A move FROM Hawaii? Feels like you are going the wrong direction :)! Foreclosures are great....but don't overlook the seller with equity either. They have to price their homes to be competitive and can make repairs and make decisions on closing costs etc. But we can certainly look at all your options. We are starting to see many approved short sales on the market too....and these can offer some terrific pricing also.
You are also looking at the right time to use the $8000 first time homeowner credit. Since the VA loans are 0% down, that's just extra money in your pocket to make upgrades or what have you....help with the cost of the move.
I'd love to help you get started if you would like to email me your search criteria. I will start by loading a website portal with this search and you can start to see what is on the MLS in your price range and size...then we can go from there. I also think your timing is good....some of our best deals are often picked up at the end of summer/early fall. But be careful on this too...to use the $8000 refund, you have to close the transaction by the end of November.
Feel free to call/email me anytime....this sounds like an exciting move (even though I don't see how you can leave Hawaii).