Are you putting your Oahu home on the real estate market? Curious about how much you will net profit? There are several closing costs that sellers should be aware of when they are preparing to sell a property that normally will be paid out of your proceeds at closing:
- Brokerage Fees: In Hawaii, real estate commissions are typically paid by the seller and the brokerage fees are split between buyer’s and seller’s agents.
- Payoff of existing mortgage: If your home is not owned free and clear, your mortgage balance and any lines of credit will be paid off at closing.
- Title insurance: This is a cost that is split between both buyer and seller – 60% to the seller and 40% to the buyer. Title insurance protects against any liens, claims, or errors that are filed against the property title.
- Escrow fees: These are fees that are paid to the title company.
- Conveyance Tax & Recording Fees: These are transfer fees that get paid to the state.
- Attorney document preparation fees: An attorney is responsible for drafting up the title deed.
- Land survey (if selling a single-family home): During escrow, a survey is typically provided to the buyer, which verifies the land boundaries of the properties and identifies any property encroachments, if any.
- Condo document packet (if selling a condominium): If you are selling a condo or townhome, condo documents are normally provided to the buyer during escrow for their review. Your realtor will usually order these on your behalf.
- Termite Inspection: During escrow, a termite inspection report is typically provided to the buyer at the seller’s expense. The buyer will select who they’d like to use for the termite inspection. If any live termites or active infestation is uncovered, the seller is required to pay for termite treatment.
- Move-Out Cleaning: Prior to closing, the seller is usually required to pay for professional move out cleaning. If there are carpets in the home, the seller may also be required to pay for carpet cleaning.
- Concessions (if any): After the buyer conducts their home inspection report, there may be some issues or repairs that they would like to have addressed by way of a closing credit or repairs done at the seller’s expense.
- HARPTA/FIRPTA withholdings: If you are a non-Hawaii resident, you will be subject to HARTA withholding of 7.25%. If you are also a non-U.S. citizen, you will also be subject to a FIRTPA withholding of 15%. Note: This is not a tax. Please consult with your CPA for more information about HARPTA/FIRPTA withholding.
- Capital gain taxes: Consult with your CPA or financial specialist to see if you are responsible for any capital gains taxes due to the sale of your property.
Each sale is unique and depending on your situation, other fees could be involved. If you are considering selling your property on Oahu, contact me today for a consultation!