Why Land Sales For Cash Can Be Difficult

Buying and selling Hawaii land for cash can be more challenging than for homebuyers that secure traditional mortgages. In fact, even a well-planned purchase can go awry. There are a few reasons why.

One reason is the lack of financing options for Hawaii land sales for cash. Many Hawaii land loans are offered only by local credit unions that require a Hawaiian residency to become a member. These loans are typically for a maximum of three years, after which the loan must be converted to a construction loan or paid off entirely. If buyers fail to pay off a land loan, the property may be repossessed by the lender.

Another reason for the difficulty in financing a Hawaii land sale is that most of the state’s land is leasehold rather than freehold. A residential leasehold is a form of real estate ownership that gives one entity control over the land and allows another to build a house or condo on it. This type of real estate ownership is most common in Hawaii and is also used in a few locations on the mainland, including Palm Springs and Florida. The main advantage of a residential leasehold is lower building costs, because the land is not being purchased. However, the cost of a leasehold is high, because each year, a homeowner must pay a lease rent that includes maintenance fees and property tax. The end of a lease is another significant drawback, as the house or condo returns to the landowner when the lease expires.

Some lawmakers believe a leasehold solution could help address the state’s affordable housing shortage. Senator Stanley Chang this year introduced four bills that would allow the development of a new type of home on state-owned lands, similar to what is done in Singapore. The homes would be built on 99-year land leases. Chang argues the plan is feasible because of Hawaii’s similarities with Singapore, which offers comparable land tenure.

The number of Hawaii residents with no practical use for a vacant piece of land is growing. Some homeowners inherited land and find they can’t manage the property, while others bought their vacant land with retirement in mind but later changed their minds or moved to another location. In either case, the land owners are stuck with the property, paying annual property taxes that can be very expensive and often having to worry about the land’s value plummeting as they wait for a buyer.

Regardless of why you need to sell your Hawaii land, ExpressLandOffers can help. We buy land fast and have the funds to close on your transaction without delay. We can give you a fair offer for your land that considers all of your needs and the current market conditions. Contact us today to learn more about our process. We can also provide a professional home valuation and help you with the escrow process. Our goal is to make your Hawaii land sale a simple, hassle-free experience.