Bidding wars frustrating for O'ahu home buyers

By Andrew Gomes
Advertiser Staff Writer

Ken Loui didn't expect he would have to bid on six houses to buy one. But he found out what an increasing number of recent buyers are learning: Homes on O'ahu are selling faster and moreover for prices above what sellers are asking.

Ken and Wera Loui, with daughter Sabrina, made six offers on homes over a 10-month period before they successfully purchased their 'Aina Haina home. "Overall, it was a positive experience," Ken Loui said. Eugene Tanner • The Honolulu Advertiser

"I am sort of burnt out right now," said Rose Marie Giasolli, an agent with East O'ahu Realty. "It's been so difficult, so difficult."

According to Honolulu Board of Realtors statistics, 15.5 percent of all single-family homes sold on O'ahu last year for more than list price, with the average reaching 18.7 percent in December.

For O'ahu condominiums, 11.5 percent sold for a premium last year, hitting 12.9 percent last month.

Harvey Shapiro, research economist for the realtor board, said the level of homes selling for a premium is higher than anytime in the past 12 years he's compiled data, even soaring above the 6 percent to 7 percent average in 1991 coming off the last market boom.

Meanwhile, the median time a home spends on the market dropped to 26 days last month —the shortest time ever for single-family homes and the second-shortest for condos, Shapiro said.

"If (buyers) don't offer full price or higher — quickly — they don't get it," he said.

The competitive market is making it tougher for buyers, who have been shopping in a sellers' market for at least the past two years as the lowest mortgage rates in decades draw more people into home ownership.

Julie Coelho, another broker with East O'ahu Realty, has felt both sides of the market's surprising speed and force.

For one buyer, Coelho said she made at least six offers before rushing to sign a contract above list price for a Kailua condo — within an hour of its being listed.

"We had the lender on my cell phone on the way over there," she said, adding that the buyer also agreed to complete the sale in 30 days instead of the typical 45 to 60 days.

"We were desperate," Coelho recalled. "It was like: How many times are we going through this?"

In the other case, Coelho represented a buyer selling a leasehold townhouse on the marina in Hawai'i Kai. "We expected it to be rough going, but we got one offer after another and it sold $5,000 above asking," she said.

Coelho, who has been in the business 21 years, said this market is different from the speculative buying led by Japanese investors in the late 1980s because prices aren't being wildly bid up and buyers are mostly local residents who are buying property as a home, not an investment.

Median prices — $350,000 for a single-family home and $160,000 for a condo in December on O'ahu — were still 20 percent below prices at the height of the Japanese investment bubble in the late 1980s.

Another key difference today is that property isn't being bought sight unseen. And while buyers are willing to pay a slight premium, no one is overpaying for homes in substandard condition or in scruffy neighborhoods. Brokers said bidding wars are breaking out for attractive, well-kept homes that are clearly not overpriced and are in neighborhoods with few houses on the market.

"You can go into any neighborhood and have homes sitting three, five months and homes that sell in a day," said Fuku Puckett, broker in charge for Herbert K. Horita Realty Inc.

Puckett said premium offers, which started in places like Hawai'i Kai and the Kailua beachfront areas a couple years ago, started spreading to Waipahu, 'Ewa, Royal Kunia, Kapolei and Makakilo last year.

"It seems like the wave's moved across from the east to the west," he said. "Where it will end we don't know."

Shapiro said one of the most active neighborhoods for overbidding was Mililani where about one in five single-family and condo transactions closed above list price in December.

In Kane'ohe, about 15 percent of homes sold for more than sellers asked last month.

Waikiki condo sales were on the low end with 2 percent selling above list, while 10 percent of sellers of Kapahulu-Diamond Head single-family homes received more than they asked.

Jim Mazzola, broker in charge of the Windward office of Coldwell Banker Pacific Properties, said anything "priced right" will generate multiple offers.

One leasehold fixer-upper on Halekoa Drive above Wai'alae Country Club received four offers and sold last month for $60,000 over the asking price, according to Puckett, who represented the seller.

Giasolli said she had one client looking at mountainside neighborhoods from 'Alewa Heights to Wilhelmina Rise. After making six unsuccessful offers that started just below list prices and rose to a little more than list, the seventh was accepted recently for significantly more than the asking price.

Another Giasolli client, who was moved to Hawai'i for work, had to take a short-term rental for his family of five after his search for a home in the $350,000-to-$450,000 range proved fruitless despite making offers on three homes.

"It's been incredible," she said.

Loui, who made six offers over 10 months before buying an 'Aina Haina home in August, has become part of an emerging group of so-called veteran first-time buyers.

A 36-year-old mechanical engineer for a general contractor, Loui and his wife, Wera, started looking for a home in November 2001 with the help of Karen Robertshaw of Prudential Locations.

The first five offers, he said, were lessons in how to come up with a competitive offer without making an excessive bid.

"Such robust activity with multiple bidders and bid prices above the asking price made it challenging for us to put in a (winning) offer," Loui said.

The couple's first five offers ranged from $5,000 to $20,000 above asking prices. None were accepted. Ten months later, and with Wera pregnant, the Louis' sixth offer was accepted — and they ended up paying a little less than list price.

"Overall, it was a positive experience," Loui said. "It was pretty exciting. I wouldn't call it frantic .... our patience was something that paid off."

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.