Every deal I close, the same moment comes up. A buyer or seller looks at their settlement statement a few days before closing and says, "Wait, what is all this?" So let me walk you through it the way I do before anyone signs anything. Closing costs in Hawaii aren't mysterious once you know who pays what, but they add up, and a couple of them are bigger here than almost anywhere on the mainland.
Here's the short version: on Oahu, buyers usually spend somewhere around 2 to 4 percent of the purchase price on closing costs when they're financing, and closer to 1 to 2 percent on a cash deal. Sellers typically land in the 7 to 9 percent range once you fold in the real estate commission and the state conveyance tax. Those are ballparks. Your actual number depends on price point, whether you're an owner-occupant, your loan, and where you live when you sell. Let me break down both sides.
What buyers pay
If you're getting a loan, the biggest chunk of your closing costs comes from the lender: origination or underwriting fees, the appraisal, and a credit report. Every lender's fee sheet reads a little differently, which is why I tell buyers to get a written Loan Estimate early and compare two or three line by line. It's the single easiest place to save real money.
On top of the loan side, buyers on Oahu generally cover:
- Roughly half the escrow fee. In Hawaii the escrow (closing) fee is customarily split down the middle between buyer and seller, though like everything else it's negotiable in the contract.
- The lender's title insurance policy, if you're financing. The seller usually pays for your owner's policy, but the lender's policy that protects the bank is on you.
- Recording fees at the Bureau of Conveyances. These are modest and flat, currently $41 per document in the Regular System and $36 in Land Court for documents up to 50 pages.
- Prepaids and reserves. Your lender collects an initial cushion for property taxes and insurance, plus prepaid interest from your closing date to month's end. This isn't a fee so much as money you'd owe anyway, paid up front.
- Inspections. Termite, general home inspection, and anything specialized you order. On older Oahu homes I almost always want a termite inspection, and on some properties a sewer or cesspool look.
None of these are huge on their own. The lender fees and the prepaid tax and insurance reserves are what move the needle.
What sellers pay
Sellers carry the heavier load on Oahu, and two line items are the reason. The first is the real estate commission, which is negotiated in your listing agreement and, since the 2024 NAR settlement, is handled differently than it used to be. Buyer-agent compensation is now its own conversation rather than an automatic split. I'm happy to walk you through how that actually works on a real listing.
The second big one is Hawaii's conveyance tax, which the seller pays. This is the one that surprises people, especially at higher price points, so it's worth understanding.
Hawaii's conveyance tax
The conveyance tax is a state transfer tax charged on the sale price, and the rate climbs with the price. There are two rate schedules. The lower one applies when the buyer qualifies for a county homeowner's exemption, meaning they'll actually live in the home. The higher one applies to everyone else, which includes second homes and investment condos. Here are the rates per $100 of value:
Owner-occupant rate (buyer qualifies for the homeowner exemption):
- Under $600,000: 10 cents per $100
- $600,000 to $1 million: 20 cents
- $1 million to $2 million: 30 cents
- $2 million to $4 million: 50 cents
- $4 million to $6 million: 70 cents
- $6 million to $10 million: 90 cents
- $10 million and up: $1.00
Standard rate (non-owner-occupant, second homes, investment property):
- Under $600,000: 15 cents per $100
- $600,000 to $1 million: 25 cents
- $1 million to $2 million: 40 cents
- $2 million to $4 million: 60 cents
- $4 million to $6 million: 85 cents
- $6 million to $10 million: $1.10
- $10 million and up: $1.25
A quick example. Sell a $1.2 million home that the buyer will live in, and the conveyance tax runs 30 cents per $100, about $3,600. Sell that same home to a buyer who won't occupy it, and it's 40 cents per $100, about $4,800. It's real money, and it belongs in your net-proceeds math from day one.
