Home Selling Cost in California
Home selling cost in California. Selling your home is one of the biggest financial transactions you’ll ever make in your lifetime. It’s extremely important for you to understand the home selling cost in California and costs associated with the real estate transaction and how it’ll impact your bottom line. Do you know all the home selling cost in California? While selling thousands of Southern California homes over the last twelve years, I realized that many home owners do not realize all the costs involved with selling a home. It’s important you understand the costs involved and how they’ll impact your bottom line. The cost of selling a house in California varies by city, but typically ranges from between 6.7% to 7.7% or more of a home’s sale price.
Home Selling Cost in California
Below you will find a summary of all the costs for selling a California home. When you know exactly all the associated costs to sell a home you will be better prepares to have your financing in order whether you are buying another home or possibly renting. Closing costs in California may vary, but in general, California homeowners can expect to pay anywhere from 6 to 10 percent of their home’s selling price to close the deal. Let’s break down the common expenses that California home sellers can expect to face.
Factoring in Closing Costs.
The additional costs outside of normal realtor commissions – is an important step in the process. There’s more to it than just subtracting your loan balance from the agreed upon purchase price. Typically, as long as your home has built up equity (meaning, it’s worth more than what you paid for it), most sellers don’t have to come up with cash to cover the costs listed below. If you’re upside down on your home (meaning it’s worth less than the initial purchase price, then in all likelihood, it’s going to cost you to sell it.
Small fees and costs add up quick. What, exactly are the average closing costs for sellers in California? From the commission paid to the listing agent, to escrow fees to city or county transfer fees, when it comes to seller closing costs in California, homeowners need to know what to expect before listing.
Real Estate Commission – Listing Agent Commission.
Real Estate commissions are the biggest expense when selling a home in California. Real estate commissions are always negotiable, but they typically run about 5 percent to 6 percent of a home’s sale price. The exact terms of an agent’s commission vary from sale to sale, and can depend on region and which firm they work for. As the seller, you pay the listing agent commission if you use the services of an agent to sell your home. The cost is generally 2-3% of the total home sale. However, commissions are always negotiable, so don’t be shy to talk to your agent about their fees. And, don’t worry about having to write a hefty commission check as commissions are usually paid from the proceeds of the sale of the house.
Real Estate Commission – Buyer’s Agent Commission.
Sellers are also responsible for paying buyer’s agent commission. Offering less than the traditional 2 to 4% commission is frowned upon by buyer agents, and will often result in your listing being passed over.
For Sale by Owner (FSBO) Fees.
The FSBO fee is only paid when sellers to sell without an agent. After the housing crash in 2008, For Sale by Owner (FSBO) became increasingly popular as buyers and sellers alike tried to recover from the fallout of bad loans and an inflated housing market. It’s still a popular option – the seller pays a fee to have his or her listing advertised on the MLS and MLS-powered sites like Realtor.com and Redfin, but can save tremendously on agent commissions. In most circumstances, this fee is only paid when sellers to sell without an agent. The actual cost can vary, depending on the services used, but it’s typically anywhere from $299 to 2% of total sale price.
Escrow Fees.
The escrow fee is calculated on the purchase price and the service level chosen. The escrow company handles all the funds in a real estate transaction. This fee compensates the escrow agent, who coordinates the whole transaction. In California, buyers and sellers usually pay their own escrow fees based on the agreed upon purchase contract (50-50). Escrow fees commonly run about $2 per thousand dollars of the sale price, plus $200 – $250 base fee. Escrow fee is a part of the home selling cost California.
Title Fees, Title Search and Title Insurance.
Title fees are any costs relating to the purchase, or sale, of property. The title company provides title insurance to both the buyer and the lender. The seller usually pays for the Owner’s Title Policy, while the buyer pays for the Lender’s Title Policy. The title search fee pays for a document that proves you have a legal right to sell your home and insures the buyer if you don’t. The Owner’s Title Policy premium, which is paid only once, is based on the purchase price. Lender’s title insurance is usually required by your mortgage company. It’s usually purchased in a bundle with owner’s title insurance. This cost is a one-time fee usually between 0.5% – 1.0% of the sale price. Other title charges include sub-escrow and wire fees, if the seller has an existing mortgage. The search fee can run from $250 – $800 and will depend on what county your property is in. home selling cost California.
