Here you will find answers to some of the most common questions we get from buyers and sellers. If you have additional questions, please contact the appropriate department or individual, using our Contact Us page.

Buyers FAQs:

1. What do Leasehold and Fee Simple mean?
2. How does Hawaii's crime rate compare with other states?
3. What does CPR mean?
4. How do Big Island utility costs compare with the Mainland?
5. What is the property tax rate?
6. How do I handle pet quarantine?
7. What about schools for my children?
8. Where are medical facilities located?
9. The temperature on the Big Island is 74 degrees all year, right? And what about rainfall?
10. Where are the major shopping areas?
11. How should I take title?
12. What's the rental market like on the Big Island?
13. How much does it costs to buy an average home on the Big Island?
14. How much should I budget to ship my personal belongings?
15. Which are the major lending institutions in Hawaii?

Sellers FAQs:

1. How much time will it take to close the sale once we have an accepted offer?
2. What should I do to make the property marketable?
3. Why do I need a survey and why so early?
4. What is this alphabet soup - FIRPTA and HARPTA - stuff all about?
5. What should I expect to pay for closing costs?
6. What marketing services do you provide?
7. How much notice do I have to give my tenants when the house is sold?

Buyers Answers:

1. What do Leasehold and Fee Simple mean?
   Many buyers are confused by these terms. If you purchase a fee simple property, you own the land and the improvements upon it. Pretty standard.

   If you purchase a leasehold property, however, you are buying a lease for the land and, usually, you own the improvements. A residential leasehold might have been set for 55 years but if the ground lease is 30 years old, there would be 25 years left on the lease. Most banks require a minimum number of years remaining on the lease before they will agree to lend on the property. Some require that the lease be renegotiated with the ground lessor, often a family trust or large landholding estate. This can take more time than you expect and, in fact, lessors are not obliged to extend or renegotiate the lease.

   With all this, why would anyone buy a leasehold property? Because it is often less expensive to purchase and the lease is depreciable, which may have some tax advantages for you.

   As always, before purchasing any property, you should consult with your tax advisor and your attorney about how to protect your tax position and your estate.

2. How does Hawaii's crime rate compare with other states?
   In the year 2005 Hawaii County had an estimated population of 167,293. Hawaii County's Index Crime rate decreased 14.3% in 2004. The violent crime rate decreased 3.4% and the property crime fell 14.8%. Hawaii County's total Index, violent, and property crime rates in 2004 were the lowest in the State of Hawaii.

   Year	State Total		City and County of Honolulu	Hawaii County	Kauai County	Maui County
   	Number	Rate 1/
   1994	78,763	66.3	60,285	7,116	2,365	8,457
   1995	85,447	71.4	67,145	7,074	2,637	8,591
   1996	77,961	64,8	60,059	6,855	2,977	8,070
   1997	71,492	59.0	53,410	7,317	2,849	7,916
   1998	63,623	52.4	47,453	6,757	2,263	7,150
   1999	57,324	47.4	42,678	5,815	2,076	6,755
   2000	62,987	52.0	46,659	6,425	2,578	7,325
   2001	65,947	54.0	48,442	6,985	2,346	8,174
   2002	75,238	2 /61.0	57,271	6,936	3,045	7,986
   2003	69,267	55.5	50,912	7,133	3,043	8,179
   2004	63,665	50.4	46,628	6,219	2,701	8,117

   1/ Annual rate per 1,000 resident population based on July 1 estimates by the U.S. Census Bureau, as revised through Dec. 22, 2005. Rates for 2000 and beyond may differ from previous Data Books due to revisions to these population figures. Population estimates for 1991 through 1999 were revised based upon the April 1, 2000 figures which were released April 19, 2002.

   2/ Revised from previous Data Book.
   Source: Hawaii State Department of the Attorney General, Crime Prevention and Justice Assistance Division, Uniform Crime Reports; calculations by the Hawaii State Department of Business, Economic Development & Tourism.

