Closing Costs in Hawaii: A Guide for Sellers

Reconveyance fee

After you’ve completed the sale of your home and paid off your mortgage, you’ll likely be responsible for a reconveyance fee. This fee covers issuing a reconveyance deed, which officially releases you from the debt tied to the property. The mortgage company will then need to record this deed, and the fee can vary based on the specific regulations of your city, state, or county.

Realty transfer tax

You also might be responsible for what’s known as a realty transfer tax. These are fees assessed by local governments whenever a property changes ownership.

These taxes are sometimes called a “Deed Excise tax” or a “Documentary Stamp tax.” Who ultimately pays these taxes depends on the state, city, or county where the sale occurs.

In Hawaii, for example, the seller is typically responsible for covering transfer taxes as part of the closing costs, but this can fall to the buyer, depending on the terms of the sales agreement.

Real estate agent commission

Unless you’re selling your home for sale-by-owner, you’ll likely have used a local agent. Research indicates that an agent’s expertise can significantly impact your sale: In 2023, homes sold with an agent’s assistance had a median price of $405,000, compared to $310,000 for FSBO sellers.

Working with a real estate agent means paying a commission. This fee covers various services, such as accurately pricing your home, marketing it effectively, and negotiating with buyers to ensure you receive the best possible price and terms.

It should be noted, however, that on March 15, 2024, the National Association of Realtors (NAR) announced a landmark lawsuit settlement that will change the way real estate agent commissions are handled in the future. These changes will “decouple” seller and buyer agent compensation. Industry experts predict that this decoupling will likely lower agent fees and give buyers the ability to negotiate commission amounts directly. Learn more.

HomeLight’s transaction data reveals that the national average real estate agent commission is 5.8% of the property sales price. This commission typically includes fees for both the listing and buyer’s agents, with sellers customarily covering the cost.

Use HomeLight’s commission calculator by entering your city for commission data tailored to your specific area.

Attorney Fees

Some states require an attorney to be present when closing the sale of a property.

Real estate attorneys are not required for real estate closings in Hawaii, but are often hired by escrow agents and title companies in the state, usually in order to prepare closing documents. This is primarily due to Hawaii’s history of land division and recording procedures.

Homeowners Association/Condo Fees

One of the biggest sticking points for sellers is the fees levied by their homeowners’ association (HOA) or condominium association fees.

Like other fees we’ve discussed, these will vary, not just because of the different rules and regulations of your local HOA but also because HOA regulations vary greatly depending on the state. These fees (or dues) are usually prorated at the time of the sale.

The average monthly HOA fee in Hawaii is $390.

Seller’s concessions

Sellers may owe money at closing due to financing concessions agreed upon during negotiations. These concessions often involve providing funds for closing costs, repairs, or home warranties.

A typical concession is repair credits, which can come into play when a buyer includes a contingency in their offer, usually tied to the home inspection. If the seller chooses not to address the repairs flagged during the inspection, they can offer repair credits—cash to cover the cost of the repairs—at closing. However, these concessions tend to be less frequent in a strong seller’s market since contingencies can deter potential buyers from moving forward with a deal.

Miscellaneous closing costs/fees

These are some of the most common closing costs you may face as a seller in Hawaii. However, it’s essential to note that many of these costs are negotiable. Your buyer might be open to negotiating certain fees, or you could work with a top agent or real estate attorney to secure a better deal on your behalf.

If you want to bypass the complexities of dealing with an agent or closing costs, consider HomeLight’s Simple Sale program. This process allows you to sell your home in just three steps—simply provide some basic details about your property, connect with a Home Consultant, and you could sell your home in as little as 10 days.

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