12 Steps to Buying a Home on the Big Island of Hawaii

James T. Morrison, R(S)

Discover the essential steps to buying a home on Hawaii's Big Island with our comprehensive guide, from setting a budget to closing the deal

12 Steps to Paradise

Aloha and welcome to the beginning of your exciting journey towards homeownership on the Big Island of Hawaii! Known for its breathtaking landscapes, diverse climates, and unique cultural heritage, the Big Island offers a living experience unlike any other. Whether you’re dreaming of a beachfront villa, a cozy home in the uplands, or a modern residence in a vibrant community, the Big Island’s real estate market has something to offer for everyone.

I’m James T. Morrison, a dedicated realtor with the Papakea Collection Real Estate Team, and alongside my partner, Julie Armstrong, we specialize in guiding buyers like you through the nuances and delights of finding your perfect home in this tropical paradise. Buying a home here is more than just a transaction; it’s about finding a space that resonates with your lifestyle and your dreams.

In this comprehensive guide, we’ll walk you through 12 essential steps to buying a home on the Big Island. From understanding the unique aspects of the local market to navigating the closing process, we aim to provide you with all the information you need for a successful and enjoyable home-buying experience.

So, let’s embark on this journey together, and uncover the wonders of owning a home on the Big Island of Hawaii.

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Step 1: Understanding the Big Island's Unique Real Estate Market

When considering purchasing a home on the Big Island of Hawaii, it’s essential to appreciate the distinct characteristics that set this market apart from others. The Big Island is not only the largest in the Hawaiian archipelago but also the most diverse in terms of geography and climate. From the sunny Kona coast to the lush rainforests of Hilo, each area offers its own unique lifestyle and real estate opportunities.

Diverse Geography and Climates

The Big Island boasts a variety of climates and terrains, ranging from arid deserts to tropical rainforests, and even snow-capped mountains. This diversity means that potential homeowners can choose from a wide array of environments. Whether you’re looking for a beachside property, a secluded retreat in the mountains, or a residential neighborhood close to urban amenities, the Big Island has it all.

Market Trends

The real estate market on the Big Island is as varied as its landscapes. Understanding local market trends is crucial for making an informed decision. In recent years, we’ve seen a growing interest in sustainable living and eco-friendly homes, reflecting the island’s commitment to preserving its natural beauty. Additionally, areas closer to popular tourist destinations like Kailua-Kona and Waikoloa Village often see higher demand and prices, while more remote areas offer more affordability but may lack certain amenities.

Cultural Significance

The Big Island is rich in Hawaiian culture and history. When considering properties, it’s important to respect and understand the cultural significance of the land. Some areas may have historical sites or be considered sacred. As a buyer, it’s essential to be mindful of this heritage and consider how your presence can harmoniously coexist with the island’s traditions.

Land Ownership and Zoning

Hawaii has unique land ownership laws, including Leasehold and Fee Simple ownership. Understanding these terms and the zoning regulations of different areas is crucial. For example, agricultural zoning might have restrictions on the type of structures you can build. Working with knowledgeable local experts, like our team at the Papakea Collection, can help navigate these complexities.

In summary, buying a home on the Big Island is about finding a place that aligns with your lifestyle and values, while also being aware of the local market dynamics and cultural sensitivities. In the next section, we’ll delve into how to set a realistic budget for your Big Island home.

Step 2: Setting Your Home-Buying Budget

One of the most critical steps in the home-buying process is establishing a realistic budget. On the Big Island of Hawaii, where the real estate market can vary significantly from one area to another, having a clear understanding of your financial parameters is essential. Here are key considerations to help you set an appropriate budget for your dream home in paradise.

Understanding the Costs

Beyond the purchase price of the property, there are additional costs to consider. These include closing costs, property taxes, homeowner’s insurance, and potentially Homeowner Association (HOA) fees, especially in planned communities or condominiums. It’s also wise to factor in the cost of living in Hawaii, which can be higher than the mainland, affecting your overall budget.

