Buying & Selling FAQ’s

Buyers

How does Buying from the mainland or out of the Continental U.S. work?

Our team of agent(s) are all up to date with platforms such as FaceTime, Zoom, Google Meets, Marco Polo and videos so we can tour properties on your behalf and get you viewing the home live with us!

Do I need to be on the island to close on the property?

No. Most Brokerages have disclosures that allow a Buyer to purchase a home without physically seeing or inspecting it yourself. This disclosure is commonly referred to as a ‘Sight Unseen Addendum’ – and it attaches to the Hawaii Purchase Contract. There is a risk involved as the Buyer to do this type of purchase without physically inspecting a property, but we do accommodate this.

Should I get pre-approved with a Lender before I talk to a Realtor?

You should be speaking with your Realtor at the same time or before connecting with a Lender in most cases. If you don’t have a Lender licensed in the State of Hawaii, your Realtor will have a list of great contacts for your reference.

What is a lava zone and how will it affect my purchase?

The Big Island is divided into 9 different lava zones, each representing the level of risk of volcanic hazard from lava flow. Zone 1 represents the highest probability of lava flow hazard, while Zone 9 represents the least hazardous. A property in Lava Zones 1 and 2 come with higher volcanic hazard. This means that your property is at higher risk of destruction from lava flow, but it also means that finding homeowner’s insurance and lending for these properties may be challenging. Your LUVA Realtor can help you find out what lava zone your property is inand help you navigate through any challenges.

What is the difference between Fee Simple and Leasehold ownership?

Fee Simple is the most common form of ownership, and is the most complete type of ownership that exists. The title of the property, which includes the land and the improvements on the land, is transferred to the buyer upon closing. With Leasehold ownership, the buyer does not own the land but instead has a right to use the land for a specific amount of time. When the lease ends, the buildings and any other improvements on the land may revert back to the owner of the land. In Hawaii, a large portion of the land is owned by the State of Hawaii, the Federal Government, or Bishop Estates (Kamehameha Schools).

Why does electricity cost so much in Hawaii?

Simply put, the cost of imported oil to our islands and the costs to operate and manage the state’s power plants and grids drive the electricity costs for consumers. A WalletHubstudy from 2019 found that Hawaii has the highest electricity prices in the nation at $0.29 per Kilowatt Hour, however the study also found that Hawaii residents have lower consumption. There are a few great energy alternatives that will save you money and help to preserve the environment, read up on Hawaii’s Clean Energy Initiative here.

Can I use my own bank to apply for a mortgage?

Maybe. Check with your bank to confirm they are licensed in the State of Hawaii, if they are, then yes you can use them to get pre-approved for a home loan. If they are not, your Realtor will have a list of great lender options for you.

As a Buyer, do I have to pay for a Realtors services?

Understanding Buyer Representation & Commission Structure

As of 2024, Realtors are now required to enter into a formal Buyer Representation Agreement with clients before showing properties. This agreement outlines the terms of your professional relationship and ensures your interests are represented throughout the transaction.

The agreement is made directly between you (the Buyer) and the Brokerage. However, in many cases, compensation for Buyer representation can still be offered by the Seller when they list their property.

Typically, Sellers agree to pay the commission for both their own Realtor (the Listing Agent) and the Buyer’s Realtor. This commission is factored into the listing price, so while you’re not paying directly out of pocket, the cost is often reflected in the overall purchase price of the home.

In some lower-priced transactions (under $15,000), Buyers may be responsible for a flat transaction fee.

✅ The bottom line: It’s essential to have your own Realtor advocating for your interests. Talk with your LUVA Realtor to understand your Buyer Representation Agreement and any applicable fees.

What are Good Funds Law in Hawaii?

Hawaii is a Good Funds State. This means that the funds required for a transaction to close must be readily available, meaning checks must be fully cleared, in the escrow account two days prior to actually closing.

Do I get the keys to the property the day I sign my papers or give my final deposit?

Not in Hawaii. Like mentioned above, Hawaii’s Good Funds Law requires the funds to clear before the transfer of the property can occur. Closing in Hawaii occurs the day the property officially records with the Bureau of Conveyance, not the day you sign, or the day you deposit the funds. You will get the keys to your new home as soon as escrow confirms the recording with the Bureau usually two days from the day you make your deposit.

