Buying Foreclosures in Hawaii County: Complete Big Island Foreclosure Guide for Buyers
Everything Buyers Need to Know About Purchasing Foreclosed Homes, Vacant Land, and Investment Property on the Big Island of Hawaiʻi
If you are searching for foreclosures on the Big Island, bank-owned homes in Hawaiʻi County, REO properties, foreclosure auctions, or distressed property opportunities in areas like Hilo, Puna, Kona, Kaʻū, Hamakua, or Waikoloa, this guide will help you understand the foreclosure buying process in Hawaiʻi.
Understanding How Foreclosures Work in Hawaiʻi
A foreclosure occurs when a homeowner stops making mortgage payments and the lender takes legal action to recover and sell the property. Foreclosures in Hawaiʻi can create opportunities for buyers looking for below-market properties, investment opportunities, fixer-uppers, vacant land, or agricultural acreage on the Big Island. In Hawaiʻi, foreclosures can create opportunities for buyers to purchase property below market value, but they also come with additional risks, timelines, and due diligence requirements.
In Hawaiʻi County, foreclosure opportunities may include:
Residential homes
Vacant land
Agricultural acreage
Investment properties
Oceanfront or rural properties
Properties in need of repairs or cleanup
Foreclosures can sometimes offer strong value, but buyers should understand the process before making offers.
The Two Main Types of Foreclosures in Hawaiʻi
1. Judicial Foreclosure
This foreclosure process goes through the court system.
Key Characteristics:
Typically slower process
Court-supervised
Public records available
Property usually sold at auction
Buyers often purchase “as-is”
What Buyers Should Know:
Court timelines can take months or years
Existing occupants may still live in the property
Delays are common
Title issues may still exist
Financing can be more difficult depending on condition
2. Non-Judicial Foreclosure
This process does not go through the courts and is generally faster.
Key Characteristics:
Conducted by lender or foreclosure attorney
Often sold at public auction
Shorter timeline
Common in Hawaiʻi
What Buyers Should Know:
Sales may happen quickly
Buyers often need cash or fast financing
Due diligence time can be limited
Interior inspections may not be possible
Types of Foreclosure Opportunities
REO / Bank-Owned Properties
REO stands for “Real Estate Owned.” These are properties the bank already took back after foreclosure.
Advantages:
Easier to finance than auction purchases
Title issues often resolved beforehand
Standard purchase contracts may be used
Inspections are often allowed
Risks:
Sold strictly as-is
Deferred maintenance is common
Utilities may be off
Seller disclosures may be limited
Foreclosure Auctions
Properties sold at auction are often the highest-risk and potentially highest-reward opportunities.
Important:
Buyers may need certified funds or cash
Some auctions require immediate deposits
Interior access is often unavailable
Properties may still have occupants
Junior liens or unpaid obligations may survive the sale in some cases
Before Bidding:
Research title thoroughly
Review tax records
Check zoning and permits
Investigate county violations
Understand occupancy status
Foreclosure Risks Buyers Must Understand
1. Properties Are Usually Sold “As-Is”
Most foreclosure properties are sold in current condition with no repairs or credits.
This may include:
Termite damage
Roof leaks
Mold
Structural issues
Illegal additions
Unpermitted work
Overgrown lots
Abandoned vehicles or debris
Catchment or septic problems
On the Big Island, deferred maintenance can become severe quickly due to the tropical climate.
2. Occupancy Issues
Some foreclosure properties may still be occupied.
Occupants may include:
Former owners
Tenants
Family members
Unauthorized occupants
Buyers should understand that removing occupants may require legal eviction proceedings after purchase.
3. Title Problems
Foreclosure properties can sometimes have:
Liens
Easements
Boundary disputes
HOA issues
Unpaid taxes
Encroachments
Probate complications
Always work with a reputable title company and conduct full title review before closing.
4. Financing Challenges
Some foreclosure properties may not qualify for traditional financing.
Reasons may include:
Unsafe condition
Missing kitchens or bathrooms
Structural damage
Water or electrical issues
Lack of insurance eligibility
In some cases, cash purchases or renovation loans may be necessary.
Important Due Diligence for Big Island Buyers
Lava Zone Research
Many areas of Hawaiʻi County are located in lava zones.
Buyers should:
Verify lava zone designation
Understand insurance implications
Research financing limitations
Understand historic volcanic activity
Lava zones can impact:
Insurance availability
Mortgage eligibility
Resale value
Septic vs. Cesspool
Many older properties on the Big Island still use cesspools.
Buyers should verify:
Whether the property has a cesspool or septic system
System condition
County compliance requirements
Future conversion requirements may apply.