Mortgage Considerations

Most home buyers will need to secure a mortgage. The amount you can borrow and your mortgage terms will depend on factors like your credit score, income, and current debts. It’s advisable to get pre-approved for a mortgage to have a clear idea of what you can afford. In Hawaii, there are unique mortgage considerations, such as VA loans popular among veterans due to the significant military presence in the state.

Market-Specific Pricing

The Big Island’s real estate prices vary widely based on location, property type, and proximity to amenities. For example, oceanfront properties or homes in resort areas like Mauna Lani or Waikoloa Beach typically command higher prices. In contrast, properties in more remote areas like Puna or Ka’u can be more affordable. It’s important to research and understand these market dynamics to set a realistic budget.

Long-Term Planning

Consider your long-term financial goals and how a home purchase fits into them. Are you looking for a forever home, a vacation property, or an investment? Your long-term plans will influence the type of property you buy and the amount you’re willing to spend.

Seek Professional Advice

Finally, it’s highly recommended to work with financial advisors and real estate professionals who understand the nuances of the Big Island’s market. They can provide valuable insights and help you navigate the financial aspects of your home purchase.

By carefully considering these factors, you can set a budget that aligns with your financial reality and your goals for homeownership on the Big Island. In the next section, we’ll discuss the importance of getting pre-approved for a mortgage and how to navigate this process.

Step 3: Getting Pre-Approved for a Mortgage

Securing a mortgage pre-approval is a crucial step in the home-buying process, particularly in the competitive real estate market of the Big Island. A pre-approval not only gives you a clear understanding of your budget but also strengthens your position as a buyer when you make an offer. Here’s how to navigate the mortgage pre-approval process in Hawaii:

Understanding Pre-Approval

A mortgage pre-approval is a lender’s offer to loan you a certain amount under specific terms. It’s based on a thorough review of your financial situation, including your credit score, income, debts, and employment history. Pre-approval is different from pre-qualification, which is a more general estimate of what you might be able to borrow.

Selecting the Right Lender

It’s important to shop around and compare offers from different lenders. In Hawaii, options include local banks, credit unions, and national mortgage companies. Some lenders may have more experience with unique properties or non-traditional income sources common in Hawaii, like income from vacation rentals.

Document Preparation

To get pre-approved, you’ll need to provide various documents, such as tax returns, pay stubs, bank statements, and proof of assets. Being organized and having these documents ready can expedite the process.

Factors Affecting Your Mortgage

Several factors influence the terms of your mortgage, including your credit score, down payment size, type of property, and current interest rates. In Hawaii, factors such as proximity to lava zones on the Big Island can also affect mortgage terms.

Pre-Approval Timeframe

Typically, a mortgage pre-approval is valid for 60 to 90 days. This time frame gives you a clear window for house hunting. Keep in mind that any significant changes in your financial situation during this period can affect your pre-approval.

Importance in the Buying Process

Having a pre-approval letter when you make an offer shows sellers that you are serious and financially capable of purchasing the home. This can be particularly advantageous in a seller’s market or when bidding on highly sought-after properties.

Getting pre-approved for a mortgage is an essential step in your journey towards homeownership on the Big Island. It lays the groundwork for a successful and efficient home-buying experience. Next, we will explore how to create your wish list for your ideal Big Island home.

Step 4: Creating Your Wish List

Finding the perfect home on the Big Island starts with understanding what you want and need in a property. Creating a detailed wish list helps focus your search and ensures that your new home meets your expectations. Here’s how to build an effective wish list:

1. Prioritize Needs vs. Wants: Start by distinguishing between what you need and what you would like to have. Needs are essentials that you cannot compromise on, like the number of bedrooms or proximity to work. Wants are nice-to-have features, like a swimming pool or a particular architectural style.

2. Consider Location: The Big Island offers a variety of locales, each with its own charm. Think about whether you prefer the dry and sunny west side, like Kailua-Kona, or the lush and rainy east side, like Hilo. Consider factors like climate, proximity to amenities, schools, healthcare facilities, and your lifestyle preferences.

