How to Get Your Money Back When Canceling Escrow


How to Get Your Money Back When Canceling Escrow

Many times buyers have to cancel during the escrow process. The most likely reason for canceling is they are not satisfied with the inspection. Another reason could be they do not like something they found out on the disclosure statement. The 3rd big reason for canceling is they can’t get the loan.

If they have not breached the contract, then the buyer is should get their money back. For example, if they cancel using one of the reasons above, within the time frames allowed in the contract, then they should get all of their money back.

However, if they miss a deadline they no longer have the right to cancel using that contingency. For example, if the inspection is over, they have accepted it by default and they can no longer say they did not like the inspection and want to cancel.

If the Buyer and Seller Can't Agree on Releasing the Deposits Mediation Is Used. Most Times 
They End up Splitting the Deposits.

This sounds easy enough, but it can be tricky in certain situations. For example, say there are 3 days left on the inspection, and the buyer requests some repairs. Now the buyer is waiting for the seller to get back to them. If the seller does not respond within 3 days, then the buyer has lost their ability to cancel because the inspection period is over. To prevent this the agent needs to keep track of the deadline and if it is approaching they need to try to extend the inspection period. If the seller does not respond to the extension request the buyer can decide to cancel or continue, but if they continue past those 3 days with no extension then they have lost their right to cancel because of the inspection period.

In some cases, there are still other ways the buyer can cancel even if their inspection period expired without a resolution. For example, perhaps they did not yet get the disclosure, or they have 10 days after receipt of disclosure to decide to continue or cancel. This gives them another out, so even if the inspection period expires, they could use the disclosure contingency to cancel. However, if the seller gets the disclosure to them day 1, then normally their disclosure contingency will be over before the inspection ends.

The finance contingency sounds simple enough in terms of a reason to cancel. If you can’t get the loan a buyer feels they have the right to cancel. However, there are deadlines in the finance contingency, and if you miss a deadline, just like the home inspection contingency, you lose your finance contingency. This is very tricky because the buyer’s agent might claim the buyer must cancel because of financing, but the seller’s agent might claim they lost that right because they did not deliver the conditional approval on time. So buyer’s agents have to watch this one closely to make sure the buyer stays within the timelines in the contract so they do not lose their ability to cancel if they can’t get the loan.

In our Standard Addendum, we added a paragraph to help with the finance contingency cancellation. It states if you can’t get the loan, you can cancel and get your money back. There are no time constraints in this paragraph, so it runs throughout the escrow and if it is part of the contract the buyer can cancel at any time if they can’t get the loan.

Escrow Will Not Return the Buyer's 
Deposits Without the Seller’s Approval

One other very important point to understand about escrow giving the buyer’s money back. Escrow is a neutral 3rd party. They will not make any decisions on the contract and who is right and who is wrong. So they only refund the buyer’s deposits if the seller also signs off on it.

This can be a problem at times. For example, say the buyer can’t get the loan and the buyer’s agent says everything was done on time so the deposits should be refunded. However, the seller’s agent disputes this and says the buyer lost their ability to cancel so the seller will not sign to give the buyer’s money back.

As escrow will not decide who is right and who is wrong they will hold onto the deposits until an agreement is reached. Many times this type of thing goes to mediation to help resolve it, and many times the deposits end up being split in some way between the seller and buyer to get them released.

Escrow Will Not Return the Buyer's 
Deposits Without the Seller’s Approval

Understanding CPRs on Oahu

Understanding CPRs on Oahu

Condominiums are a different type of ownership created in the 1960s of real property unlike subdivisions, which have been in existence for centuries. Hawaii is a leader in the development of condominium laws and has been used as a model by other states. The Condominium Property Regime (CPR) was known as the Horizontal Property Regime (HPR) in the early 1960s. Condominiums projects were high-rise buildings or town houses or apartment buildings that were converted to condos and sold to individual buyers. Within the last 15 years, single-family homes on one lot were condominiumized because the property could not be subdivided or the owner chose to do a condo project rather than subdivide.

What makes a condominium form of ownership different from all others forms of ownership in real property? A condo project is a special form of ownership of real property. To create a condo project in Hawaii, the requirements of the Condominium Property Act, Chapter 514A, Hawaii Revised Statutes (HRS) must be complied with. The condo project must also comply with all of the county requirements for zoning and building code.

Condo Creation

The Real Estate Commission (REC) does not create the condominiums. A condominium project is created by recording the master deed or lease, declaration of the condo project, by-laws of the project and the condo maps at the Bureau of Conveyances or at Land Court. The role of the REC is to make sure that all of the condo documents have complied with the law and all pertinent disclosures have been made for the consumer’s protection. The law states that you cannot sell the condo units to the public unless you have a public report. The CPR documents can create the condominium and be recognized by the government as a condo project but in order to sell the units to the public, a public report has to be issued by the REC.

