# Need help on Kaanapali purchase



## Ianneyan (Mar 31, 2022)

I have a couple offers out there:

1) 11K on 2BR EOY odd years: Agent quoted closing costs in Hawaii are $1,849, Hyatt charges a $650 transfer fee and the administrative fee is $349. 
2) 19.5K on 2BR annual: Waiting on fees, but title insurance recommended (I vaguely recall an estimated fee of upwards of $1K for this).

I am awaiting responses from the agents as to whether their clients accept my offer. If offers are accepted, how likely is it that they either will pass ROFR? My other questions are:

a) Should I pay for title insurance? Any there any questions I can ask the agent to avoid the need for it (e.g., Is seller original owner who bought through developer?; Divorced/deceased spouse? Does estoppel shows loan paid in full with MF current, etc.)?

b) Does bundling the sale price and closing costs really help ROFR?  I asked an agent to submit offer for 13,750, seller pays fees to improve ROFR and he said Hyatt would still only see it as $11K when they subtract fees.

Any other advice?

TIA for your help


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## echino (Mar 31, 2022)

That may depend on which fixed week and floor band you are buying. As an example, an off-season week in May or October, and a low floor band, is worth much less than a high season week in March or July on a high floor band. Consequently, ROFR may also be affected.


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## Ianneyan (Mar 31, 2022)

echino said:


> That may depend on which fixed week and floor band you are buying. As an example, an off-season week in May or October, and a low floor band, is worth much less than a high season week in March or July on a high floor band. Consequently, ROFR may also be affected.



Thanks for the input. Low level floors 1-4, week 39 (last week of September/first week of October)


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## Kal (Apr 1, 2022)

My guess is you are close to the ROFR grab.  Too bad you can't rework the deal with a poison pill to keep Hyatt out of the action.


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## Ianneyan (Apr 2, 2022)

Kal said:


> My guess is you are close to the ROFR grab.  Too bad you can't rework the deal with a poison pill to keep Hyatt out of the action.


If either offer is accepted, I guess we'll see. Any advice on title insurance? It's the first time I've been asked if I wanted it if we move forward.


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## ScoopKona (Apr 2, 2022)

Ianneyan said:


> If either offer is accepted, I guess we'll see. Any advice on title insurance? It's the first time I've been asked if I wanted it if we move forward.



I wouldn't. If there is a title problem, it affects the other 51 owners as well. The potential problems are property boundaries (which have been set since the original royal land grants). Or an unpermitted structure. Or adverse easements and similar. 

I don't think any of the above is worth insuring -- just extra money for what is already an inexpensive real estate purchase. It's like putting comprehensive insurance on a cheap car.


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## Thompssc (Apr 13, 2022)

New guy here, but interested in HKB. I'll hop on here and ask- how does Hyatt decide when to execute their ROFR? @Kal is saying this deal is likely close to the cutoff on ROFR. I'm curious how you came to that conclusion. My uneducated thinking on this is just that if it's a crazy good deal (cheap), they will claim ROFR and then resell on their own to capture a decent margin. But how are you coming to the conclusion that the specifics of this deal are near that threshold? Is there a rule of thumb or something that you use (ex. If resale is 40% or less of retail)? Seems like if you're nearing ROFR range, you know you're getting a good deal.


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## ScoopKona (Apr 13, 2022)

Thompssc said:


> New guy here, but interested in HKB. I'll hop on here and ask- how does Hyatt decide when to execute their ROFR? @Kal is saying this deal is likely close to the cutoff on ROFR. I'm curious how you came to that conclusion. My uneducated thinking on this is just that if it's a crazy good deal (cheap), they will claim ROFR and then resell on their own to capture a decent margin.



They want every deeded week they can lay their hands on to sell their new points-only program (which I want nothing to do with). When I worked there, nobody in sales knew the precise answer -- not even my broker. But they had an algorithm where "the money to be made putting the week back into the mix" was worth absorbing the maintenance fees and the cost of selling a week. It's a sliding scale -- Diamond weeks will never be as good a deal as Bronze weeks. ROFR will be exercised at a higher threshold for those Diamonds.

From the looks of things, Maui is either all Diamond or mostly Diamond.