3. Property Type: Decide on the type of property you’re interested in. Are you looking for a single-family home, a condo, or perhaps a plot of land where you can build? Each has its pros and cons, and understanding these can help refine your search.

4. Budget Alignment: Ensure that your wish list aligns with your budget. It’s easy to get carried away with wants, but it’s important to stay realistic about what you can afford. Remember to account for additional expenses like property taxes, insurance, and maintenance.

5. Future Considerations: Think about your long-term plans. If you’re planning to start a family, you might need extra bedrooms in the future. If it’s a retirement home, consider ease of access and low maintenance.

6. Lifestyle Features: The Big Island is known for its outdoor lifestyle. Consider features that enhance this, like outdoor living spaces, proximity to beaches or hiking trails, or a community with shared amenities like a pool or fitness center.

7. Cultural and Environmental Fit: Consider how your choice of property fits into the local culture and environment. For example, homes in certain areas may have guidelines to maintain the island’s aesthetic or environmental standards.

Creating a comprehensive wish list is a crucial step in your home-buying journey. It helps you and your real estate agent understand what you’re looking for and focus your search effectively. In the next section, we’ll discuss the importance of partnering with the right real estate agent to help you find your dream home on the Big Island.

Step 5: Partnering with the Right Real Estate Agent

Choosing the right real estate agent is a pivotal decision in your home-buying journey on the Big Island. A good agent not only helps you find your dream home but also navigates the complexities of the Hawaiian real estate market. Here’s what to consider when selecting an agent:

1. Local Expertise: Look for an agent with in-depth knowledge of the Big Island’s various regions. Understanding the nuances of each area, from climate variations to local regulations, is crucial. An agent familiar with the Big Island can provide valuable insights into different neighborhoods, market trends, and unique property features.

2. Experience and Track Record: Consider the agent’s experience and track record in the real estate industry, particularly in Hawaii. An experienced agent will have a better grasp of the intricacies of Hawaiian real estate transactions and can guide you through challenges that may arise.

3. Communication and Availability: Choose an agent who communicates effectively and is readily available. Buying a home can be a complex process, and having an agent who keeps you informed and responds promptly to your inquiries is essential.

4. Understanding Your Needs: A great agent takes the time to understand your specific needs and preferences. They should be committed to finding properties that align with your wish list and budget, and not just show listings that are convenient for them.

5. Professional Network: An agent with a strong network of contacts, including lenders, inspectors, and contractors, can be immensely valuable. They can connect you with the right people at each stage of the buying process, making it smoother and more efficient.

6. Client Reviews and References: Look at client testimonials and reviews, or ask for references. Feedback from past clients can give you an idea of the agent’s working style and effectiveness.

7. Compatibility: Finally, ensure that you feel comfortable with the agent. Buying a home is a personal and sometimes emotional journey. You want an agent who understands your goals and with whom you can build a trusting relationship.

At the Papakea Collection Real Estate Team, my partner Julie Armstrong and I are committed to providing personalized service that meets these criteria. We pride ourselves on our local knowledge, experience, and dedication to finding you the perfect home on the Big Island.

In the next section, we will explore how to effectively explore different areas of the Big Island to find the location that best suits your lifestyle and preferences.

Image Map with Overlay

Step 6: Exploring Different Areas of the Big Island

The Big Island of Hawaii is known for its diverse regions, each offering unique lifestyles and opportunities. To find your ideal home, it’s important to explore these different areas and understand what each has to offer. Here’s a guide to some key regions:

1. Kailua-Kona (West Side): Known for its sunny weather and beautiful beaches, Kailua-Kona is a popular destination for both tourists and residents. It offers a mix of residential neighborhoods, shopping centers, and dining options. Ideal for those who enjoy a lively, beach-town atmosphere.

2. Hilo (East Side): Hilo, with its lush landscapes and frequent rainfalls, offers a more traditional Hawaiian experience. It’s home to a variety of local businesses, historic sites, and is less tourist-centric than Kailua-Kona. Perfect for those seeking a quieter, more community-focused lifestyle.