A landowner may choose to do a condo project because although he has enough land to build the number of units, the lot configuration may not be conducive or preclude a subdivision from being approved. The lot may be too narrow, or the access to the lot may be a flag driveway, or the lot may be too steep and the grade is unacceptable for a subdivision. The owner may have a lot large enough to subdivide and has the required frontage but he may want to convey title to a smaller land area than the minimum lot size for a subdivision. There is no minimum land area required for a condo unit whereas the minimum lot size for a subdivision could be 5,000, 7,500, 10,000 or 20,000 square feet.

A landowner is strongly urged to condominiumize if a second house is built on the lot and a child has borrowed money to build the second house and the mortgage is on the whole property. The parents may be jeopardizing their financial security if the child defaults on the mortgage and the bank is forced to foreclose on the property. The parents will need to satisfy the bank loan or they may have a new partner on the lot under a Tenants in Common ownership and the new partner can force the sale of the property. If the child goes bankrupt the creditors could attach a lien on the property. If the child gets a divorce, the in-law could ask to be paid off his or her share of the equity. Many problems arise when the property is held in joint ownership. It is highly recommended that landowners condo the property to protect it against lawsuits, divorce and non-payment of mortgage notes.

Development Timeline

How long does it take to subdivide one lot into two? Does the streamlined building permit process affect other applications at the DPP? If all goes well, a subdivision could be approved in 2 to 3 months but realistically, the whole process could take 4 to 5 months or longer. The key is to have a good professional that knows what he is doing and follows up with all of the agencies reviewing the subdivision plans. The streamlined building permit process is limited to duplex and single-family homes only.

In a subdivision, there is a tentative approval and a final approval and the time it takes between the two approvals is dependent on the difficulty of the project, accuracy of the plans, the proficiency of the surveyor and engineer, the number of projects being submitted, vacation time of the reviewers, and many other factors. A tentative approval could be received as quickly as 30 days if there are no hitches. Final approval will not be given until construction plans are approved, each agency signs off on the plans (about 12 agencies are involved including the utility companies), DPP signs off on the plans, bonding approval if the site work is not finished and the file plan is given to the state surveyor for his review. You can sell the land with a final map being approved but cannot convey title without a recorded map.

In a simple 2 lot subdivision, the surveyor is the key person that will route the plans through the DPP. In a larger project, a consulting engineer or civil engineer will be the key person(s) to design the improvements, sewer lines, utilities, lot layouts, check for sewer and water availability, do preliminary consultations with the various city and state agencies, etc.

DPP has a lot of printed materials on the subdivision process and the guidelines are well defined. There is a subdivision guideline summary booklet that is available. Clusters and PDHs are more subjective and the final decision lies with the DPP Director rather than printed guidelines. In the future, private roads that are 24 feet wide may not be ADA approved and design requirements may be different. Kalanianaole Highway is a classic example of changing rules and the work taking years to finish. The bus stops and fire hydrants are in the way of the wheelchairs traveling on the sidewalks and need to be relocated at tremendous cost and time. State office for persons with disabilities will need to review the plans for compliance with the laws.

Posted in MLS

Understanding Leasehold Property on Oahu

Understanding Leasehold Property on Oahu

Leasehold means you do not own the land.

Someone else owns the land and you pay a fee/rent each month to that owner to be on their land.

The problem with leasehold is at the end of the lease you no longer have the right to be on that land, so the value in your leasehold unit would be zero.

Sometimes you can change a leasehold property to fee simple, and it in that case it becomes a normal property where you own the land and the value will continue to increase.

If you can’t change it to fee simple the leasehold property value will decrease each year as it heads towards a zero value.

So, for leasehold you must pay rent to the land owner each month plus Home Owner’s Association fees plus taxes. It can add up to a big expense each month.

So, for most situations, we do not recommend leasehold because you lose not only the rent you pay but each year you are there you lose the value in the unit. You are better off renting because at least you know exactly how much money you will spend each month and at the end of the rental period you simply walk away, you do not have to sell a property and take a loss on it.

One situation where leasehold could work is for seniors who will most likely die before the lease is up and are not worried about leaving more money in their estate.

Another option could be for an investor, but you must make sure you are not expecting to get your money back if you must sell the unit.

Posted in MLS

Why Does Every Broker on Oahu Have Their Own Standard Addendum?

A Broker’s Standard Addendum is designed to reduce the liability for the Broker.

