The complex seems to be on track and ready to start closing the first building, Hokulani in January. The question is, how many units are going to close?
It seems some of the reservation holders have changed their minds and no longer wish to take a piece of what has the promise to be the finest resort complex on the Kaanapali/Lahaina side of the island. Those reservation holders who wish to sell and can close escrow will be OK. They will find buyers if they price their units right and don’t get greedy. There is demand for Honua Kai condos and the demand will continue to build over time.
The current crop of reservation holders that are in trouble are those who can’t close. Individuals who were pre-qualified on the basis of “stated income” for loans are likely to find that well is dry; although I have heard of a potential program for stated income, but that was a couple of weeks ago and it may be gone by now.
And they are double stuck. The contract to purchase they currently hold cannot be transferred to a new would-be buyer and it requires the original contract holder to close escrow. Since they can’t get a loan, they can’t close. Since they can’t close, by contract, they lose their 20% deposit.
Some other folks who are in better shape and can qualify for a loan and close, but want to divest the property as quickly as possible after closing, have listed their properties for sale. It probably seemed like a good idea at the time.
What they didn’t know is that once they listed their property and put in the MLS, they probably killed their chances of getting a loan. You see, almost no lender will approve a loan for a property that is on the market for sale.
The ray of hope is that the developer has provided an out that effectively lets reservation holders sell by taking on a partner. In a nutshell, the original reservation holder closes escrow with the partner and then transfers the property to the partner after closing. Of course, it’s easier said than done, but it can be done.
We also know of at least one lender who may be able to help those listed in the MLS. No promises of course, but trying is better than kicking the sand and saying there’s nothing I can do about it.
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