The Process of Selling Land in Hawaii

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The Process of Selling Land in Hawaii
By

Bart Waldon

Known for its beautiful beaches, tropical landscapes, and friendly locals, Hawaii is a top destination for visitors from around the world. Yet beyond tourism, Hawaii also has a thriving real estate market driven by its desirability as a place to live and invest. For those looking to sell land they own in Hawaii, it pays to understand the local landscape and key steps in the sales process.

Hawaii real estate operates on a statewide multiple listing service (MLS). This allows brokerages to list properties for sale which then syndicate out to other participating brokerages and sites. Home sales prices in Hawaii continue rising with the median price for a single-family home reaching $975,000 as of November 2022. The high demand and short supply, especially on Oahu, pushes values up. With only so much land available across this island chain, undeveloped lots also draw prime prices when brought to market.

Getting Started: Key Decisions Before Selling Your Land

If you've inherited property or owned land in Hawaii for years, deciding to sell brings up some initial choices. Do you want to build on it first or sell the vacant lot? Does it make sense to subdivide your acreage before listing? What is the zoning and are there any entitlements or restrictions on developing the land? By researching your options, you can determine the best route to maximize your sale return.

You also need to decide on your preferred timeline. Hawaii's hot real estate market facilitates faster sales in many cases. However, preparing the land, allowing time to market it effectively, and closing the transaction still takes an average of 12-18 months. If you want proceeds quickly, consider direct sales companies that purchase land outright with cash offers. Just know that the convenience costs—cash buyers must discount prices to account for the risks and costs they take on. Maximizing your land value requires patience and effective marketing to the right buyers.

Working with a Real Estate Professional

The traditional and most common path involves listing your land for sale with a licensed real estate brokerage. Your broker will advise you on listing timing, appropriate pricing, terms to offer, and more based on market comps and demand in your area.

Here are key steps in the broker-assisted sales process:

Choose Your Representation

You can either use a broker who represents just you as the seller (seller's agent) or opt for one that represents both buyers and sellers in Hawaii. Some things to ask prospective brokers include:

  • How long have you been in the Hawaii real estate business? Seek 5+ years minimum due to complexities and changes.
  • What specific experience and track record do you have selling land and vacant lots? Reference sites like Zillow when permitted to verify sales data.
  • What percentage commission do you charge on land sales if you bring the buyer? Typical land commissions range from 5% to 10%.

Also ask for references from recent seller clients to check satisfaction.

Prepare the Property for Sale

Your broker will advise you on any clean-up, documentation, inspections, or other prepping needed to showcase your land. This might include staking property boundaries, getting survey maps, researching permit requirements in the area, taking attractive photos, etc. Proper prep work maximizes buyer interest.

Price Your Property Competitively

Real estate agents rely heavily on comparable sales to estimate your land's market value. Comps include recent sales prices for lots of similar acreage, zoning, neighborhood, and potential use. Adjustments factor in site differences on drainage, views, road access and frontage, and more. Get multiple agent opinions on pricing and offer flexibility to increase interest. Also set your terms for aspects like released contingencies, buyer financing, seller carryback options, closing dates, etc.

Market and Show Your Property

Your real estate broker will enter listing info and photos into Hawaii's statewide MLS. This syndicates your lot to participating brokerages and sites like Zillow, allowing broad online exposure. The agent also typically places a for-sale sign onsite and handles all communications and showing requests. Be flexible on timing for showings to enable prospective buyers and agents to view the property at their convenience.

Negotiate Offer Terms

Once you start receiving offers, your broker will help you evaluate them in alignment with your goals. Key aspects to weigh with offers include:

  • Price – Is it aligned with your listing or expectations? Seek price bumps if warranted.
  • Terms – Do contingency timeframes, closing date, etc. work for you? Seek adjustments if an issue.
  • Buyer qualifications – Can they truly buy? Ask about proof of funds and agent notes.
  • Earnest money amount – Is the deposit enough to show commitment? Often 5-10% of purchase price.

Your agent negotiates back and forth to get an agreement suitable for both parties. You finalize terms by signing the chosen buyer's purchase offer.