For example, paragraph one of the Standard Addendum states that Brokers are released from any liability in areas in which professional services have been recommended and where we are not experts. The termite inspection is an example of this. We always recommend a termite inspection from a professional inspector, and we are not qualified to do one. The termite inspectors are really good and I can’t remember ever having a home with live termites where tenting was not recommended because the inspector did not notice the infestation, but if a mistake was made we are not liable as the buyer picked the inspector and the inspector would be liable for any mistakes made. Inspectors normally have a clause in their contract that states their liability is capped at the total amount spent on the inspection, and I have seen cases where the home inspector refunds the inspection fee.

Scope of Service from Standard Addendum

The Standard Addendum also gives the buyer some more ways to cancel, which again reduces the liability for the Broker.

For example, if the termite inspection finds a live infestation or damage the buyer could cancel the contract. This right is the Standard Addendum, but not in the standard Hawaii Purchase Contract. This right is important because buyers might be uncomfortable with the extent of the termite problem the inspector finds and should have the right at that point to cancel.

Termite Inspection cancellation right in Standard Addendum

Another area we want to make sure the buyer has the right to cancel if they can’t get the loan. While the Hawaii Purchase Contract also gives them this right, it is a bit confusing as there are certain dates that must be met, and if one is missed the seller could claim they waived the financing contingency and try to keep the buyer’s deposits even when they can’t get the loan. On the Standard Addendum, we give the buyer the right to cancel if the loan does not come through or the appraisal is low and we do not restrict the time period they can do so. This means the seller can’t claim the buyers lost their right to cancel because they missed a deadline in the Purchase Contract.

Finance Contingency in Standard Addendum

In many cases the seller’s agent will counter the offer to replace our Standard Addendum with their own Standard Addendum which they are more comfortable with. We do not have an issue with this. It happens a lot, and the buyer still has all their rights to cancel built into the contract and I have not seen any Standard Addendum that removes the buyer’s right to cancel and get their deposits back as stated in the Hawaii Purchase Contract.

Honolulu MLS Rule About Contact Information

Honolulu MLS Rule About Contact Information

The rule for the Honolulu Board of Realtors MLS, otherwise known as, is there can be no contact information in the public section of the MLS.

This is important because the MLS goes out to over 1,000 other websites, and those websites do not want to be promoting competitors. If contact information was allowed every Broker would be promoting themselves as much as promoting the property they are selling.

Regarding not adding contact information it sounds straight forward but might surprise you with a violation anyway. The obvious thing is no contact information in the photos or public description. However, it gets a bit more tricky when you link to 3rd party websites such as YouTube, Zillow, etc.

For example, we had one seller who had us link to a 3D tour on Zillow. On the tour itself there was no contact information, but for someone really looking at it closely, the Zillow tour had a way to see who the listing agent was, and this counts as contact information. It was hard to find that link, but some agent found it and reported us.

If you do link to YouTube you have to make sure there is no way to get contact information from the YouTube account you have uploaded the video too. A Broker can’t simply upload a video to their YouTube channel and display it that way.

One thing they are OK with so far is they do not analyze the URL you are linking to. For example, we can link to a generic page with no contact information on The URL contains the words, but nowhere on the page does anything mention us, so they are OK with it. Here is a sample unbranded page on

This no contact information policy has been improved throughout the years. At one time they used to allow branding in the photos, so for example we could put on every photo showing that it was our listing and our photo. As complaints mounted about this they updated the rule to say no company logo or branding on any photos. That branding in the photos was one of the reasons I started as a separate company. At the time we worked for Realty Executives, and we could only put Realty Executives on our photos, as that was our Broker’s name. I figured if I start as my own brokerage, then I can use on the photos. This worked for a few years until they eliminated it.

Posted in MLS

How to Eliminate the Buyer’s Agent 2.5% Commission

How to Eliminate the Buyer's Agent 2.5% Commission

One exclusive advantage we offer is if you find a buyer without a buyer’s agent, we will represent both sides for the $3,500 flat fee or the 2% full service fee.

Because we are representing the buyer too, this gives the buyer the confidence that they will get their questions answered and get the support they need. If we were not representing the buyer they would not feel comfortable and would request another agent to represent them, and that agent would want a 2.5% commission.

This option gives you an opportunity to eliminate the 2.5% commission paid to the buyer’s agent.

Many sellers find buyers by word-of-mouth through friends, family, or even social media.

The chart below shows you total commission saved with no buyer’s agent.

Sellers in Buildings With Special Assessments Must Review F-8 on the Hawaii Purchase Contract

If there are any special assessments that being paid monthly paragraph F-8 is very important. Buyers will want sellers to pay any lump sum assessments prior to the Acceptance Date. They might want sellers to pay off any special assessments they are paying monthly on.