What school district is my new home in and how does it rank?

You can use the School Finder here to find out which Public School your new address falls in. You can use the Department of Education’s school accountability and improvement system here to check the performance of all Public Schools.

What types of questions is my Realtor not allowed to answer?

Realtors cannot answer questions or give opinions relating to schools, crime rates, “good” or “bad” neighborhoods, or demographics as examples. These would be a violation of the Fair Housing Laws which were enacted in 1968 to eliminate housing discrimination.

Can you show me other listings other than what your company offers?

Yes! Even if a property is not listed with LUVA, you will still have access to view the property with your LUVA Realtor. Our Realtors are members of the Multiple Listing Service (MLS), which is where most brokerages post their listings for sale. When you browse listings on sites like Zillow, Realtor.com, Redfin, etc.. these listings are all syndicated from the local MLS.

Sellers

What are the standard costs for a Seller?

It is customary that the Seller’s Closing Costs would include, but it is not limited to the cost of drafting of conveyance documents and bill of sale, cost of obtaining Seller’s consents, FHA or VA mandatory closing fee, notary fees, recording fees to clear Seller’s title, 60% of the premium for standard coverage title insurance, 50% of Escrow fee, Conveyance Tax, buyer and seller agent commissions, and FIRPTA/HARPTA. Additionally, Seller costs can include ordering Section M certified documents from your property’s association that must be no older than 6 months old, a Survey and Termite Inspection Report, if requested by the Buyers and agreed upon in the accepted purchase contract. Your LUVA Realtor will get you an estimated net sheet based on the Listing price, and the offer presented to you so that you are aware of the costs upfront.

What is HARPTA?

HARPTA, which stands for Hawaii Real Property Tax Act, is a state law that requires non-resident sellers to withhold 7.25% of the proceeds from a real estate transaction. The seller may fill out an exemption application which can save them money or eliminate entirely the withholding. The exemption applications are filed prior to transferring of title to the new owner in order for the 7.25% to not be withheld. If the Seller is withheld the 7.25% but thinks they can prove they do not owe this entire amount they can file for a refund. Be aware you will need to provide receipts and accounting documentation to prove your exemption or refund. Always speak with a tax professional for guidance on this or any other Real Estate tax subject.

What is FIRPTA?

FIRPTA, which stands for Foreign Investment in Real Property Tax Act, is a state law that requires foreign to withhold 15% of the proceeds from a real estate transaction. Similar to HARPTA, the seller may fill out an exemption application which can save them money or eliminate entirely the withholding. The exemption applications are filed prior to transferring of title to the new owner in order for the 15% to not be withheld. If the Seller is withheld the 15% but thinks they can prove they do not owe this entire amount they can file for a refund. Be aware you will need to provide receipts and accounting documentation to prove your exemption or refund. A Seller whom is not a US citizen must file and pay for both HARPTA and FIRPTA. Always speak with a tax professional for guidance on this or any other Real Estate tax subject.

Can I move off island before my property officially sells?

Yes you can. If you are dependent on the sale to make your move, we normally advise you to wait until the inspection period and the conditional loan approval have been fulfilled before making that step. Make sure to speak with the escrow officer to see if it makes sense for you to sign your closing documents here on the island verses with a notary wherever you are moving to. If moving out of the country it may be best to sign here on the islands instead of having to coordinate the long process with the Embassy elsewhere.

Do I have to stage my home in order to sell it?

While it is not required to stage your home before putting it on the market, we find it to be an incredibly valuable tool used in selling your home quickly and at the best price. Home staging makes it easier for buyers to visualize the property as their future home.

What if I need to hire a licensed contractor for repairs for my on-island home but I am living off-island?

Your LUVA Realtor can send you a long list of vendors that may be able to help with repairs and renovations!

Can I be home when the Buyer and their Agent wants to view m property for sale?

While you technically can be home, we do not feel that this is the best practice. Selling a home can be an emotional process, and seller’s emotions or opinions about their home are often apparent if they are home while a buyer is viewing the property. It is best for a Buyer to view the home without the Seller being home so that that they can feel comfortable making comments and opinions to their Agent. It is also difficult for a Buyer to imagine the house as their own when the Seller is home during a showing.

What languages do LUVA agents speak?