In a Hawaii home sale, the seller usually pays more at closing than the buyer. The seller covers real estate commissions, the state conveyance tax, and the majority of the title insurance premium; the buyer covers lender-related charges, the survey, recording of the new deed and mortgage, and prepaid insurance and tax reserves. A handful of costs — escrow and the termite inspection chief among them — are typically split. Combined closing costs for both sides generally fall between 6% and 10% of the sale price, with the seller shouldering the heavier portion once commissions are counted.
Those allocations are customary, not mandatory. The Hawaii Association of Realtors Purchase Contract uses a checkbox format that lets the parties assign each cost to the buyer, the seller, or a split, and almost everything except the conveyance tax liability itself is negotiable.
What the Seller Pays
The largest line item for most sellers is the real estate commission. Total commissions have traditionally run 5% to 6% of the sale price, with the seller paying both the listing agent and the buyer’s agent out of proceeds. On a $900,000 home, that’s $45,000 to $54,000. Since the National Association of Realtors settlement took effect in August 2024, sellers are no longer required to offer buyer-agent compensation through the MLS. Buyer-agent commissions are now negotiated separately, so a seller’s total commission bill may be smaller depending on how the deal is structured.
Hawaii’s conveyance tax is the seller’s statutory obligation. Under the Hawaii Administrative Rules, the seller must pay it before the deed can be recorded with the Bureau of Conveyances or Land Court.1Hawaii.gov. Hawaii Administrative Rules Chapter 247 – Conveyance Tax The tax is calculated per $100 of sale price, with rates that step up at higher brackets and that are lower when the buyer qualifies for a homeowner exemption by occupying the property as a principal residence. On a sale between $600,000 and $1,000,000 to an owner-occupant, the rate is $0.20 per $100 — $1,800 on a $900,000 sale. Rates are higher at every bracket when the buyer does not qualify for the exemption.
Sellers also pay 60% of the premium for the standard owner’s title insurance policy, which protects the buyer against defects in the ownership history.2Old Republic Title. Buyer vs Seller Costs Standard Allocation of Closing Fees The seller is responsible for drafting the conveyance document (typically a warranty deed), which runs $200 to $500. Any outstanding mortgage balance, liens, and accrued interest come out of proceeds at closing, and recording the mortgage release with the Bureau of Conveyances costs $36 to $41 depending on whether the property sits in the Land Court or Regular System.3Bureau of Conveyances. Recording Fees
What the Buyer Pays
Most buyer closing costs trace back to the mortgage. The lender’s appraisal generally runs $500 to $900 in Hawaii, reflecting the state’s geographic isolation and higher cost of living. Loan origination — the lender’s processing charge — commonly equals about 1% of the loan amount. Credit report fees are smaller but still part of the package.
Buyers pay the remaining 40% of the standard title insurance premium, plus the full cost of any extended coverage policy they elect.2Old Republic Title. Buyer vs Seller Costs Standard Allocation of Closing Fees The boundary survey, known in Hawaii as a K-1 or K-2 survey, is the buyer’s responsibility and typically costs $300 to $1,500 depending on the parcel. Recording the new deed and mortgage with the Bureau of Conveyances or Land Court runs $36 to $41 per document for standard filings.3Bureau of Conveyances. Recording Fees
Buyers also prepay the first year of homeowners insurance before closing and fund escrow reserves for property taxes and insurance if the lender requires them. A general home inspection, separate from the termite report, usually costs $300 to $425 and is almost always paid by the buyer, since the results inform the buyer’s own decision whether to proceed.
What’s Split Between Buyer and Seller
The escrow fee — paid to the neutral company that holds funds, manages documents, and coordinates closing — is traditionally split 50/50. It is usually calculated as a percentage of the sale price or a flat fee that scales with the transaction.
