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Kawamoto homes More than two months after Japanese businessman Gensiro Kawamoto put one-third of his Oahu homes up for sale, no sales have closed and a few deals have fallen apart because prospective buyers did not like what they saw during inspections.
not selling
Some deals have fallen through
when prospective buyers back out
after inspecting the houseBy Tim Ruel
truel@starbulletin.comKawamoto, a billionaire who bought more than 170 properties in Hawaii during the rip-roaring real estate boom of the late 1980s, has left some of the aging homes in disrepair, and several are not worth the asking price, observers said.
Prudential Locations agent Rodney Mukai, one of three Realtors retained by Kawamoto to sell the homes, confirmed that a "handful" of potential deals have fallen through following buyers' inspections. "We had a few like that," he said.
Mukai said he knows of five or six home sales that are scheduled to close at the end of this month. Deals have taken longer than usual, Mukai said, but only because the signing of documents has been slowed because Kawamoto lives in Japan.
"Compared to other closings in the market, it's definitely slow," said Jack Leslein, principal broker with East Oahu Realty, which has been representing prospective buyers. Many of the Kawamoto homes up for sale are in the Hawaii Kai area.
Typically, closings happen within 45 days of a listing, Leslein said.
When Kawamoto put the homes on the market in early February, many of the properties were said to be undervalued, drawing a lot of interest. Several buyers put in bids for homes they had never seen before, agents said at the time.
Upon the acceptance of a bid, a hopeful buyer would make a deposit on the house and hire a professional home inspection company to make sure the particular dwelling was not in need of expensive repair. That was when several deals fell apart for certain properties, Leslein said. It is a fairly normal situation in sales, he noted, and the listing agent would simply turn to the next prospective buyer. The deposit is refunded in full.
"It's almost like a foreclosure. Unless you know the history of the property ... you can buy a can of worms," said Cathy George, whose firm Cathy George & Associates is representing buyers. The onus is on the buyer to examine the home, she said.
What is different with Kawamoto, Leslein said, is that some of his homes were put up for sale at a real deal, while others were overpriced because of disrepair. "We've never had anything like this at all," Leslein said.
Andy K. Chan, a resident of Ewa Beach, was initially skeptical when he put in a bid on a 1,314-square-foot three-bedroom home for sale in Niu Valley. The home was built in 1955, primarily of wood, and Chan figured he would have to rebuild it.
Kawamoto assumed the lease to the house in 1988 for $187,000, and he later paid $195,000 for the 8,295 square feet of land underneath it, for a total of $382,000. Kawamoto listed the home for sale at $385,000.
Upon inspection, Chan found he would need to make only minor modifications, including a gate that would have to be built around the swimming pool, for safety. Plus, he would have to fix one external wall that was damaged by a tree root.
"It needs repair, but not that much," Chan said. He was pleased because he had heard tales of other Kawamoto homes that really needed work. "Lucky, yeah?"
In contrast, House Doctors home inspector Thom Therrien said one of his prospective customers decided against buying a Kawamoto home after driving by the property to have a look, without even an inspection.
Mukai declined to discuss whether Kawamoto would have to lower the prices on some of the homes to sell them. "We normally don't disclose that to anyone," he said.
Another listing agent hired by Kawamoto, Herwin Hung of Properties of the Pacific, declined any comment. "We're not allowed to discuss our clients," he said. An attorney who represents Kawamoto could not be reached for comment yesterday.
Kawamoto's net benefit from the investment in each home is likely to be varied.
One property, a home on Kaumakani Street, is listed for sale at $350,000, including 5,283 square feet of land. Kawamoto bought it for $227,500, records show.
On the same street, Kawamoto listed another home on 9,000 square feet of land for sale at $335,000. He paid nearly $500,000 for it.
Kawamoto has created quite a stir in other real estate markets. In California, Kawamoto was met with outcry and litigation when he gave 30-day eviction notices to nearly 600 people renting his homes in the Sacramento and Santa Rosa area on month-to-month leases. Kawamoto has placed all of the homes on the market, and was within the law by giving tenants 30 days, but he later agreed to extend the period to 90 days.