What is a Maui Real Estate Lottery?
What is a Real Estate Lottery?
A real estate lottery is a system where buyers submit their name to a developer with a project that is under construction to be put into a drawing system for the opportunity to purchase a property in the development.
The lottery system for real estate is more akin to bingo. The developer will take all of the submitted names from interested buyers for the project and give them a number that will then go into a drawing. Numbers are most often placed on bingo balls and placed into a bingo style ball spinner to be mixed up and then drawn one at a time.
When a number is drawn the buyer that was assigned to that number is then able to pick the available property and building site of their interest. If a buyer's number is called after other numbers and their property of interest is already chosen they will need to pick put their next choice in properties in the development or opt-out of the lottery.
Before a buyer will be considered to be given a number to enter into the bingo style lottery drawing, they most often are required by the buider to submit some important information about themselves and their ability to purchase an available property in the new development. Each developer will have its own set of rules as to what information they require a buyer to submit and the timeline or schedule of the lottery events. This is why it is important for buyers to work through an experienced Maui real estate agent to help compile these lottery documents and strategize which properties in the development they would like to purchase when their number is drawn.
The most often asked-for documents in real estate lotteries are registration forms, pre-qualification letters, and proof of cash funds for any cash put into the purchase of the home. Each contractor of course requires different items from buyers in the lottery and purchase process. Many contractors will require contract signing and a portion of the down payment be made when your name is drawn in the lottery and you pick your property of interest.
Why are Maui Developers Using the Lottery System?
The demand for Maui real estate is still very high and especially high where the new construction market is concerned. Because of this many developers in Maui and all throughout Hawaii choose to go with a lottery system for interested buyers. The lottery system is said to help even the playing field to give a larger number of interested buyers the opportunity to purchase a property in the development.
Tips for Entering Into a Real Estate Lottery on Maui
If you are interested in purchasing a new construction Maui home through a lottery there are some good things to know and tips to use to help in your home buying adventure.
First, make sure you can qualify for a home loan in the price ranges fo the property. Also make sure that you meet the owner-occupancy requirements of the development. For example: some lottery system homes are reserved as affordable housing.
Contact a Maui Real Estate Agent. Employ the help of an expert local agent. Get their opinion on the development and the pricing. Have them with you every step of the way to help submit the lottery registration and to look over the contract.
Be Aware of Timeframes. Make sure you know all of the rules and requirements of the specific lottery and when it will take place. You also want to know when required deposits will be due and when the last day to walk away from the purchase is without consequence. It is also good to know the projected completion date and when you can hope to move in. (New construction can sometimes take longer than projected timelines.)
Be mindful of mortgage rates. It is good to have knowledge of where mortgage rates are heading. They can change rapidly. The mortgage rates you might be able to secure today most likely will not be the same ones when the home is finished.
Always Read Fine Print. Make sure you know the terms of your home ownership especially if the community will have an HOA or condo board. You want to make sure you know all of the CCand R's for living in the community. And make sure you are well aware of extra monthly fees that come with them.
For more information on purchasing a home in Maui please contact us any time.