestation. If termites are found, the property will be treated. Usually, the seller pays for both the inspection and any treatment required prior to close of escrow.

 

Q:  How much notice do I have to give my tenants when my house is sold?

A:  That depends upon the kind of lease your tenants have. If they occupy the property under a fixed lease, the lease expires on the date specified, regardless of who owns the property. In other words, a fixed lease survives escrow and the buyer of your property must honor the terms of the lease until it expires. Clearly this is a fact that requires early and full disclosure to prospective buyers. If your tenant is on a month-to-month lease, you are required by the Hawaii Landlord Tenant Code to give 45 days' notice to vacate. Once notice is given, the tenant may vacate at any time prior to the 45th day, without penalty. Therefore, you'll want to time your Notice to Vacate carefully or you may find yourself missing the rental income you had expected. This gets especially tricky when closing is delayed and the property is sitting vacant.We recommend that, before you enter into a lease with a new tenant, you think carefully about your long-range plans for the property. Investors that rent condos with a property management company have an obligation to ensure that there are no future rentals scheduled before closing.