Mortgage Balance Payoff.
Your payoff amount is how much you will actually have to pay to satisfy the terms of your mortgage loan and completely pay off your debt. At the close of escrow, before receiving any proceeds on the sale of the house, the remaining amount owed on your mortgage will be paid off to the lender. The mortgage balance payoff is the cost of repaying your home loan. It’s important to note that this cost can also include a loan payoff fee, which will vary by lender and may include a prepayment penalty fee if outlined in your mortgage. home selling cost California.
Closing Cost Concessions (If Agreed).
When there is a seller concession in place, the seller will pay for part or all of these costs. Part of the closing costs for a seller in California is city and county transfer taxes. These are also referred to as “documentary transfer taxes”. Some buyers ask a seller to cover their closing costs. If you agree to this request in the contract, you will pay their fees, which could be in the range of up to about 3% of the purchase price.
City and County Transfer Taxes/Fees.
In California, the seller usually pays for the Documentary and property Transfer Tax. This fee is usually $1.10 per $1,000 of purchase price. The total cost of city or county transfer fees will vary by location, and in some areas, there are no transfer fees.
Notary Fees.
Standard notary costs range from $0.25 to $20 and are billed on a per-signature or per-person basis depending on the state. Standard in most legal processes, notary fees are paid to a notary to verify your identity and ensure proper execution of paperwork. Notary fees are also a part of home selling cost in California.
HOA Dues and HOA Transfer Fee.
Homeowner Association (HOA) dues are pro-rated. If the HOA fees have been paid in advance, the buyer will credit the seller a pro-rated amount from the date of sale.
The HOA charges document preparation and transfer fees, which are usually paid by the seller. The seller is required to provide HOA documents for the buyer’s review, including the CC&Rs (Conditions, Covenants, and Restrictions), board meeting minutes, and articles of incorporation. The HOA charges a document preparation fee to assemble this package. An HOA transfer fee only applies if the property you’re selling has an HOA. It’s usually paid for by the seller, and will include a fee to cover document preparation and to register the new buyer as the property owner. HOA transfer fees are typically less than $1,000. However, HOA transfer fees usually run anywhere from $100 to $600 with an average HOA transfer fee being around $225 to $350.
Cost of Home Warranty.
A home warranty is a year-long, renewable home service plan that covers home systems and appliances when they stop working due to normal wear and tear — like your air conditioning system, refrigerator, water heater, and washer and dryer. A home warranty is a common closing concession provided by the seller for the buyer (If agreed in the purchase contract). The price varies based on location and Warranty Company. A home warranty costs between $350 and $600 on average and can range anywhere from $350 to $1,000. Most home warranties are around $400 for basic coverage.
Termite Inspection and Repair Fee.
In California, sellers pay termite inspection costs. The cost is typically inexpensive, ranging from $50 to $150. Some termite companies even offer a free inspection in the hopes that they’ll earn your business and can handle any necessary (and more expensive) treatment. A termite inspection fee is common in California and may be required depending on property location and the type of loan a buyer is using. A termite inspection fee usually costs around $100. Depending on the inspection results, subsequent repairs can be anywhere between $1,000 and $5,000. This is a minor home selling cost in California.
Natural Hazard Disclosure (NHD) Fees.
The Natural Hazard Disclosures (NHD) determines if a property is within a designated hazard area. This is a commonly ordered report that details natural hazards or threats in your area, such as earthquake fault lines and flood zones, fire zone, etc. The natural hazard disclosure report (NHD) often includes other nuisances such as airplane noise. The disclosure starting at $65, will likely cost around $125 – $200. Keep reading for the home selling cost in California.
Lien Release Document Fee.
If a court judgment resulted in a lien on your property for an unpaid debt, you’ll need to repay it before your sale can close. A lien release document (also known as a Release of Lien or a Lien Cancellation) stating any lien against the property has been paid will likely be required. You will probably also have to pay a recording fee on the document showing your debt has been paid in full.
Processing Mortgage Discharges.
