Home listings prompt frenzy

By Andrew Gomes
Advertiser Staff Writer

The mass-marketing of about 65 O'ahu homes owned by Japanese billionaire Gensiro Kawamoto has touched off a bidding frenzy among interested buyers who are making offers on the run-down rental residences without so much as a peek in the front doors.

The effort to sell the mostly single-family homes in Hawai'i Kai and Kailua also could create a crunch of renters displaced by the sales.

"They're creating kind of an auction fever," said Cathy George, owner of the Honolulu-based real estate sales and property management firm Cathy George & Associates Inc.

The frenzy comes as Kawamoto also has put hundreds of homes in California on the market.

The Honolulu law firm of Alston Hunt Floyd & Ing sent 30-day notices to renters of single-family homes in suburban Sacramento subdivisions owned by Kawamoto saying the landlord intends to sell the homes and get out of the rental business.

As many as 200 families could be affected.

It is not clear what has prompted the selloff, and Kawamoto has not indicated whether he plans to sell his other 100 Hawai'i homes.

A spokeswoman said last week that the real estate magnate is not in financial trouble and remains a debt-free billionaire.

In Hawai'i, brokers said the three listing agents assigned to sell Kawamoto's island properties initially said they would take offers on the homes until last Friday, and that bids would have to be made without inspecting the homes.

The unusual process led brokers and prospective buyers to make "drive-by" inspections of homes, which is how Kawamoto sometimes bought his houses in Hawai'i. Brokers say all purchase offers are contingent on interior inspections to be scheduled later.

Whether Kawamoto's agents were still accepting offers as of yesterday was unclear. But brokers representing prospective buyers have deluged the listing agents, who have yet to respond to offers, brokers said. Some brokers estimate there are 20 or more offers on individual properties. George said one broker submitted a bid $50,000 above the asking price.

Jim Mazzola, broker in charge at the Windward office of Coldwell Banker Pacific Properties, said his agents have put in 40 to 45 offers on 18 Kawamoto homes for sale in Kailua. Some people have made offers on multiple properties in the hopes they will succeed in getting at least one.

Kawamoto's three listing agents at Prudential Locations and Properties of the Pacific all declined to discuss the offerings, and referred calls to Kawamoto's Honolulu attorney, Carol Asai-Sato, who did not return calls yesterday. A representative of Asai-Sato's firm said Asai-Sato was trying to get a statement from Kawamoto.

It was last week when Kawamoto, without public explanation, put about a third of his Hawai'i real estate on the market. Property records show that most of the properties listed are in the low-end of Kawamoto's portfolio of roughly 160 homes he bought with cash in the late '80s.

Nearly all of the homes for sale are "fixer-uppers" with three to four bedrooms, and generally range in price from $300,000 to $400,000, according to the listings and brokers who have seen the properties.

"Every one of them has had very little maintenance," Mazzola said.

The homes have been listed at prices near, above and below market prices, property records show.

According to a sampling of 17 homes for sale, Kawamoto would take losses of at least $200,000 on some sales at the listing price. But he would also make profits of at least $140,000 on other homes.

The overwhelming response from prospective buyers has in some cases driven up the value of offers on Kawamoto's homes, and that stands to increase profits and reduce losses for Kawamoto, who has also earned rental income on the properties for 13 or 14 years.

Brokers representing buyers say they have yet to hear from Kawamoto's listing agents.

"At this point, I think there's frustration among buyers because they haven't heard anything," Mazzola said. "Everyone is just kind of sitting back, waiting for word of a counteroffer, or an acceptance or some kind of response. I think (the listings) took agents by surprise."

Also taken by surprise were tenants in Kawamoto's homes, according to brokers. By law, tenants in Hawai'i must be given 45 days' notice that their leases will be terminated. Karen Robertshaw, a partner at Prudential Locations, said she has not heard that renters of Kawamoto properties, some of whom are on month-to-month leases, have been notified their leases will be ended.

Real estate rental agents say the rental market is not as tight as in California, but still could pose hardships for families looking for comparable housing.

"There's a tightening of the rental market because of low mortgage rates," said Donn Terada, president of Rental Finders in Honolulu. "People are buying instead of renting, so they're taking a lot of inventory off the market."

George said Kawamoto tenants won't necessarily have to move if they have longer-term leases without termination clauses, or if buyers elect to continue renting the properties to current tenants.

Kawamoto spent at least $85 million buying about 200 Hawai'i properties, including the Kaiser estate for $42.5 million, almost 15 years ago following a trip to Hawai'i in which he said he noticed there were many houses for sale but a shortage of rental properties.

The Associated Press contributed to this report. Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.

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