Aloha, friends. I just got back home from visiting a few potential homes for purchase here on Oahu and wanted to share some quick thoughts. When analyzing a home to buy (or if you’re selling your house), there are some obvious and not-so-obvious factors to consider when trying to figure out its true market value.
The normal way to figure out how much your home is worth is by “running comps”. This means looking at the most recent home sales in the neighborhood that are the most similar to your home. In addition, you can look at the homes for sale because those are your competition (if you’re the seller). Remember, the idea is to have an “apples to apples” comparison, i.e. don’t compare a 2000 sqft oceanfront single family house built in 2008 to a 1200 sqft house 6 blocks from the water built in 1960.
However, there are often extra factors or “intangibles” that need to be considered beyond the traditional comp factors such as living sqft, lot size, year built, # of bedrooms and bathrooms, and condition. Here are just a few of these intangibles you can’t ignore if you want to better understand the true market value of your home or home you’re considering for purchase:
1. NOISE. I recently visited a property that was located right on one of the busiest roads on Oahu. From the map it seemed that the road noise wouldn’t be so bad, but upon arrival I was quickly corrected. In addition, there was a neighbor raising chickens nearby and they more than happy to make their presence known. Think this affects resale value? You better believe it.
2. LAYOUT. All 4-bedroom houses are not created equal. The layout or “flow” of a home can drastically affect its true market value. In higher-end homes, an obstructed or restrictive layout can reduce a property’s value by $50,000 or even more.
3. NEIGHBORS. You can have the most beautiful home in one of the best neighborhoods on Hawaii, full of aloha spirit to every person who visits your front door. But if your neighbor’s home is a run down shack or showcases a collection of old “classic cars” (re: junkers) on the front lawn, you’ll scare away potential home buyers and that means a reduced home value. As a real estate investor, I actually once paid to cut down a neighbor’s mango tree to help increase the value of my own property I was flipping. Sometimes reaching out to your neighbors with a gesture of friendship can go a long way in keeping up your property value.
4. FRUIT TREES. Following up on the last item, we’re lucky to have some many delicious fruits available here in Hawaii. Whether it’s mango, papaya, soursop (my personal favorite), orange, lime, banana or anything else, if you’re lucky to have one (or more) of these growing on your property, you’re in luck — it could increase your property’s value by a few thousand dollars. Shopping for a home? It might be worth increasing your offer for a home with a mango or papaya tree (or two). Fewer trips to the market!
This is just a short list, but remember to factor in these other intangible factors when shopping for a home or selling your own home in Hawaii. Every factor, whether positive or negative, affects your home value in some way. Education is the key!