3. Kohala Coast: The Kohala Coast features luxury resorts, world-class golf courses, and high-end residential communities. It’s known for its dry and sunny climate. This area is suitable for those looking for a resort-style living experience.

4. Puna District: For those seeking more affordable options and a more rural lifestyle, the Puna District offers larger land parcels and a diverse community. However, it’s important to be aware of the volcanic activity in this region.

5. Waimea (Kamuela): Waimea is known for its cooler climate, rolling green hills, and ranching history. It offers a more upcountry living experience, ideal for those who appreciate a rural setting but still want access to amenities.

6. Hamakua Coast: The Hamakua Coast is famous for its breathtaking ocean views and agricultural land. It’s a great choice for those interested in farming or a peaceful, natural setting.

7. Ka’u District: The southernmost district, Ka’u, is known for its vast lava fields, remote beaches, and small towns. It’s perfect for adventurers and those seeking solitude and a connection with nature.

When exploring these areas, consider factors such as proximity to work, schools, healthcare, shopping, and recreational activities. Each area has its own charm and challenges, and finding the right fit depends on your personal preferences and lifestyle.

In the next section, we will discuss how to approach viewing properties and open houses on the Big Island, ensuring you make the most of each visit.

Step 7: Viewing Properties and Open Houses

Once you have identified potential areas on the Big Island where you’d like to live, the next step is to start viewing properties and attending open houses. This is an exciting part of the home-buying process where you get to see potential homes in person. Here’s how to make the most of these viewings

1. Preparing for Viewings: Before visiting a property, make a checklist of your needs and wants. Bring this list to each viewing to ensure the property meets your criteria. Also, consider bringing a camera or using your smartphone to take pictures or videos for later reference.

2. Scheduling Viewings: Try to schedule multiple viewings in a day, especially if you’re looking in different areas. This will help you make efficient use of your time, particularly if you are traveling from afar.

3. What to Look For: Pay attention to both the house and the neighborhood. Check the condition of the property, including structural elements, plumbing, electrical systems, and appliances. Observe the neighborhood’s atmosphere, traffic patterns, noise levels, and proximity to amenities.

4. Attending Open Houses: Open houses are a great opportunity to explore a home in a more relaxed setting. Take your time to walk through the house, ask questions, and get a feel for the space. It’s also a chance to gauge interest from other potential buyers.

5. Ask Questions: Don’t hesitate to ask your real estate agent questions about the property. Inquire about things like property taxes, utility costs, homeowner association fees (if applicable), and any other pertinent details.

6. Visualize Living There: As you walk through each property, try to visualize yourself and your family living there. Consider how your furniture might fit and how the space would accommodate your daily routines.

7. Follow-Up: After the viewings, discuss your thoughts with your real estate agent. They can provide additional insights and help you compare properties based on your feedback.

Remember, the goal of property viewings and open houses is not just to find a house but to find a home that suits your lifestyle and needs. It’s a process that shouldn’t be rushed.

In the next section, we’ll explore the steps involved in making an offer and negotiating the purchase of your Big Island home.

Step 8: Making an Offer and Negotiating

After finding a property that feels like the right fit, the next step is to make an offer and enter into negotiations. This phase requires strategy, understanding of the local market, and often, a bit of patience. Here’s how to navigate this crucial stage:

1. Understanding Market Conditions: Your offer strategy should be informed by current market conditions. Is it a buyer’s market, a seller’s market, or balanced? Your real estate agent can provide insights into the local market trends, which will help in crafting your offer.

2. Making a Competitive Offer: Based on market analysis and the property’s condition, decide on an offer price. Your agent will help you consider factors like how long the property has been on the market, recent sales of comparable homes, and any unique features of the property.

3. Consider Contingencies: Contingencies are conditions that must be met for the sale to go through, such as a satisfactory home inspection or securing financing. While contingencies can protect you, too many can weaken your offer in a competitive market.

4. Writing the Offer Letter: Your real estate agent will draft the offer letter, which includes the purchase price, contingencies, deposit amount, proposed closing date, and any other terms of the sale. Personalizing the offer with a letter explaining why you love the home can sometimes make your offer stand out.

