Buying Real Estate in Hawaii

Are you planning to buy property in Hawaii? There are numerous reasons why you would want to establish a domicile in Hawaii. It could be the great weather, the friendly Hawaiians, the islands’ proximity to the Far East, or maybe you want a holiday home on a tropical island where you would hibernate during the harsh winter on the mainland. Our company understands that buying real estate in Hawaii can be a unique experience, especially when compared to the mainland United States. The reason is obvious; Hawaii is a tropical island with a unique climate that only Florida can compare. Housing and property laws in Hawaii are quite different too. It is also important to consider the diversity of the islands – Hawaii is one of the most diverse states of the United States. We’ve considered these factors while preparing the following «advisory» to sensitize you before buying a home in Hawaii.

Buying a home in Hawaii

Please be aware of these aspects of purchasing a property on the Big Fiery Island:

Fee Simple versus Leasehold

Fee simple property ownership is common in the mainland United States. This plan allows the buyer to have complete ownership of the purchased property including the land on which the property is situated as well as all improvements made on the land or property in perpetuity. As a result, the owner can use the land in whichever way and dispose of as they please – give it away for free, sell it, etc.

Leasehold, on another hand, is common in Hawaii but almost unheard of in most states in mainland America. The leasehold arrangement gives ownership of the land to the government. The buyer of the property in this plan owns the piece of land for a set period; the owner uses the land for the time being but does not own it. After the lease period has elapsed, the land is repossessed and appropriated to a new owner under the same conditions. As much as 60 percent of land in Hawaii is owned by the Federal government of Hawaii as part of the Volcanoes National Park, and the third-largest landlord on the biggest island is Kamehameha Schools. There are good reasons behind this plan; firstly, Hawaii is an Inland and you could easily run out of land if you allowed every buyer to assume permanent ownership of the purchased property and secondly, there is a need to protect Hawaiian biodiversity and ecosystem. So, those INCREDIBLY cheap condos and homes you’ve been seeing on the island could be sitting on land whose lease could be fast approaching expiration date. Keep that in mind when buying a home in Hawaii.

Beware of Lava Zones

A significant number of the islands that constitute Hawaii are active volcanoes. Hazard zones have been identified along the lava lines and are mainly based on frequent and prehistoric eruptions. The most restless of the islands is Kilauea which erupts once in a while. As a result, much of East Hawaii is under constant threat. Puna, a small town on the island is under threat too. If you’re buying property in Hawaii online, consider looking for lava zones in the areas you intend to purchase the property. Luckily though, much of the Kailua Kona and West Hawaii are located in Lava Zone Four, which hasn’t experienced a volcanic eruption for a long time. Are you still worried? Try checking out Hawii which is located in Zone Nine, they saw their last eruption almost 70,000 years ago!

Using a Mainland Bank versus a Local Bank for Mortgage

The «Good Funds» principle is widely applied in Hawaii. It means that for you to complete the transaction, the funds must be in the hands of the title company. More often than not, mainland US banks don’t transfer the money until the closing date. This tends to cause excoriating delays because a title company located in Hawaii will have to wait for as many as five days to receive the funds from the mainland bank. Worse yet, Wells Fargo and Bank of America don’t have a presence in Hawaii. We advise you to discuss your funding options with a Hawaiian realtor before getting the mortgage.

Elevation Can Actually Affect Your Comfort And Your Home’s Energy Consumption

This is hard to notice because you often stay in a beach house or air-conditioned hotel whenever you visit Hawaii, but you need to know that Hawaii is quite hilly in some areas and experiences tropical climate throughout the year. Elevation and airflow can affect how often you switch on the air conditioner in your home and may significantly affect your energy consumption. Unlike the tourist hotels, most homes in Hawaii don’t feature an air conditioner because of the high cost of running the cooling equipment (Hawaii has the highest yearly energy costs in the US.). Homes built in 700 – 1500 elevation zone (a cool zone) can be a little expensive to run compared to homes close to the beach (a hot zone). You drop 1 degree for every 200 feet of elevation you achieve. For these reasons, consider buying a property in the low lying areas of the islands and save a lot of money on energy costs.

Go Slow On Those Square Footage Goals

Buying a house in Hawaii

One question that callers who reach to HAWAII TRUSTED REALTY offices can’t stop asking is about square footage of houses in Hawaii. Mainland US buyers are always searching for a property with immense square footage. Truth is that many homes in Hawaii, more so West Hawaii aren’t as big as what many mainlanders are accustomed to. We’ve seen plenty of buyers who come with big goals, aiming for a 2,600 square foot property only to discover how minimalistic Hawaiian lifestyle is. It is not like Hawaiians love small houses, they just spend most of their time outside. When you’re leading a lifestyle like that, there isn’t a good reason why you should build a cathedral for yourself. There are other reasons too; a big house would mean more air conditioning and higher energy costs. Most houses feature Lanai or outdoor deck. When buying a home in Hawaii, therefore, pay more attention to the outdoor space surrounding the home, not the indoor space.

Bottom Line

Hawaii is remarkably different from the rest of the United States. Put the above «advisory» into consideration when buying property in Hawaii and avoid making costly mistakes. You can contact us HAWAII TRUSTED REALITY for more information and tips about buying real estate in Hawaii.