Recording fees for the various documents at the Registry of Deeds. The total of these miscellaneous expenses will usually amount to a couple hundred dollars. California home selling costs are pretty straight forward when you know what they entail. Real Estate surprises however, are never fun especially when they involve taking unexpected money out of your pocket! Use this list of home selling costs in California to plan ahead!
Nobody likes unexpected expenses. These are the California closings costs you will be dealing with as a home owner.
Home Preparation Cost
Unless you’re planning to sell your California home “AS-IS” or to a cash buyer, you’ll need to spend some money to get your home market-ready to attract qualified buyers. These costs will vary depending on the age and condition of your home, your home’s size and layout, the level of demand or competition for homes in your neighborhood and more.
The cost to prepare your home for sale could add thousands more to your total upfront costs. For example, home staging costs between $1,000 to $4,659 on average nationwide, according to HomeAdvisor. However, actual costs depend mainly on your market, the size of your home and numbers of rooms furnished, and how much furniture is needed.
If your home needs to be deep cleaned by a professional, expect to spend at least $300-$1000 for a complete deep cleaning. Finally, pre-listing home repairs and improvements could add hundreds, if not thousands more to your budget, depending on how much work your home needs.
Property Taxes
Depending on the time of year of the sale, there may be unpaid property taxes, which are pro-rated until close of escrow. If property taxes have already been paid in advance, the buyer will credit the seller a pro-rated amount from the date of sale. You can also read my article about property tax calculator for more information about how property tax is calculated when you sell real estate.
Capital Gain Taxes
Under current U.S. federal tax policy, the capital gains tax rate applies only to profits from the sale of assets held for more than a year, referred to as “long-term capital gains.” The current rates are 0%, 15%, or 20%, depending on the taxpayer’s tax bracket for that year. All capital gains in California are taxes as ordinary income, according to the State of California Franchise Tax Board.
However, the IRS offers a tax break on capital gains from the sale of your primary residence, as long as you meet certain requirements:
- Single homeowners can deduct up to $250,000 of gains from sale of their property;
- Married couples can deduct up to $500,000 of gains.
- You must have occupied the property for at least two of the past five years.
- You can also deduct certain repairs and improvements from your home’s cost basis.
Miscellaneous Home Selling Cost in California.
In addition to the above standard closing costs for sellers in California, there are some other costs and fees associated with selling a home. The Residential Purchase Agreement outlines the terms and conditions of the sale. The agreed upon terms may include a seller credit towards buyer closing costs, or a buyer credit towards seller closing costs. Buyers often request a one-year home warranty, a natural hazard disclosure report, and a termite inspection and repair. After home inspection, buyers may also request the seller complete repairs. Repair requests are negotiated between the buyer and seller after inspections are completed. Not all of these will apply to you, but you should understand what these costs are before you get into the process. Home selling cost in California.
You might see several miscellaneous fees itemized on your settlement statement. Expenses for mailing, filing fees
- Overnight mailing.
- Courier services
- Wiring expenses
Home Selling Cost in California – The Bottom Line
Although most people consider selling a home as a profit-generating transaction, selling a home is not without its own associated costs. The cost to sell a house will affect your bottom line. When you plan to sell your home, your listing agent can give you an estimate of your closing costs and seller net proceeds. There are moving pieces, but knowing what to expect and how to calculate your bottom line at the very end can help eliminate some of the stress. Remember, there is more to it than just subtracting your mortgage from your sale price. As a seller, you may be required to cover the costs of lender payoff fees, commissions, property taxes and more. It pays to be informed.
If you’re thinking about putting your house on the market, and are wondering just how much closing costs are for sellers in California, you should learn about all options before committing to an agent. Real estate can be a smart investment, and if you’re really smart about it, you could walk away with a nice nest egg to reinvest in a new property or other investments to the benefit of your overall financial well-being. Home selling cost in California
We Can Help You Sell Your Home and Save
Both of these options will get your home the exposure that is needed for attracting real and active buyers who will offer you market value for your home. If you or your agent are a shrewd negotiator or follow a pricing strategy that is designed to attract multiple offers to get the maximum selling price the market will bear then both of these options should be given serious consideration. For the exact home selling cost in California, Contact Us.