3. What does CPR mean?
   In Hawaii real estate, CPR stands for "condominium property regime" and is most commonly heard when referring to a number, the "CPR number", which identifies one condominium property from another for tax and sales purposes.

   A single-family residence, for example, has a five number Tax Map Key (TMK) such as 3-7-3-10-10, which refers to a specific piece of land and everything on it. Because condominium ownership includes a percentage interest in the land with other owners, the Tax May Key has a sixth number, the CPR number. This identifies a specific apartment in a high rise or a portion of a lot when land is "condominiumized." Thus a condo TMK number looks like this: 3-7-2-15-15:103.

4. How do Big Island utility costs compare with the Mainland?
   Electricity for residential use is currently 27.90 cents per kilowatt hour. Cost varies monthly depending on petroleum fuel costs.

   A single residential phone line costs approximately $25.95 per month, no frills.

   Residential water costs are as follows: (based on 5/8" meter size):
   Base rate: $12.00 /month
   Power Cost Charge $1.50 / month

   For each 1,000 gallons:
   $0.75 / up to 5,000 gallons
   $1.55 / 5,001 to 15,000 gallons
   $2.75 / 15,0001 to 40,000 gallons
   $3.65 / > 40,001 gallons

5. What is the property tax rate?
   Residential property tax rate is $8.10 per $1,000 of valuation.

   	PROPERTY CLASS	Tax Rate Per $1,000 Net Taxable Building	Tax Rate Per $1,000 Net Taxable Land
   1	Improved Residential	$8.10	$8.10
   2	Unimproved Residential	$8.10	$8.10
   3	Apartment	$8.10	$8.10
   4	Commercial	$9.00	$9.00
   5	Industrial	$9.00	$9.00
   6	Agricultural or Native Forests	$8.35	$8.35
   7	Conservation	$8.55	$8.55
   8	Hotel and Resort	$9.00	$9.00
   9	Homeowner	$5.55	$5.55

   Source: Hawaii County Real Property Tax Office, real property tax rates fiscal year - beginning July 1 to June 30 of the next year. http://www.hawaiipropertytax.com/

6. How do I handle pet quarantine?
   We recommend you go directly to the source for this information. Here's the link to use: http://www.hawaiiag.org/hdoa/doa_importing.htm.
7. What about schools for my children?
   As you would expect, there are public schools in or near each community. There are also many private schools. Because Hawaii's public schools have historically tested far lower than most Mainland public schools in academic achievement, many parents opt to enroll their children in private schools. Changes are being made in the public school system and you should allow time to investigate for yourself and decide which would be the better choice for your children.
8. Where are medical facilities located?
   The Big Island has hospitals in Hilo, Kamuela, Kohala, Ka'u and Kona. Additionally, medical clinics and physicians' offices are located in most communities.
9. The temperature on the Big Island is 74 degrees all year, right? And what about rainfall?
   The Big Island has everything from desert to rain forest. The following chart summarizes basic information regarding weather around the island.

   Table 1.3 - TEMPERATURES AND PRECIPITATION FOR SELECTED PLACES, HAWAII COUNTY

   		Average temperature 1/(F.)		Extreme temperature of record(F.)		Average annual precipitation (inches)
   Station	Ground elevation (feet)	Coolest month	Warmest month	Lowest	Highest
   Hilo Airport	30	66.3	81.2	53	94	126.97
   Hawaii Volcanoes Nat'l Park Headquarters	3,971	52.6	69.0	34	89	107.34
   Naalehu	800	65.8	79.3	50	93	47.12
   Kailua-Kona	30	64.1	77.0	51	88	122.90
   Puako 3/	5	68.3	83.8	52	92	9.09
   Waimea (Kamuela)	2,670	66.7	84.3	34	94	20.75
   Honokaa	1,080	67.6	75.5	NA	NA	85.12
   Mauna Kea Summit 4/	13,796	31.3	42.5	11	66	NA

   NA = Not Available.
   1/ For some stations, data present 30-year normals.
   2/ Revised from previous Data Book.
   3/ Data available through 1976. Temperature data are for Mahukona.
   4/ Based on incomplete and non-continuous data for 1966-1972.