This leaves you with two options:

1) You know PRECISELY when you want to be in Maui for the next several years (if not in perpetuity). If so, buy that. Just keep putting offers in and hope one of them sticks. (I've had people in front of me who got ROFR'd so many times, they finally just bought the week they wanted from Hyatt.)

2) You know you want to go to Maui often, but don't know when from year to year. If that's the case, standard Hyatt rules apply -- buy the least-expensive Diamond week and trade. Because if you aren't reserving what you own, where you own makes no difference. Only the amount of points you have. Once traded for points, all points have equal value within the system. 

IIRC, Sedona has the least-expensive total cost of ownership. If I'm wrong, someone will be along shortly to correct me.


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## Pathways (Apr 13, 2022)

ScoopLV said:


> hey want every deeded week they can lay their hands on to sell their new points-only program


Remember, HKB is not in the points program, and it is not Hyatt who exercises ROFR there, it is the developer of HKB.  

I don't think anyone has a handle of what it takes to pass ROFR there, probably depends on how well sales are going.  Clearly, it has taken FAR longer for the developer to sell out than what they planned, so I think they will pass on ROFR most of the time. 

Most owners have absolutely been sold a bill of goods on resale value, or most have big loans they have to pay off as the asking prices on Redweek are nonsense.  I once responded to a 3 bed ad for 45k, and told the daughter I would offer around 35.  (This was an annual).  She said her mom 'needs to sell it as she needs the cash" and my offer would be close to what a broker had told her she could realistic get.  After she presented it to mom, mom went ballistic and said it was worth of 65k at least and to remove the listing.

BTW, I was glad I didn't get it, those 3 beds are almost not worth it at any price given the MF's.  They are hit and miss to rent, and since no lock out, you need a big group to make it worthwhile


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## ScoopKona (Apr 13, 2022)

Pathways said:


> They are hit and miss to rent, and since no lock out, you need a big group to make it worthwhile



If you're buying a week for the rental-income potential, I strongly advise against that. I'm of the opinion that the only reason to buy a deeded week in Maui is that you believe you will use that week at least four years out of five -- for a very long time. Otherwise it's just not worth it. Any Diamond week in the system will work just as well if you're going to trade often.


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## Pathways (Apr 13, 2022)

ScoopLV said:


> IIRC, Sedona has the least-expensive total cost of ownership. If I'm wrong, someone will be along shortly to correct me.


You are correct.

BTW - You planning some competition with Greenwell Farms?


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## ScoopKona (Apr 13, 2022)

Pathways said:


> BTW - You planning some competition with Greenwell Farms?



Nah. We're all in this together. All the coffee farmers bend over backwards to help each other out. I'm going to sell all my coffee, every year. So is everyone else. The Kona coffee belt is only seven miles long and a few thousand feet wide. There are only a few hundred of us, after all. 

Our biggest problem is people who counterfeit our coffee. Most people who buy "10% Kona Blend" are being scammed, big time. We have access to mass spectrometers here. Can't fool us with their bogus beans.


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## Pathways (Apr 13, 2022)

Thompssc said:


> New guy here, but interested in HKB. I'll hop on here and ask- how does Hyatt decide when to execute their ROFR? @Kal is saying this deal is likely close to the cutoff on ROFR. I'm curious how you came to that conclusion. My uneducated thinking on this is just that if it's a crazy good deal (cheap), they will claim ROFR and then resell on their own to capture a decent margin. But how are you coming to the conclusion that the specifics of this deal are near that threshold? Is there a rule of thumb or something that you use (ex. If resale is 40% or less of retail)? Seems like if you're nearing ROFR range, you know you're getting a good deal.



Great example of the crazy asking prices at HKB.  4 - 3 bed units just hit Redweek, Wks 4,5,6 and 7.  Cheapest asking price is 85K.  They have ZERO chance of getting a sniff at that price.  Can you imagine what the sales commission was to sell those 4 units to a single buyer?


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## echino (Apr 13, 2022)

Pathways said:


> Great example of the crazy asking prices at HKB.  4 - 3 bed units just hit Redweek, Wks 4,5,6 and 7.  Cheapest asking price is 85K.  They have ZERO chance of getting a sniff at that price.  Can you imagine what the sales commission was to sell those 4 units to a single buyer?



With maintenance fees for a 3br exceeding $5,000 - I am not sure the real value of that ownership is much higher than zero.


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