How to Buy a Foreclosure in Kauai, Hawaii

Real Estate Broker/Owner with KAUAI DREAMS REALTY Kauai Real Property Specialist RB-14203

With the Kauai real estate inventory getting tighter more consumers are considering more aggressive means of finding a Kauai real estate deal. One option can be to buy a judicial foreclosed property. Here are some tips for buying a Kauai Foreclosure. These tips apply to judicial foreclosures only.

When a property is foreclosed on the court will appoint a Foreclosure Commissioner. Typically on Kauai this will be a local attorney. The commissioner will print 3 notices in a local publication. On Kauai most foreclosure notices are printed in  The Garden Island Newspaper. This is often the first notice to the general public that a home or property is being foreclosed on.

Typically the commissioner will hold 2 open houses if the property is a house or has a residential structure. Some commissioners will conduct open houses for vacant land but it is not typical. I think it is a must to go to the open house if you are planning to bid on the property. At the open house you should ask the commissioner the following questions.

#1. What are the underlying liens? Is there 1, 2 or more mortgages on the house? How much are they?

#2. Who are the lien holders? (national bank vs. local lender)

#3. Is the house/property vacant or occupied? If occupied owners or tenants, what are their plans to move? Is there a lease? Do the occupants look like they are packing? Are they agreeing to move once the foreclosure sale is completed? Or are they saying they are not going to move until the sheriff throws them out. The commissioner will not evict. That will be the buyer's responsibility.

The sale will be held at the courthouse steps. Prior to bidding The commissioner will ask any prospective bidders to show their cashiers checks. 10% of the sales price will be due at the end of the auction. The commissioner wants to be sure bidders are qualified to bid and prepared. To be safe the cashier check should be made out to two people, the real estate commissioner, i.e. John Smith OR your name Joe Buyer. That way if you are not the winning buyer you can just deposit the check to your account.

Usually there is no minimum bid at a foreclosure auction, however the foreclosing bank will normally put in their minimum bid. It will most likely be the mortgage or market value, which ever is less. For example if the property is worth $400K and the foreclosing lien holder has a mortgage of $500K, they will probably only bid to $400K. But in an escalating market their value and bid may be outdated. The bank may bid only $400K when the value may very well be $475K. Sometimes the value of the house can be $400K and the mortgages are only at $300K. Definitely an opportunity.

The auction has started, the bank bid $300K, if you are the only bidder besides the bank, you can bid $1.00 more and be the winning bidder. However if there are multiple bidders the commissioner will want to see higher bid increment amounts. The best strategy is to stick with your budget, dont get caught up in the competition of winning. Egos make for bad decisions.

Didn't win-There will be others or you can bid again at court confirmation. You are the winning bidder-Congrats but don't start making renovation plans yet. The sale is subject to Court Confirmation. (An approximately 60 day waiting period from the sale date) This is where the judge confirms the sale. But before it's confirmed bidding can be opened up again as long as the bid is 5% over the winning bid. So if the winning bid was $400K another bidder can bid $420K. If this happens and the new buyer succeeds then the original buyer gets their 10% back. Because of the new bidding at court confirmation some bidders wait until court confirmation to bid.Buying a foreclosure Kauai

The sale is confirmed. Yea! The commissioner will ask you if you want to use a title/escrow company. Your answer should be "Yes". You open escrow and have 30 days to consummate the sale. This is usually not enough time to get a loan. The sale is not contingent on you being able to get a loan. Your 10% down payment is at risk. You better be able to close. However I have seen reasonable commissioners who will give extra days as long as the escrow/closing is on track. Most local attorneys are great to work with. You should close with no delays or major issues.

Escrow should issue you a commissioners deed. This is a fully insurable title deed. Hopefully you had a smooth foreclosure experience and bought a great deal on the wonderful island of Kauai.

If you are unable to be present at a foreclosure auction to bid, you can be represented by an agent. Call me if you would like to explore this arrangement or just have more questions about bidding on foreclosures.



Feel free to call 808 652-6174 or email me at with any questions you might have or an appointment to look at properties. Aloha Julie.


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 By: Julie Black

Posted by

CLMHS CRS GRI Realtor/Broker/Owner Kauai Dreams Realty 

Comments (8)

Sheila Morales
Kauai Property Shop - Kapaa, HI
Your Kauai Hawaii Agent

Great explanation of a complicated process.  

May 23, 2013 05:35 PM
Julie A. Black
KAUAI DREAMS REALTY Kauai Real Property Specialist - Kapaa, HI
CLHMS, CRS, GRI, Realtor, Broker

Thanks Sheila

May 23, 2013 05:47 PM
Mike Warren
Real Estate - Colorado Springs, CO

Thanks for providing this information. Good post, Julie.

May 23, 2013 07:06 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Julie, what great advice, I have seen novice buyers not knowing what they were doing and ended up buying just a second Trust Deed when they thought they bought a home.....Due Diligence is key, Endre

May 24, 2013 08:33 AM
Julie A. Black
KAUAI DREAMS REALTY Kauai Real Property Specialist - Kapaa, HI
CLHMS, CRS, GRI, Realtor, Broker

Thanks Mike, & Endre I agree some buyers have gotten burned when they don't know what they're doing.

May 24, 2013 08:45 AM
Yolanda Cordova-Gilbert
Richmond, TX


 Great education for those of us who are builders reps and there are many agents who do not how some of these auctions work! I hope you are having a great Memorial Day Weekend!

May 25, 2013 05:26 AM
Julie A. Black
KAUAI DREAMS REALTY Kauai Real Property Specialist - Kapaa, HI
CLHMS, CRS, GRI, Realtor, Broker

Thanks Yolanda and have a Memorial Weekend too!

May 25, 2013 07:24 AM
Kathleen Luiten
Resort and Second-Home Specialist - Princeville, HI
Kauai Luxury Ocean Home Sales

Just came across this older post but the information is still very valuable. I've been involved in a few auctions and know many agents that really don't inderstand how they work. Thanks for providing a great explanation, Julie!

Aug 11, 2014 07:45 AM