Maui Real Estate & Development

A recent report revealed that in November, Condo sales had more than doubled!  The Realtors Association of Maui reports 69 condos selling in November 2009 compared to 29 units sold in November 2008.  We’re on track to sell about as many condos this year as last year.  This is a sign of a buyers market and hopefully the beginning of the market coming back.

At the same time, November was up 122 percent in foreclosures across the state of Hawaii, according to sources with the Associated Press.  Maui was noted as having the worst month for foreclosures with 197 in November.

People are still hurting and are losing their homes.  This makes for a ripe time for those that can buy a home or condo.  In our honest opinion, these are all signs that things are changing soon.  Our island has been through some very difficult times, but 2010′s real estate outlook seems to be sunnier on Maui.

Wells Fargo, trustee for the registered holders of the commercial mortgage securities of which secured the property, filed a foreclosure lawsuit on Monday.  Everett Dowling and Morgan Stanley’s partnership, created to purchase the 1,800 acre resort, owes $192.5 million in principal, interest and late charges.

Dowling Company and Morgan Stanley bought the resort and hotel just a little over 2 years ago from Seibu Group of Japan.  Though the future of Makena Resort is uncertain, Dowling Co. is moving forward with its other Makena Project called Maluaka.  This development has been considerably altered in plans from 69 luxury condominium units to 13 custom homes and a club house.

To read more about this latest Maui Real Estate News, see the BizJournal Article.

UPDATE:

Maui Prince Resort to Stay Open with Name Change!

The Maui Prince Hotel will now be called the Makena Beach and Golf Resort.

Prince Resort Hawaii told the public that it would be shutting down the Maui Prince in 2 weeks, but Wells Fargo bank, trustee of the resort, countered this statement by saying they will keep it open and that funds have been made available to pay off vendors and suppliers that were owed as well as continue payroll.

Management will need to be restructured as the Maui Prince Resort has been showing around a 1 million dollar loss per month.

I was reading Maui News yesterday and I could not help but notice how much the foreclosure notices had occupied almost half of the entire real estate section of the newspaper. Talks about foreclosures and short sales abound on Maui (and everywhere else in the US I suppose).   Although I have a little bit of an idea what the difference is between foreclosure and short sale, I thought I should ask a reliable realtor to explain it to me.

Here’s what Gina Duncan wrote for us:

Before selling your home short sale, letting it go to foreclosure or buying a short sale or foreclosure you should know the basics and always use an experienced Realtor for your purchase or sale.

What is a Short Sale?

A short sale is when a homeowner offers their home for sale for a price less than what is owed on the property and their lender(s) agree to the terms of the offer submitted. Once an offer is made the lender reviews the seller’s financials, their hardship letter which outlines their reason for needing the short sale, and the Purchase Contract. A lender generally if not in agreement with the Purchase Contract terms or price will counter the offer with an offer that they will accept or in rare cases they will simply reject the offer.

When they counter (as a seller) be prepared that they may ask you to sign a promissory note for the difference in what the property sells for to what is actually owed. This happens in investment property more often then for a primary residence. There are tax consequences and no waiver for the tax if it is not your primary residence. At the point a lender approves/counters an offer the buyer and seller have a choice to move forward if any terms from original offer are countered. As always with any legal transactions I encourage all parties to seek the legal advice of an attorney and tax advisor. Short Sales will offer the buyer a seller disclosure form and the lender approving generally will pay for survey and termite inspections. More and more they aren’t paying for any tenting needed, and they are negotiating how much in back taxes or home owner’s dues they will pay. Warranties that are available are generally transferred with the property. Short Sales are generally priced at or just below market value. Most Short Sale lenders won’t cover closing cost assistance or any type of down payment assistance. (I’ve only seen this done in case of VA Buyer).

What is a Foreclosure or Deed in Lieu of Foreclosure? (Mortgage foreclosure)

A foreclosure occurs when the properties mortgage is in default and the lender is not willing to modify the loan, or the seller isn’t willing to do so and all other avenues have been exhausted. Prior to actual foreclosure a last ditch effort for a seller may be to offer the deed to the lender (deed in lieu). This actually saves everyone from going through the formal foreclosure process and the lender takes your deed in return for the debt. Again as with a short sale there are tax and legal consequences so all parties involved should seek the legal advice of an attorney and tax advisor. In Hawaii there is no right of redemption once a property has been foreclosed on by the mortgage holder.

When a lender forecloses (takes back title) on a property they will evict homeowner/and or tenants. In some cases they will offer (Cash for Keys). This offer is made to the resident of the property so they will turn over the keys and move out promptly with no damage done to the property. The property will then go to auction and if an acceptable bid is made, the property will transfer title to the new buyer. In many cases we are seeing the property loan is so far above market value that the only bidders are the lenders themselves. In that case the property is “bought back” by the lender and then offered for sale as an REO property.

REO properties (bank owned) are generally listed with a Realtor and most are posted at just at or just below market value. REO lenders typically do not offer any warranties, survey, termite reports, or disclosure for the properties they convey to a new buyer. They also require good cash down payments and quick inspection and closing time periods, and generally won’t cover closing cost or down payment assistance.

For further information please contact: Gina Duncan, R (S), ABR, e-Pro Team Leader of the Fine Island Properties Team of Keller Williams Realty Maui at www.FineIslandProperties.com