5. Negotiating the Terms: Once the offer is submitted, the seller may accept, reject, or make a counteroffer. Be prepared for some back-and-forth negotiation. Your agent will guide you through this, advising when to stand firm and when there’s room for compromise.

6. Emotional Balance: It’s important to stay emotionally balanced during negotiations. Being too emotionally invested can lead to overpaying, while being too detached might cause you to miss out on a property you love.

7. Finalizing the Offer: Once an agreement is reached, both parties will sign the offer, making it a binding contract. After this, the process moves into the home inspection and due diligence phase.

Navigating the offer and negotiation phase requires a blend of market knowledge, strategic thinking, and emotional intelligence. With the right approach, you’ll be well on your way to securing your dream home on the Big Island.

In the next section, we’ll cover the importance of a home inspection and the due diligence process.

Step 9: Home Inspection and Due Diligence

After your offer is accepted, the next critical step is the home inspection and due diligence process. This phase is vital to ensure that you are fully informed about the property’s condition before finalizing the purchase. Here’s how to approach this important stage:

1. Scheduling a Home Inspection: Arrange for a professional home inspection as soon as possible after your offer is accepted. In Hawaii, it’s particularly important to have an inspector who understands local issues, such as the impact of a saltwater environment on buildings or volcanic activity in certain areas.

2. What Inspectors Look For: The inspector will examine the property’s structure, roof, electrical systems, plumbing, and more to identify any existing or potential problems. They may also look for signs of pest infestations, which are common in tropical climates.

3. Reviewing the Inspection Report: Once the inspection is complete, you will receive a detailed report outlining any issues. Review this report thoroughly and discuss any concerns with your inspector and real estate agent.

4. Negotiating Repairs or Credits: If significant issues are uncovered, you can negotiate with the seller for repairs, a price reduction, or credit at closing. It’s important to prioritize which issues are most critical and focus negotiations accordingly.

5. Additional Inspections: Depending on the initial inspection results and the property’s location, you might need additional inspections. These could include a termite inspection, a radon test, or a survey if property boundaries are unclear.

6. Conducting Other Due Diligence: Beyond the physical inspection, due diligence includes reviewing any homeowners’ association (HOA) rules, verifying zoning and land use restrictions, and ensuring there are no outstanding permits or legal issues with the property.

7. Making an Informed Decision: Use the information gathered during this phase to make an informed decision. If there are too many issues, it’s okay to walk away from the deal, especially if it affects the property’s value or your quality of life.

The home inspection and due diligence process is your opportunity to gain a full understanding of the property you are about to purchase. It’s a critical step in ensuring that you make a sound investment and find a home that meets your expectations on the Big Island.

In the next section, we’ll delve into the final steps of closing the deal on your Big Island home.

Step 10: Closing the Deal

Closing the deal is the final and one of the most important steps in the home-buying process. This is when the ownership of the property is officially transferred to you. Here’s what to expect and how to prepare for a smooth closing:

1. Finalizing the Mortgage: If you haven’t done so already, finalize your mortgage arrangements. This will involve a final credit check, verification of employment, and a review of your financial situation to ensure nothing has changed since the pre-approval.

2. Closing Costs: Be prepared for closing costs, which can include loan origination fees, title insurance, property taxes, attorney fees, and other expenses. In Hawaii, these costs can vary, and it’s important to have a clear understanding from your lender about what is required.

3. Reviewing Closing Documents: Prior to the closing day, you’ll receive a Closing Disclosure form that outlines the terms of your loan and the final closing costs. Review these documents carefully, and don’t hesitate to ask questions if anything is unclear.

4. Conducting a Final Walkthrough: Before closing, conduct a final walkthrough of the property. This is to ensure that the property is in the agreed-upon condition, and any repairs or modifications have been completed.

5. The Closing Meeting: The closing meeting is where all the paperwork is signed, and the transaction is finalized. This typically involves the buyers, sellers, real estate agents, and a closing agent or attorney. In Hawaii, the closing process might also involve a representative from the title company.