Water Source
Foreclosure properties may use:
Catchment systems
County water
Wells
If the property uses catchment:
Inspect tank condition
Check pumps and filtration
Verify water quality
Evaluate maintenance needs
Permits and Unpermitted Structures
Unpermitted work is common in some areas of Hawaiʻi County.
Buyers should:
Compare county records to existing improvements
Verify permits were finalized
Review property tax records
Understand potential future permitting costs
Agricultural Land Considerations
If purchasing agricultural land:
Review zoning requirements
Verify allowable uses
Understand minimum farming requirements if applicable
Research access and utility availability
Check for conservation or flood overlays
Financing a Foreclosure Purchase
Conventional Financing
Possible for properties in good condition.
Lenders will evaluate:
Habitability
Insurance eligibility
Appraisal condition
Safety issues
Renovation Loans
Some buyers use renovation financing to improve distressed properties.
These loans may help cover:
Repairs
Upgrades
Structural improvements
Safety corrections
Cash Purchases
Many foreclosure auction properties require cash.
Cash buyers may have advantages including:
Faster closing
More competitive offers
Ability to purchase distressed properties
Fewer financing contingencies
The Foreclosure Buying Process
Step 1: Define Your Goals
Determine whether you are looking for:
Primary residence
Investment property
Fixer-upper
Vacant land
Agricultural acreage
Long-term hold
Step 2: Get Pre-Approved or Verify Funds
Before pursuing foreclosure opportunities:
Obtain lender pre-approval
Verify proof of funds
Understand your repair budget
Step 3: Research the Property Thoroughly
Review:
Title reports
County records
Tax records
Zoning
Flood zones
Lava zones
Permit history
Utility access
HOA documents if applicable
Step 4: Inspect the Property if Possible
Recommended inspections may include:
Home inspection
Termite inspection
Septic inspection
Roof inspection
Survey
Structural inspection
Some auction properties may not allow inspections before purchase.
Step 5: Submit Offer or Bid at Auction
Depending on the property type:
Submit traditional purchase offer
Participate in foreclosure auction
Negotiate with bank-owned seller
Step 6: Close Escrow
Escrow may include:
Title review
Insurance verification
Final financing approval
Recording fees
Prorated taxes
Common Foreclosure Myths
“All Foreclosures Are Great Deals”
Not always.
Some foreclosure properties require significant repairs or carry hidden costs.
“Banks Always Accept Low Offers”
Banks analyze market value carefully and may reject unrealistic offers.
“You Can Always Inspect Before Buying”
Auction properties may not allow interior access.
“Foreclosures Close Fast”
Some do. Others can experience lengthy delays.
Why Local Big Island Knowledge Matters When Buying Foreclosures
Buying a foreclosure in Hawaiʻi County can be very different from purchasing a foreclosure on the mainland. The Big Island has unique environmental, infrastructure, permitting, and insurance considerations that buyers should understand before purchasing distressed property.
Local knowledge is important because buyers may need guidance on:
Lava zones
Catchment systems
Rural infrastructure
Agricultural zoning
Septic and cesspool systems
Permit history
Property access
Climate-related maintenance issues
Insurance availability
Each district on the Big Island can present different considerations.
Questions Buyers Should Ask Before Purchasing a Foreclosure
Is the property financeable?
Are inspections allowed?
Is the property occupied?
Are there outstanding liens or taxes?
Were additions permitted?
What repairs are needed immediately?
Is insurance available?
Is the property in a lava or flood zone?
What utilities are available?
What are the estimated holding and repair costs?
Final Thoughts on Buying Foreclosures on the Big Island of Hawaiʻi
Foreclosures can create excellent opportunities for buyers willing to perform proper due diligence and understand the risks involved. Some properties offer tremendous upside, while others may require substantial repair work, legal review, or long-term planning.
Working with knowledgeable local professionals—including a real estate agent, title company, lender, contractor, and inspectors—can help buyers navigate the process more confidently.
Whether you are searching for a foreclosure in Hilo, a bank-owned property in Kona, vacant land in Puna, agricultural acreage in Hamakua, or an investment property in Kaʻū, understanding the foreclosure process is an important first step.
Buyers looking for foreclosed homes in Hawaiʻi County should approach each opportunity carefully, perform extensive due diligence, and work with professionals who understand the unique aspects of Big Island real estate.
Foreclosure opportunities can sometimes provide excellent value in Hawaiʻi’s competitive real estate market, especially for buyers willing to take on repairs, deferred maintenance, cleanup, or redevelopment projects.
Disclaimer
This guide is intended for general educational purposes only and should not be considered legal, tax, lending, or investment advice. Buyers should consult with qualified attorneys, lenders, title professionals, inspectors, and tax advisors regarding their specific situation before purchasing a foreclosure property in Hawaiʻi.