Manage Contingencies and Prepare for Closing

There are typically contingencies associated with buyers securing financing, title searches revealing no issues, inspections checking that the land matches marketing, etc. Your broker keeps you informed if any hiccups arise and works to protect your interests here. As you get closer to closing, they also coordinate any needed paperwork and walk you through next steps.

A title company or law firm serves as an impartial middleman to handle closing. They oversee the financial exchange with buyer funds, closing costs, and net sale proceeds. Be prepared to pay selling costs including:

  • Broker commission fees (negotiated percentage of sale price)
  • Legal fees for closing agent (around $500+)
  • Title search, document or mapping fees ($500+)
  • State conveyance tax (minimal for vacant land)

The closing representative will provide a settlement breakdown for your review in advance. They also record sale documents with the state to finalize the ownership transfer. Then you receive the net sale proceeds per terms agreed upon.

Consider Alternatives to Maximize Land Value

The traditional broker-assisted path allows you to sell for top market value eventually. But it does require patience and effective marketing. Alternatively, direct land buyers like Land Boss provide certainty in sale timing and terms. However, their cash offers typically purchase at significant discounts to account for risks, carrying costs, commissions they would pay brokers, and desired profit margins. Sellers who prioritize convenience over maximizing profit work with these swift cash buyers.

You might also consider if subdividing acreage first makes sense, contractor Chapter X filings as needed. Perhaps you build on a portion to increase overall property value. By fully exploring options early, you set your land's best path to market. An experienced local real estate attorney can provide guidance on maximizing value based on zoning, market trends, and more.

The Scenic Route to Completion

Selling vacant land you own in vibrant Hawaii takes patience through necessary steps. But the outcome delivers a profitable return from a worthwhile investment in this special place. Work with knowledgeable professionals, prepare your land thoroughly, and market it effectively. Stay flexible and optimistic as offers transpire. Before you know it, you’ll have a closed sale generating cash you can reinvest or use to support other dreams you wish to pursue. The extra effort pays dividends when it comes to property sales in paradise. Here’s to best wishes for a smooth and lucrative transaction ahead!

Final Thoughts

Selling land in the beautiful Aloha State brings its fair share of complexity given Hawaii’s unique island landscape and remote location far out in the Pacific Ocean. Yet the payoff comes through property values ever-rising and unmatched natural beauty secured for generations to enjoy. For those ready to bid farewell to their little piece of paradise, work thoroughly yet patiently through the sales process. Enlist local area experts like brokers to ensure you maximize profits while direct buyers provide convenience of faster cash returns. Thorough preparation, reasonable pricing, and effective marketing deliver success when selling land to transition ownership in Hawaii. Stay determined through negotiations until you finalize the closing and collect proceeds owed by the fortunate new land owner. Both seller and buyer walk away winners when it comes to lucrative real estate deals closing in this island paradise.

Frequently Asked Questions (FAQs)

What taxes and fees should I expect when selling land in Hawaii? 

There is a 0.1% conveyance tax on land transfers over $600,000 in Hawaii. There may also be a partial real property tax credit given to the buyer. You will also pay broker commission fees, as well as legal fees for your closing agent which often add up to over $1,000 combined.

How long does it usually take to sell land in Hawaii? 

The typical timeframe to sell land in Hawaii is 12-18 months on average. However, lots with prepared build pads, infrastructure in place or subdivision potential could sell in 6 months with the right marketing and pricing.

Does my land need to be surveyed before selling in Hawaii?

While not legally required, having a certified survey map of the property boundaries and dimensions creates more buyer confidence and can maximize the sale price. Surveys also protect you from future neighbor disputes over the land area after the sale.

What are the rules on subdividing land in Hawaii? 

The state and individual counties all have their own density, design and review rules in place for subdividing land parcels into multiple lots. Consult local zoning laws early to assess viability and requirements like minimum lot sizes, acreage ratios and infrastructure rules before creating subdivided parcels to sell.

How will potential buyers access my Hawaii land to view before buying? 

Ensure you provide legal access like deeded easements in listing details. Alert a broker ahead of showings and accompany buyers onsite. Install visual stakes/flagging at property boundaries. Keep vegetation trimmed at entrances for safer ingress. Road quality, proximity and accessibility impact Hawaii land prices.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.

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