Californian home sellers should expect to pay anywhere from 5% to 6% of their home’s final sale price in commissions towards their realtor. However, those are not the only closing costs associated with selling your California home.
In this article, we will be breaking down what closing costs home sellers pay in California, and what you would typically pay for the sale of your home.
What you should expect for closing costs as a home seller in California
There are six general categories that form your closing costs. They are:
- Miscellaneous fees
- City Transfer Taxes
- County Transfer Taxes
- Title Insurance
- Escrow Fees
- Realtor Commissions
Closing costs are strictly taken out of the profits you have made from selling your home.
Let’s break down the six different closing costs – shall we?
Miscellaneous fees are seen on your settlement statement. They will be the cheapest out of the six, and they include everything from:
- Notary Fees
- HOA Fees
- Recording Fees
- Marketing Fees
- Inspections Fees
These are the smallest charge out of the six, let’s move forward onto some of the bigger ones.
City and County Transfer Taxes
All counties in California have a transfer tax, however, not every city in California has a transfer tax.
The cost of the county transfer tax in California is approximately $1.10 per every $1,000 of the final sales price. (Unless you live in San Francisco County – where the county transfer tax is dependent on the final sale price of the home, as explained here.)
So for example, if your home sells for $500,000, your county transfer tax will be $550.
In some cases, you can save on one, but you will still have to pay for the other. The cost for the city transfer tax varies from city to city, but more likely than not – as the seller, you will have to pay for the city and county transfer taxes, or you can negotiate with the buyer to split them 50/50.
Title Insurance Fees
Title insurance protects the buyer from any form of financial loss due to a bad/defective title on the home. Additionally, it also protects against any liens that are associated with the home, after it has been sold.
There are generally two types of title insurance policies, one that covers the buyer which is called an owner’s title policy, and one that cover’s the buyer’s lender, which is called a lender’s title policy.
Title insurance does vary between different title insurance companies, but the general standard is .225 of the home’s final sales price. If you need a more in-depth calculation based on your city/county, you can get a more accurate estimate here.
The buyer will pay for the lender’s policy (if they are financing the home) and the owner’s title policy varies by county.
As we have learned so far, which county and city you are located in determines the amount you’re going to pay as a seller.
Escrow companies are a neutral third-party that act as a safeguard for the buyer and seller. They hold the money allotted for the purchase of the home until the sale is completed and finalized.
As a seller, they protect you in the case that you don’t receive payment. As a buyer, they hold your money until you receive the property.
Now – as we have mentioned earlier, escrow fees are also dependent on the county that you’re selling the home in. Each county has a standard for escrow fees, which will be outlined in the offer contract you have received from the buyer.
These fees are negotiable, and as a seller – you won’t necessarily have to pay all of the escrow fees associated with the sale of your property. You can split the fees down the middle if your county allows for it, which can save you more money off of your sales price.
A general average is $2 for every $1,000 of the final sales price plus an additional $250 for the servicing fees of the escrow company.
For example, if you were to sell your home for $500,000, it would approximately be $1,250 for the escrow fees that you can pay by yourself or you can split with the buyer.
This is where the biggest chunk of your closing costs are lost, and you’ll be paying an average of 5% to 6%.
Good thing is, these commissions are negotiable as well. There are various ways one can reduce their real estate commissions in California, which include:
- Going through a discount brokerage
- A flat fee company
- Working with a real estate investor (like us!)
Psst… we have zero commissions for buying your home, keep that in mind before you sell with a realtor.
The 5% to 6% you’re paying for doesn’t go to just your realtor, it also goes to your buyer’s realtor as well. They split the percentages between the brokerages, so either way – both realtors on either side are making money.
Seller costs in California include:
- Real estate commissions that can be up to 6% (always negotiable or worked around)
- Escrow fees (are an average of $2 per $1000 of the final sales price plus an additional $250 service fee)
- Title insurance differs between companies but is generally the final sales price multiplied by .225.
- City transfer taxes are dependent on the city you live in, while County transfer taxes are $1.10 for every $1000 of your final sales price (unless you live in San Francisco)
- Miscellaneous fees vary with each different transaction.
So there you have it! It’s quite a bit of math, but you should know how much you’re going to be paying for out of your home’s final sale price when the time comes.
If you’re looking to sell your home without any commissions, repairs, or renovations done – We Buy Houses SoCal is looking to buy your home!
We purchase all properties as-is, and if you’re looking to sell your home without any closing costs, receive your free offer in as little as 24 hours.