   Source: Hawaii State Department of Land and Natural Resources, Commission on Water Resource Management, records; University of Hawaii at Manoa, School of Ocean and Earth Science and Technology, Department of Meteorology, records.
   Website: http://www3.hawaii.gov/DBEDT/index.cfm?section=READ_Databook1075

10. Where are the major shopping areas?
    For general shopping of all sorts, Hilo offers the most choices. Prince Kuhio Plaza, a regional mall, and Kopiko Plaza are located in Hilo and are tenanted by both national chains and popular Hawaii retailers.

    Kailua-Kona, however, boasts some of the favorite shopping places for residents - the old standbys: K-Mart, Wal-Mart, Home Depot, Lowe's and Costco.

    Many smaller communities are home to specialty boutiques and art galleries and discovering what's tucked away in each is an adventure well worth the effort.

    For major shopping on "shop till you drop" excursion, many Big Island residents trek to Honolulu where shopping has become a minor art form.

11. How should I take title?
    Our company policy is to give you all the information you may request about the various ways in which title can be held but not to offer advice to you on this matter. Because of the implications for your estate and tax status, we urge you to discuss this question with your tax advisor, attorney or estate planner.
12. What's the rental market like on the Big Island?
    Tight and likely to remain so for some time. For details, go to the Rentals section of this web site where you will find a brief description of market trends and a "Hot List" of available properties which is updated weekly.
13. How much does it costs to buy an average home on the Big Island?
    Housing costs vary greatly from community to community on the Big Island, as they do on the Mainland. The best way to get an idea of current property costs is to browse through the Advanced Search section of this web site, exploring different locations as you go. You'll be able to see everything that's presently for sale through the Multiple Listing Service because our site links directly to the MLS database.

    Once you've pinpointed an area that interests you, email us for more information regarding the specifics of that area. We'll be happy to help you get the facts you need.

14. How much should I budget to ship my personal belongings?
    Your best source of information is in your home community. Contact a reputable moving company for estimates and delivery dates. Many such companies now have their own web sites and you may be able to get some helpful tips for pre-moving preparation.
15. Which are the major lending institutions in Hawaii?
    Bank of Hawaii and First Hawaiian Bank are the largest banks in the state. Other well-established institutions include American Savings Bank, Central Pacific Bank, City Bank, Hawaii National Bank, and Territorial Savings.

Sellers Answers:

1. How much time will it take to close the sale once we have an accepted offer?
   We normally estimate 45 and 60 days for closing but, frankly, there is no such thing as a "normal" escrow. Each property and each sale are unique. If there are time-consuming conditions to the contract, it will take that much longer to close and record the transaction. We recommend that you discuss this matter with your broker when you are considering offers to purchase, especially if "time is of the essence" and you must meet deadlines of your own outside of escrow, such as moving or purchasing another property.
2. What should I do to make the property marketable?
   In general, a property that is clean, well-maintained, and in good order is most attractive to a buyer and brings the best price. Your agent will be able to help you identify specific issues that should be taken care of before marketing begins.

   In the meantime, there are some simple things you can do to help get a good price. Start by looking at your property through a buyer's eyes and you'll see what we mean: remove unnecessary furniture and stored items, eliminate clutter, get the landscaping in good shape, and re-paint where needed. This will make a prospective buyer's first impression a positive one.

   If you are not able to take on major repairs prior to listing, be realistic. Expect to receive a somewhat lower price for the property and reflect that in your listing price. And remember, some buyers look specifically for properties where they can invest "sweat equity" rather than paying top dollar so don't be discouraged if you can't do everything you'd like to bring the property to mint condition. Your buyer may be looking for exactly what you have to offer.