Beyond commission and conveyance tax, sellers on Oahu typically cover the owner's title insurance policy for the buyer, about half the escrow fee, a prorated share of property taxes and any AOAO or HOA dues through the closing date, and the payoff of any existing mortgage or liens.
HARPTA and FIRPTA, if you live out of state or overseas
This one catches a lot of my mainland and international sellers off guard, so I bring it up early. If you're selling Hawaii property and you're not a Hawaii resident, escrow is required to withhold 7.25 percent of the sale price under HARPTA (the Hawaii Real Property Tax Act) and send it to the state. If you're a foreign person, FIRPTA adds a federal withholding, generally 15 percent of the sale price, on top of that.
The key thing to understand: this is not an extra tax. It's a prepayment against the capital gains tax you might owe, collected up front because the state and IRS can't easily chase it after you've left. If your actual tax bill is lower than what was withheld, you file and get the difference back. There are exemptions too. HARPTA has a limited carve-out when the property was your principal residence in the year before the sale and the price is $300,000 or less. These rules get technical fast, and the exemption and refund process is where a good local tax professional earns their fee.
How to keep the number from surprising you
The buyers and sellers who feel calm at the closing table are the ones who saw an estimate early. On the buy side, that means a Loan Estimate from your lender plus a buyer's cost sheet from me before you're deep into a contract. On the sell side, it means a written net-proceeds estimate with the commission, the correct conveyance tax tier for your price and buyer, and any withholding if you're out of state. I'd rather you know your bottom line in week one than week six.
If you want to see how these costs land on a specific property or price point, that's a 20-minute conversation. Reach out through my contact page and I'll build you an estimate for your actual situation. You can also read more about buying on Oahu and selling your home here, and if you're weighing a purchase, my financing overview covers how loan choices affect your upfront cash.
Frequently asked questions
Who pays closing costs in Hawaii, the buyer or the seller?
Both, but not equally. Buyers cover their loan costs, the lender's title policy, recording fees, prepaids, and about half the escrow fee. Sellers cover the commission, the state conveyance tax, the owner's title policy, the other half of escrow, and prorated taxes and dues. Everything is negotiable in the contract, but that's the customary split I see on Oahu deals.
How much are closing costs for a buyer on Oahu?
As a rule of thumb, plan on 2 to 4 percent of the purchase price if you're financing, and 1 to 2 percent if you're paying cash. The financed range is higher because of lender fees and the prepaid tax and insurance reserves your loan requires. I always give buyers a written estimate for their specific price and loan, because the rule of thumb only gets you so far.
Why is the conveyance tax higher on my sale than my neighbor's?
Two reasons, usually. Price is one, since the rate climbs in tiers. The other is who's buying. If your buyer will live in the home and qualifies for the county homeowner exemption, the lower rate applies. If they won't occupy it, the standard, higher rate does. Same house, different buyer, different tax.
I live on the mainland. Will I really lose 7.25 percent of my sale price?
Not lose, prepay. HARPTA withholding is 7.25 percent of the sale price held by escrow and sent to the state as a prepayment on your capital gains. If you owe less than that when you file, you get the difference refunded. I always loop in a Hawaii tax professional early so we can look at exemptions and the refund path before closing, not after.
Can I ask the seller to pay some of my closing costs?
Yes, and buyers do it all the time. A seller credit toward your closing costs is a normal part of an offer, especially in a market with some breathing room like the one we're in this fall. Whether it makes sense depends on the property, the competition, and your loan's limits on credits. That's exactly the kind of strategy I map out before we write an offer.
This is general information, not tax, legal, or lending advice. Every transaction is different, so run your specific numbers past your lender, your escrow officer, and a licensed Hawaii tax professional or attorney before you rely on them.
Tony Kawaguchi is a licensed Hawaii broker (RB-21841) with The Kawaguchi Group at eXp Realty. With 20+ years in the business, 20+ agents on the team, and more than $1 billion in career sales, we help buyers and sellers across Oahu understand their real numbers before they sign.