Welcome back! In our previous post “What is My House in Hawaii Worth? Part 1“, we talked about what it means to truly understand the value of your home. To recap, we defined your home’s value as “what someone is willing and able to buy it for”. This means that promises, tax assessed values and other opinions really don’t mean much at the end of the day. The real market value of your home, which is the only type of value that matters if you want or need to sell your house, is only what someone is willing to buy it for.
We also talked about using “apples to apples” data to gauge the value of your home. This means using data of houses that have sold that are similar in respect to: age, location, size, style, condition and date when sold. Let’s look at these in more detail:
Many homes in Hawaii were built in the 1950s and 1960s. If your house falls into this category, then be sure you’re not using sales of newer construction houses when estimate your home’s value. There’s no rule, but if you stay within 15-20 years you should be ok. Beyond that, then it may not be a fair comparison.
This probably goes without saying, but be sure you only look at data within the same neighborhood or geographic area. Try to stay within a mile if you can. Neighborhood characteristics can change just when crossing the street, so it’s important to make sure your comps reflect the same local feel as your home.
Be sure both the living sqft (under roof size) as well as the lot size of your comp properties are similar to your home’s size. Living sqft is more important, but lot size is also used by buyers when coming up with offers — which we already stated is the true value of your home. In general, within 15% living sqft size is an acceptable margin. You’ll still need to adjust accordingly up or down, but if your house is 1800 sqft, then a 2100 sqft single family home would be an acceptable comp. A 3000 sqft home would not. Along these same lines, a 10000 sqft lot is significantly more valuable than a standard Oahu 5000 sqft lot – be sure to take this into consideration.
Raw square footage isn’t enough — style of home is also important, and styles of homes on Oahu can vary tremendously. Does your house have a pool? A deck overlooking Diamond Head and the ocean? Does it feature an open layout kitchen or a small kitchen that needs upgrading? Does the master bedroom have its own full master bath or does it have to share a bath with others? These are all important items to buyers. If your home doesn’t have these features but the recent area’s sales do, then you need to factor this into your home value estimate — because you can be sure that buyers will do so.
Of course, the condition of your home is critically important. If your Oahu house is a true fixer upper, then it’s important to come to terms with that (luckily for you we love fixer uppers!). Every potential home buyer will get an inspection, so any problems with the house will come to light at some point in the process. When looking at comps, you either have to look at homes in similar condition to yours OR you need to adjust your home value estimate based on the differences in conditions.
Date When Sold
Lastly, be sure to look at when the comps on your list actually sold. The Oahu real estate market can change rapidly, so using old data won’t help guide you in figuring what your house in Hawaii is worth. Ideally, you want to restrict your search to only 3 months in the past. However in some areas you just won’t have enough houses sold; in these instances, try not to go back more than 6 months. Again, the idea is to keep your comps to current market conditions as much as possible.
Now that you know how to analyze comps, try to get a list of sold houses that meet the above criteria. Ideally you want 4-5 comps to really give you a reliable guide to work from.
And don’t forget to include active comps as well — that’s your competition for your buyer’s money! If there are other, more attractive houses available in your area, then you may need to downgrade your house estimate a bit to get it sold.