6. Transferring Funds: You’ll need to transfer the down payment and closing costs, usually through a wire transfer. Ensure that these funds are ready a few days before the closing date to avoid any delays.

7. Recording the Deed: After signing all the documents, the deed will be recorded with the county, officially transferring ownership to you. Once this is done, you are the official owner of the property!

8. Receiving the Keys: Finally, you’ll receive the keys to your new home on the Big Island. Congratulations, you are now a homeowner!

Closing the deal is a complex process, but with the right preparation and support from your real estate team, it can be a smooth and rewarding experience.

In the final section of our guide, we will discuss moving in and adjusting to life on the Big Island.

Step 11: Moving In and Adjusting to Island Life

Congratulations on your new home on the Big Island! As you prepare to move in and start this exciting new chapter, there are several important but frequently overlooked tasks to take care of. Here’s a checklist to ensure a smooth transition:

1. Utility Setup:

Electricity: Contact the local electric company to transfer the service into your name. This ensures uninterrupted power supply.
Water and Sewer: Similarly, ensure water and sewer services are set up.
Internet and Cable: Arrange for internet and cable services in advance, especially since certain areas might have limited options.

2. Address Changes:

Postal Service: File a change of address with the U.S. Postal Service to forward your mail.
Update Address Records: Notify banks, credit card companies, insurance providers, and other important institutions of your new address.

3. Home Services:

Yard Maintenance: If your property requires it, arrange for regular yard maintenance services.
Trash and Recycling: Find out the local schedule for trash and recycling pickup and any guidelines for waste disposal.

4. Community Integration:

Neighborhood Introduction: Introduce yourself to your neighbors. Building a good relationship with them can be invaluable.
Community Resources: Locate essential services such as the nearest hospital, police station, grocery stores, and schools.

5. Emergency Preparedness:

Understand Local Risks: Familiarize yourself with local emergency procedures, especially related to volcanic activity, tsunamis, or hurricanes.
Emergency Kit: Prepare an emergency kit with essential supplies, keeping in mind the unique needs of living on an island.

6. Respect the Land and Culture:

Learn About Hawaiian Culture: Take the time to understand and respect the local culture and traditions.
Environmental Awareness: Be mindful of your environmental impact, as the island’s ecosystem is delicate.

7. Exploring Your New Home:

Discover the Island: Explore the Big Island’s diverse regions, beaches, mountains, and local events to fully experience your new home.

8. Establishing Routine Services:

Medical, Dental, and Veterinary Care: Find local healthcare providers for you and your family, including pets.

Moving to the Big Island is not just about a new home but also about embracing a new lifestyle. Take your time to settle in, explore, and become a part of this vibrant community.

Step 12: Embracing Your New Paradise: A Dramatic Conclusion

As the sun sets over the vast Pacific, casting a golden glow over your new home on the Big Island, you stand at the threshold of an adventure that’s just beginning. Here, where the sea meets the sky, where ancient volcanoes stand guard over lush rainforests and rolling hills, you’ve not just found a property; you’ve discovered a new way of life.

Imagine waking up each morning to the symphony of the waves, the scent of plumeria in the air, and the warm embrace of the island breeze. Here, in this land of fire and water, tradition and modernity blend seamlessly, inviting you to become part of a community that respects the land and cherishes the spirit of Aloha.

Your journey to homeownership on the Big Island has been a journey of discovery – of uncharted territories, of unexpected delights, and of yourself. As you unpack your belongings and set up your new home, remember that each item, each moment, is a part of your story on this majestic island.

The Big Island doesn’t just offer a place to live; it offers a lifestyle – one that is vibrant, diverse, and deeply connected to the natural world. Whether you’re sipping Kona coffee on your lanai at sunrise or stargazing from Mauna Kea at dusk, you are now part of a tapestry that is as timeless as it is dynamic.

As you step into this new chapter, know that the Big Island is more than just your home; it’s a sanctuary, a source of inspiration, and a testament to the dreams that led you here. So here’s to your new life on the Big Island – a life full of adventure, beauty, and the magic of Hawaii.

Welcome home.