3. Why do I need a survey and why so early?
   Surveys are a standard part of every real estate sale. They protect the buyer's interest by defining the exact position and size of the property he is buying and assuring him that there are no encroachments or boundary problems. The survey is conducted early so that, should problems arise, they can be resolved in a timely manner and not unnecessarily delay the close of escrow.
4. What is this alphabet soup - FIRPTA and HARPTA - stuff all about?
   FIRPTA (Foreign Investment in Real Property Tax) and HARPTA (Hawaii Real Property Tax Act) relate to tax payments due from sellers who are not residents of the United States or of Hawaii, respectively.

   FIRPTA "requires that if the seller is a foreign person, the buyer must withhold 10% of the amount realized by the seller to cover any seller tax liability. Residences below $300,000 that are going to be occupied by the buyer are exempt from this provision."

   HARPTA "requires every buyer of Hawaii real property to deduct and withhold from the non-resident seller's proceeds, 5% of the gross amount realized on the sale to be applied to any Hawaii income tax due from the seller with regards to the sale of the property. A buyer would be exempted from this requirement if the seller furnishes the buyer with an affidavit stating that the seller is a resident (includes resident aliens), together with his taxpayers identification number..." [from Vitousek et al, Principles and Practices of Hawaiian Real Estate, Honolulu, HI, 1995.]

   Because of the strict deadlines and penalties associated with these laws, your agent and your escrow company will make sure you are fully compliant.

5. What should I expect to pay for closing costs?
   A good rule of thumb is 2% of the purchase price. The items usually paid by the buyer and by the seller are listed in the standard terms of the sales contract.

   Additional items may be negotiated as special terms of the contract. Individual situations can differ substantially, depending upon variables such as the level of market activity, the condition of your property and your motivation to sell. Your agent will give you a fairly close estimate and will work to make sure you are paying a fair price for the services provided.

6. What marketing services do you provide?
   Marketing is the key to a successful real estate sale and, at Clark Realty, we use every tool available to us.

   We offer a wide range of sophisticated marketing services - both high-and-low tech - to publicize the properties we have listed for sale. We "get the word out" in weekly print advertisements, in monthly real estate and business publications, with flyers and post cards, and by direct calls to clients looking for a property such as yours. But that's just the beginning.

   Since the mid-1990s, we have had an Internet presence and we are very proud of the response our web site receives each day. The fact that you are reading this is evidence of the power of the Internet in real estate sales. Our web site statistics show activity from around the world and from all major search engines.

   We have designed our marketing program to integrate print advertising and the Internet. Because of the amazing flexibility of the Internet, we can give your property the kind of visual presentation that we could only dream of a few years ago. And our print advertising constantly refers readers to our web site so that your property has double visibility. Visitors to our web site are able to search the entire MLS database for information about properties for sale, browse through the special properties we feature in our "Featured Properties" section, and even find out about current market trends on the Big Island. In the Information Age, our goal is to provide INFORMATION and to keep the buyers coming back for more.

   Last, and most important, we have an exceptionally qualified, dedicated and professional sales team whose major focus is the successful sale of your property. With all this and seven offices serving the Big Island, we give the term "excellent service" a whole new meaning.

7. How much notice do I have to give my tenants when the house is sold?
   That depends upon the kind of lease your tenants have. If they occupy the property under a fixed lease, the lease expires on the date specified, regardless of who owns the property. In other words, a fixed lease survives escrow and the buyer of your property must honor the terms of the lease until it expires. Clearly this is a fact that requires early and full disclosure to prospective buyers.

   If your tenant is on a month-to-month lease, you are required by the Hawaii Landlord Tenant Code to give 45 days' notice to vacate. Once notice is given, the tenant may vacate at any time prior to the 45th day, without penalty. Therefore, you'll want to time your Notice to Vacate carefully or you may find yourself missing the rental income you had expected. This gets especially tricky when closing is delayed and the property is sitting vacant.

   We recommend that, before you enter into a lease with a new tenant, you think carefully about your long-range plans for the property.

If you have specific questions about your property, we invite you to visit our Rentals page and e-mail our Property Management Division for more information.