One more example I’ll just cover real quick is a rental property we purchased on Maui where the owner, again, lived on the mainland in Colorado. This was a house in Kihei, Hawaii in decent condition. It wasn’t really bad. It had a couple different rental units, and one of the rental units was pretty rough and really needed a lot of TLC. Another issue was an African tulip tree, which, if you’re familiar with the African tulips here in Maui, they are invasive and they are very problematic. This tree had grown to be over a hundred feet tall. I don’t know exactly how tall it was, but it was a massive tree and it was ripping up the driveway. The concrete was popping up about two feet up, so you couldn’t drive a car up the driveway. It was also in the back of the property, near the cottage. So it was complicated logistically to access the tree to have it removed.
Then there was another tree that was causing problems. I believe it was like some sort of mango tree that’s roots were penetrating into the main sewer drain. So that was another problem. The sewer drain was busted and was estimated to be about $20,000 to replace the entire drain pipe because it was so long. So there was a few problems but nothing major. But with the seller living on the mainland, he wasn’t able to keep up with the property as much as he wanted. He would come and visit and see it and just be disappointed and frustrated with how the tenants would maintain it.
In that scenario, there was no rush at all. We had a normal closing, took 45 days, the standard timeframe that we close sales here in Hawaii. We factored in what he would’ve sold for on the MLS, which was about 950k at the time. We both agreed that would be the fair open market value. Then we deducted the commissions that he was going to be saving, which was about 45,000, I believe was what the realtors were quoting him. And then we also deducted the cost of the removal of the trees, repairing the driveway, repairing the drain pipe, and I think there was a couple other things that basically came out to around another 50k or so.
So we ended up buying the house for the 950k minus those costs, which was 855k at the time. In that scenario, along with all the other ones, they worked out to where the seller was able to walk right away with the same amount of cash they would have gotten if they had listed the house on the market with a realtor on the MLS. But they didn’t have to go through all the paperwork, be locked into a contract with a realtor and have to be forced to pay them commissions even if the realtor wasn’t doing a good job. They also didn’t have to worry about buyers making offers and then backing out or not getting approved for the mortgage, having home inspections, etc. Often a buyer will make an offer, agree on a price with you, then have a home inspection and come back and say, “the roof needs to be repaired, the plumbing problems and all this and that.” and either ask you to reduce the price, or they’re just back out of the sale. So you end up with the same amount at the end of the day, but it’s a lot more misleading I would say. It can be hard to know how much are you actually going to get at the end of the day because you don’t know how much you’ll need to reduce the price after the inspections.
So one of the things I really love about our business is that once we make an offer and we agree on the price, we’ve already factored in all of these things. We look at a lot of properties so we can pretty much see most of the stuff that’s going to come up. Sometimes we get surprised later and it hurts us because we end up not knowing about a big problem with a house before we bought it. But generally, we factor all of this into the cost before making our initial offer. And once we make that offer, we stick to it. Aside from something catastrophic happening, we don’t back out on an agreement that we’ve decided to purchase.
So that’s my favorite part, that you know as the seller exactly how much cash you’ll be walking away with from day 1 – no guesses, no surprises. There’s a lot more clarity and it’s a lot more predictable in my opinion. It’s not the right solution for every situation. There’s a lot of situations where it can make more sense to list on the open market, but there’s a lot of situations where it makes more sense to work with a cash buyer if you can walk away with the same amount of money, with much less headaches, much less hassles, and in a much shorter timeframe. From the day you call us, we might discuss the property over a couple days, but once we make an agreement, we’ll typically close anywhere between 10 days and up to about 45, depending on your timeline, the sale will be done and over with.
If you were listing with a realtor, you would be spending a couple of weeks just getting the property ready to list. You’d have to pay for professional pictures to be taken and a lot of marketing to be prepared. You can typically expect your house to be for sale on the market usually somewhere between one to four weeks. So the first month is just getting the house onto the market listed for sale. Then you’ll have anywhere from a few weeks to a few months of being on the market having showings daily, open houses, broker’s opens, touring events, etc., until you find a buyer. Once you make an agreement with that buyer, then you’ll have a similar timeline till closing as you would with us, somewhere between 30 to 60 days generally for a closing timeline. So listing on the MLS can take anywhere from, at the very shortest, about 3 months, potentially up to a year. Although typically you should expect it to take somewhere between 3-6 months total from the time you first start the process.
But if you call a cash buyer like Maui Home Buyers, you can expect to make an agreement with us with a matter of days and then close as quickly as 2 weeks after you first call us. But generally, most of the people we work with aren’t in that much of a rush. So we’ll close sometime within about a month or two months at the most from when they first contact us. We just bought a house in Kihei where the seller had first called me two years ago. He was just doing research and checking us out even though they weren’t ready to sell. They spoke to many realtors and a few other cash buyers, and ultimately decided we were there best option.
Our goal is to serve you. So if you need us to close in 10 days we’ll make that happen (that’s about the fastest you can close in Hawaii is about 10 to 12 days). But if you’re not in that much of a rush, then that’s great. We prefer to move at a more normal pace because then we can do a little bit more research and due diligence on the property.
I hope this has been helpful. Thank you for checking us out. As always, if you’re interested in getting an offer on your property, please feel free to reach out to Maui Home Buyers. You can call, text or email us anytime 24/7 at 808-359-3121. We look forward to hearing from you! Aloha.