Sometimes this can be a lot of money depending on the size of the assessment, so if there is a special assessment being paid monthly sellers might want to ask that the buyer keeps paying that assessment after closing rather than paying the entire assessment at closing.

Reviewing this is critical because you don’t want to think the buyer will keep paying the assessment, then once in escrow you find out you need to pay $10K to $20K extra to pay off the special assessment.

Regarding paragraph c this rarely happens but if it does and an agreement is not reached the buyer has the right to cancel and get their deposits back.

Understanding Our $3,500 Flat Fee vs. Our 2% Full-Service Selling Options

Understanding Our $3,500 Flat Fee vs. Our 2% Full-Service Selling Options

Which selling option meets your needs best?

The big difference is with our full-service option an Team Realtor will meet you in person and view the home you are selling. With our $3,500 option we do not meet you in person or see your home in person. With both options you do get full representation from start to finish.

With our $3,500 option we prefer to work via email, although we are available via phone when needed. With our full-service option, you decide with your dedicated Team Realtor how you prefer to communicate. If you prefer phone calls and require in-person meetings, then full service is your best option.

With our $3,500 option I represent you. With our full service option a Realtor on the Team would represent you.

With our $3,500 option I will do a Home Value Video going over a suggested price range using and send you this video along with the comparables I am looking at in the video. With the full-service option, the Realtor will see your home in person and provide comparables and a price range based on their in-person visit. With both options you decide the price you want to list at.

With the full-service option photos are included and we pay for them. With the $3,500 option you pay our recommended photographer around $200 for photos, or you can provide photos that you have taken yourself.

With our full-service option the Realtor from our team can do an Open House for you. With the $3,500 option you can do as many open houses as you like, but you would sit them.

So which option will meet your needs best? It depends on you. If you are used to a traditional Realtor and appreciate meeting your Realtor in person then full-service is the way to go. If you are comfortable using Email and handling a few more things yourself and like the idea of saving money on commission than the $3,500 option would be for you.

You can read more about the benefits of our $3,500 Selling Option and our 2% Full-Service Selling Option to help you make a decision.

Will Resetting Days on Market Help Find Buyers?

Will Resetting Days on Market Help Find Buyers?

When a home is not selling, some sellers feel the need to reset the Days on Market shown in the MLS.

Let’s take a closer look at how a buyer might see this.

Buyers care most about the price of the home, what it looks like, and where it is located. They don’t say to themselves I won’t buy a home that has been on the market for over 60 days. If the price was lowered and is now priced right, that home that was sitting on the market for a while could now get multiple offers.

Buyers do look at Days on Market to get an idea of how flexible the seller is. So there is a possibility if you reset the Days on Market and the buyer does not notice the past listing they will feel you are less flexible with your price, as sellers tend to be less flexible when they first list and more flexible after they have been on the market for a period of time. This means resetting the Days on Market could prevent a buyer from making a lower offer as they might assume you will not be interested in it. So in this scenario resetting the Days on Market might cause you to lose an offer.

Another issue with resetting the Days on Market is if they notice you withdrew and then relisted again, buyers might wonder why. Is it just you are trying to hide the Days on Market or is there some other reason you had to withdraw? Perhaps there was an issue with the home you had to fix. Even if it was just to hide the Days on Market, buyers could get concerned with sellers who attempt to hide something. It brings up the question, would there be other things a seller might hide.

With the Oahu MLS, 15 days is required after withdrawing a listing to relist it again. During these 15 days while you are not listed you could lose a potential buyer. We figured out a way around this 15-day rule, but most agents will have you wait 15 days before it can be relisted and you can’t get an offer when you are not listed.

So resetting the Days on Market is not something we recommend, but we will do it if the seller requests it. We believe if a home is sitting too long the best thing you can do is drop the price. This shows you are interested in selling and gets you closer to the market price where your home will sell. All homes are easy to sell and sell fast at the right price, and all homes are impossible to sell when priced too high. The market might be telling you that your price is too high if you have been listed over 30 days with no offers.

Posted in MLS

Cleaning Prior to Closing Is Required When Selling a Home

Cleaning Prior to Closing Is Required When Selling a Home

If the 2nd blank is checked then a professional cleaning is needed for the entire home with receipts provided to prove it was done.

If the 2nd blank is not checked then only the carpets need to be professional shampooed. The other cleaning items can be done by the seller or a professional cleaning service.

We suggest using a professional service even if it is not required. Sellers have enough to worry about without having to worry about cleaning, and many buyers are not satisfied with the cleaning that sellers do themselves.