The termite inspection is the other shared expense. Hawaii’s warm climate makes termite damage a serious concern, and lenders almost always require a clear report before funding a loan. The inspection cost is typically split; who pays for any required treatment is negotiated in the purchase contract. The inspector must be a licensed pest control operator, and the form and content of the report are governed by state law.4Justia Law. Hawaii Revised Statutes 460J-19 – Termite Control Contracts and Written Inspection Reports
HARPTA and FIRPTA: Withholding on Non-Resident Sellers
If the seller doesn’t live in Hawaii, two withholding regimes can take a large bite out of proceeds before any other closing cost is paid. Many out-of-state and foreign sellers are caught off guard.
HARPTA, the Hawaii Real Property Tax Act, requires the buyer to withhold 7.25% of the sale price and remit it to the Hawaii Department of Taxation within 20 days of closing. On a $900,000 sale, that’s $65,250 held back from the seller’s proceeds. The seller can file a Hawaii return to claim a refund if the actual tax owed is less, but the cash is tied up until the return is processed. Hawaii residents avoid the withholding by providing the buyer with Form N-289, and the withholding doesn’t apply when the property was the seller’s principal residence and the sale price is $300,000 or less.5Hawaii Department of Taxation. Tax Facts 2010-1 – Understanding HARPTA
FIRPTA is the federal counterpart. When the seller is a foreign person or entity, the buyer must withhold 15% of the sale price and remit it to the IRS.6Internal Revenue Service. FIRPTA Withholding A foreign seller who is also a Hawaii non-resident faces both, meaning 22.25% of the sale price is withheld before they see any proceeds. Withholding certificates that reduce or eliminate the amount must be applied for in advance, so sellers in this position should talk to a tax professional well before listing.
Prorations at Closing
Property taxes and HOA dues keep accruing while a property changes hands, so both are prorated between buyer and seller based on the closing date and appear as credits or debits on the settlement statement. Hawaii’s property tax year runs July 1 through June 30, with installments due August 20 and February 20; if the seller has already paid an installment covering a period after closing, the buyer reimburses the seller for the portion they’ll own the home. Condo and townhouse sales almost always involve an HOA, and the escrow company will request a payoff statement from the association that includes any special assessments or outstanding balances the seller must clear.
Seller Credits and What’s Negotiable
A seller credit (sometimes called a closing cost concession) is a specific dollar amount the seller agrees to put toward the buyer’s costs, reducing what the buyer brings to the table. Lenders cap how much the seller can contribute based on the loan type and down payment:
- Conventional loans: 3% of the sale price if the down payment is 10% or less, 6% for down payments between 10% and 25%, and 9% for down payments above 25%.7Fannie Mae. Interested Party Contributions (IPCs)
- FHA loans: 6% of the sale price regardless of down payment.
- VA loans: 4% of the sale price for certain concessions, though standard closing costs such as title insurance and recording fees don’t count toward that cap.
- Investment properties (conventional): 2% of the sale price.7Fannie Mae. Interested Party Contributions (IPCs)
Credits above these caps are treated by the lender as a price reduction, which can lower the appraised value relative to the loan and create financing problems. The 60/40 title split is likewise negotiable, but any departure from the standard arrangement needs to be written into the purchase contract.2Old Republic Title. Buyer vs Seller Costs Standard Allocation of Closing Fees
Leasehold Properties Carry Extra Costs
Hawaii has an unusually high number of leasehold properties, where the buyer owns the building but leases the land. These transactions add costs that don’t exist in a fee simple sale. The landowner typically charges a transfer or consent fee to approve the new lessee, and the buyer’s attorney or title company will need to review the ground lease in detail. Lease rent transfers to the buyer at closing and is prorated like property taxes.
Lenders are stricter on leasehold deals, often requiring the remaining lease term to extend at least 10 to 15 years beyond loan maturity, and sometimes charging a higher interest rate. The appraisal can run more because the appraiser must evaluate both the leasehold interest and the remaining lease term. Buyers of leasehold units should budget more for due diligence and allow extra time for the lessor’s approval process.