July 1st marked a big day for Realtors and potential real estate buyers as the Hawaii House Bill 1468 rolled into effect. The Legislature was passed in May of 2009, but took a couple of months to become fully effective. The law has a provision that states;
"Prior to the sale of residential real property, the property owner shall make a good faith declaration of electricity cost based on the most recent three-month period in which the property was occupied prior to the date of the seller's disclosure, pursuant to chapter 508D. This declaration shall only apply where the owner directly pays the electrical utility bills, and shall not apply in the case of a foreclosure of residential real property or where there are no electrical utility accounts associated with the property."
The Basics
All legal mumbo-jumbo aside, the bill basically states that sellers are now required to give a good estimate of what their last three months of electric bills were. The new bill could cause some frustration for sellers, once the buyers see just how expensive it is to live on the islands. But there are numerous reasons why this bill is coming into play at just the right time.
One of the biggest reasons that caused scrutiny over many lending agencies is that the loans were allowing people into homes based on the maximum they could afford. Doesn't make any sense? Sure it does. If you could only spend $ 3,000 a month for your house, based on your income calculations, you would most likely get pre-approved for that amount. Ultimately, you would also probably max out that monthly limit, getting the best bang for your buck when deciding on your new home.
How to Use the Bill
Here is where the finances come into play. The bank said you could afford $ 3,000 a month, but they didn't tell you that had to include water, electricity, upkeep, etc. So you have now spent the full amount on your mortgage without leaving room for additional necessities, like Air Conditioning and water. The new house bill allows homebuyers to judge if they will be able to afford, not only the house, but also the utilities that come with it. Here are three things to keep in mind when utilizing the new bill:
Usage - Everyone has different ideas of comfort. Some like to leave the air conditioning off and keep the windows open during a nice day, while others keep the air set at a frosty 68 degrees all summer long. There are also some who will turn every light on in the house while others walk behind them turning all the lights off as they leave the room. Since there will be differences in usage, do not take the amount as a solid figure.
Budgeting - Using the information provided from the seller, by way of the house bill, and keeping in mind that individual usage will vary, the buyer can still get a good estimate of what they need to set aside in terms of money for utilities. It would be a great idea at closing, and even before if possible, to ask the seller some basic questions about their electricity usage style to get an even better idea.
Goal setting - Face it, everything is going green these days and eventually, your electrical resources will be headed that way as well. Use the information gathered from the previous three months of electrical bills to start setting some goals to reduce the cost. Research and try different methods that can help reduce electrical costs, such as changing out your light bulbs or planting trees to help with shade. There are numerous things that can be done to reduce the cost of electrical utilities.
Instead of looking at the bill as just another law that has to be passed, look at the positive aspects such as being a large part in reducing your carbon footprint while at the same time keeping a firm grasp on your financial goals.
The Hawaii House Bill is part of a larger legislation, which is looking to increase the production and use of renewable energy on the Hawaiian Islands. As such, it is important to keep a grasp and firm understanding on the expenses of electricity as a consumable resource. No matter which beautiful house you decide to buy or invest in, there are always ways to improve it for future tenants or others on the island. See how much of a difference you can make between the purchase and sale of your Hawaiian home.
Volker Weiss - Maui Realtor(R/S) specialist focusing on Maluhia at Wailea . Make your vacation last forever, check out Maui Real Estate. For immediate help call: VW Real Estate - 2525 Omiko Place, Kihei, HI 96753 - (888) 572-6888
Orignal From: Maui Real Estate: Don't Get Left in the Dark
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