Here’s a glossary of the most frequently used real estate terms as they pertain to our business of professionally purchasing properties in Hawaii directly from sellers like yourself.

Deed — The deed is the legal instrument that actually shows true ownership of a property.

Title — The “title” is the way we commonly refer to ownership of a property. If you have title to a house, then you are the owner of a house. Want to prove it? Produce the deed with your name on it.

Purchase and Sale Agreement — This is the actual contract we use when buying a home in Hawaii directly. It shows the names of all parties (buyers and sellers), the property address, the price and any other terms that detail how the sale is taking place.

Addendum — An addendum is an additional document attached to, but with a set of terms beyond, the original Purchase and Sale Agreement. Common addenda used at the time of the contract are the “As Is” (we’ll buy your house no matter the current condition) and the “Short Sale” addendum (if you’re selling your house for less than what you owe the bank).

Sometimes we’ll have to use an addendum after the original contract is signed. For example, if the contract says we’re closing on February 28 but you need an extra week to move out all of your belongings, then we’ll use an addendum to extend the closing.

Short SaleWe buy many short sales in Hawaii! A short sale is where you sell your property for LESS than what you owe your bank(s). For example, John bought his home in Ewa Beach in 2006 right around the time of the last crash. He lost his job and hasn’t been able to make payments for almost two years and is afraid the bank is going to start to foreclose on him. He owes $675,000 but the property is only worth $580,000. Since he owes so much more than it’s worth, putting it on the MLS with a realtor and hoping for a market buyer is impossible – it would never sell for what he needs to pay off all the debt. After all, who would pay $675,000 for a home worth $580,000?? No one.

However, there’s still a way forward — the short sale. Our team negotiates with your bank(s) and/or associations — for FREE — to buy your Hawaii property for less than what you owe. The bank takes a loss, but they also get to avoid having to foreclose and take back your property, and you get to move on from the property without being foreclosed upon.

Pre-foreclosure — This a general term for the time period between when the bank files their Notice of Default at the courthouse and when they actually hold a foreclosure auction. This can be as short as a few months or stretch out a few years – every situation is different.

This is where we buy most of our properties in Hawaii from sellers — when they know the bank is starting to pile on the legal fees but while they want to avoid getting foreclosed upon and still have time to make intelligent decisions about their future.

Probate — Probate refers to the legal process of transferring assets from the estate of someone who passes away to that person’s heirs. Inheriting a property in Hawaii might sound rosy, but not every property is an asset worth taking on. Sometimes a property that’s been in the family for generations is well overdue for costly renovations and is more of a burden than anything else.

We can buy houses in Hawaii probate so that your family has quick cash without having to fix anything up or hold onto the property and try your hand at being a landlord. Our paralegal can expertly work with your family to resolve the house probate matter, even if there are other assets that need to be addressed.

Agreement of Sale — This is an alternative to the direct cash-out. With an Agreement of Sale (AOS), we may work with your existing debt or lenders to make your regular payments for you while we renovate the property for resale. Sometimes this option can net you more money than a regular cash-out.

Lien — A lien is recorded legal instrument that collateralizes the home for a certain dollar amount and must be released or paid off for title to transfer clearly to another owner. Your mortgage, for example, is a form of lien — it has to be paid off (or released in a short sale) for you to give clear title to a new owner.

When we work with private individual lenders to fund our Hawaii home purchases, we record a lien for their loan amount against the very property we’re purchasing.

Escrow — An escrow service is a neutral third-party that handles all the funds that go between the buyer, seller and any other party like banks, the county, etc. This is for everyone’s protection and benefit. Common escrow companies in Hawaii that you may be familiar with are First American, Fidelity, and Old Republic among others.

Survey — A survey is a process of delineating a property’s boundaries and making sure it matches to what’s on the deed or other historical records. It can tell you whether you have encroachments from a neighbor (or vice versa) and whether a property is affected by any setbacks. A survey can cost close to $1000. It is normally paid by the seller, but we always cover it ourselves.

Home Inspection — A home inspection is where a professional inspector looks for damage from top to bottom: roof, electric, plumbing, tile work, flooring and anything else that a potential buyer should be aware of when considering a purchase. While we always get an inspection done on our purchases, we still always buy our properties “as is”.

Reinstatement — This is process of bring a defaulted loan back into current good standing. Sometimes, depending on your property condition and loan status, we may restore your loan and pay the arrears (delinquent amount) instead of an upfront cash out. Buying a home this way can often give you a credit boost in the process.

Docusign — This is online software that we frequently use to sign the Purchase and Sale Agreement instead of dealing with paper, faxing, scanning and such. Of course, we can still use good ol’ paper, but online signatures are often easier and more transparent since the signing process can be tracked. All you need is an email address!

Zestimate – Ah yes, the Zestimate. This is a figure on the popular website Zillow that supposedly gives the current value of a property. Quite often, people will call us with the Zestimate figure already in hand. Unfortunately, this is rarely a true reflection of a home’s worth. After all, it’s just a computer algorithm and has no way of taking the property’s condition – inside or outside – into consideration.

Have more questions? Just call us at 808-377-4379 and we’ll be happy to discuss them with you!