Navigating the Home Buying Process on the Big Island

Work with a Local Real Estate Agent

The Big Island market has nuances that mainland agents and even Oahu-based agents may not understand, like lava zones, catchment systems, agricultural zoning, and subdivision-specific rules. A local buyer's agent who knows the Big Island is invaluable. Zenon works with trusted agents across the island and can connect you with one.

Leasehold vs. Fee Simple

In Hawaii, some properties are sold as leasehold, meaning you own the structure but lease the land. Fee simple means you own both the land and the building. On the Big Island, most properties are fee simple, but leasehold does exist near resort areas. Leasehold properties are cheaper upfront but come with annual lease rent and can be harder to finance. Always verify the land tenure before making an offer.

Ohana Units & Multi-Family

Many Big Island properties include ohana (in-law) units or are zoned for multi-family use. These can be great for rental income or housing extended family. However, not all ohana units are legally permitted, which can affect financing and insurance. Verify permits with Hawaii County before counting on rental income.

Water Catchment vs. County Water

Large portions of the Big Island, particularly Puna, HOVE, and parts of North Kohala, rely on water catchment rather than county water. Catchment systems collect rainwater into tanks for household use. Most lenders will finance catchment properties, but FHA and VA have specific requirements for water quality testing and minimum storage capacity. Budget for filtration and maintenance.

Off-Grid Properties

Some Big Island properties are fully off-grid, running on solar power, water catchment, and septic or composting toilets. While appealing to some buyers, off-grid properties can be harder to finance. Conventional and government-backed loans typically require a property to have a functioning, permanent electrical system and adequate water supply. Cash purchases or portfolio lenders may be the best path for truly off-grid homes.

The Hawaii Purchase Contract

Hawaii uses its own standard purchase contract (DROA: Deposit, Receipt, Offer and Acceptance), which differs from mainland contracts. Your real estate agent will prepare this document, but key items include the purchase price, financing terms, closing date, and contingencies. Having a SMART START™ pre-approval letter attached to your offer signals to the seller that you're a serious, qualified buyer.

Inspection Contingencies

On the Big Island, inspection contingencies are especially important. Beyond standard home inspection, you'll want to consider inspections for termites (a year-round issue in Hawaii), septic or cesspool systems, roof condition, and, in certain areas, lava zone risk assessment. Waiving inspections to be "competitive" is particularly risky on the Big Island given the unique property considerations.

Earnest Money

Earnest money deposits in Hawaii typically range from 1-3% of the purchase price and are held in escrow. This deposit demonstrates your good faith intent to complete the purchase. It's applied toward your down payment or closing costs at closing. Your real estate agent will advise on the appropriate amount for your offer.

Big Island-Specific Inspections

Hawaii's tropical climate and volcanic geology create inspection considerations you won't encounter on the mainland:

• Termite inspection: Subterranean and drywood termites are active year-round. A pest inspection (typically a "Wood Destroying Insect Report") is standard and often required by lenders.
• Septic & cesspool: Many Big Island properties use individual wastewater systems. Hawaii is phasing out cesspools, so if the property has one, understand your obligations for eventual upgrade to a septic system.
• Roof condition: Trade winds, salt air, and UV exposure can age roofs faster. Metal and tile roofs are common and generally perform well.
• Lava zone assessment: For properties near active volcanic areas, understanding the lava zone designation and its implications for insurance and financing is critical.
• Water catchment system: If the property uses catchment, inspect the tanks, filtration system, and gutters. Water quality testing may be required by your lender.

Appraisal Considerations

Appraisals on the Big Island can be challenging in rural areas where comparable sales are limited. Properties with catchment, off-grid features, or unusual construction may require appraisers with specific Big Island experience. Zenon works with appraisers who understand the local market to help ensure a smooth valuation process.

🌫️ Vog (Volcanic Fog)

Vog is haze created by volcanic emissions from Kilauea. It primarily affects the Kona (west) side when trade winds die down, causing hazy skies and potential respiratory irritation for sensitive individuals. Hilo and the east side are generally vog-free due to prevailing trade winds. If you have respiratory sensitivities, consider the east side or upper elevations.

💧 Water Catchment Maintenance

If your property uses catchment, plan for ongoing maintenance: regular gutter cleaning, UV sterilization or filtration systems, and periodic tank cleaning. Annual maintenance costs typically run $200-500. Most residents find the water quality excellent with proper filtration. It's simply a different way of life, not a hardship.

🏠 Property Tax Benefits

Hawaii County offers a generous owner-occupied homeowner exemption that can significantly reduce your property tax bill. The current exemption is $40,000 off the assessed value at the lowest tax rate (roughly $6.15 per $1,000 for owner-occupied). Compared to many mainland states, Big Island property taxes are very reasonable, especially for owner-occupants.

🤙 Community & Aloha Spirit

The Big Island has a tight-knit, welcoming community. Neighbors look out for each other, local farmers markets are a social institution, and the pace of life is intentionally slower. Embrace the aloha spirit. Respect the land, the culture, and the people who have called this island home for generations.