If you’re planning to sell your Southern California home, it’s important to understand the closing costs associated with the transaction. The costs to close a purchase or sale are the fees and expenses that come with the transfer of ownership from the seller to the buyer. In Southern California, these costs can vary depending on a number of factors.
One of the biggest expenses you’ll incur as a seller in Southern California is the commission paid to the real estate agents involved in the transaction. This typically ranges from 5-6% of the sale price of the home.
Additionally, you may be responsible for paying for any repairs or upgrades required by the buyer as part of the sale agreement. These expenses can include title insurance, escrow fees, and transfer taxes. Understanding these costs upfront can help you prepare financially for the sale of your home.
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Understanding Southern California Seller Closing Costs
What are Closing Costs?
When it comes to selling a property, closing costs are the expenses that the seller has to pay before the sale is finalized. These costs can vary depending on the state and the specifics of the real estate transaction. In Southern California, the seller is typically responsible for paying for certain expenses that are associated with the sale of the property.
It’s important to note that these are just some of the expenses may be associated with a real estate transaction in Southern California. It’s important to work with a knowledgeable real estate agent or broker who can help you understand all of the costs that will be associated with your specific transaction.
Video: I explain the Fees that are incured at the close of escrow
Seller Costs are different in a Real Estate Transaction than the Buyer in California
The Seller’s real estate agent, when representing you, is the listing agent. Their goal is to get you the highest and best price for your home in the shortest amount of time on the market. - The Buyer’s real estate agent represents the buyer and seeks to assist the buyer to get the lowest price for the home
- Escrow Company and Escrow Officer—an independent, neutral third-party company that carries out the agreements that the buyer and seller made during the offer for real estate. They are licensed, bonded, and insured escrow/settlement agents. To learn more, go to “What is an Escrow Company”
- Lender/Bank—if a loan is involved
- Title Insurance Company —A company that issues insurance regarding the title of real property. So, when the new owner purchases the home, the house is not encumbered with debts and issues that belong to the past seller or sellers.
What Are the Costs When Selling Your Home?
- Documentation Preparation Fee for transferring the deed
- Escrow Fees – your escrow officer is the key to a smooth transaction. Since you are the seller, your listing agent, Jay Valento, should know several reliable escrow companies in your area to assist with the closing of the sale. Examples would be Cardinal Escrow, Anchor Seaport Escrow, or International City Escrow.
- Notary Fees – usually run
about $50 to $100 or more depending on the document that needs to be notarized
- Loan Fees – possible fees required by the buyer’s lender if the buyer buys with an FHA or VA loan. This amount can vary.
The buyer may ask the seller to pay for their closing costs in the purchase contract. Usually, the buyer asks for up to 3% of the purchase price for theese costs to be paid by the seller. You as the seller can negotiate this item.
Demand Fee – your bank that has your loan now may charge a fee for documents so your loan can be paid off through the sale in escrow.
- Real Estate Commissions – a good agent can help you get the highest price that the market will bear for your home. Percentage is negotiated with the seller when the listing is taken or with the buyer before showing them real estate for sale.
- Termite Work – in California, there are two sections to the Termite Report; Section 1 covers the infestation of termites, and Section 2 covers future items that may happen. The best thing to do is get a termite inspection report of your home when you first get it listed for sale so you know what your costs will be. However, you are under no obligation to do the termite work.
- Natural Hazard Disclosure Report discloses to the buyer if the property is in an earthquake zone, fire hazard, etc. You as the seller need to disclose this to the buyer. You can fill out the form yourself or have a third-party company take the liability of it and create a report for the buyer.
The cost is about $99 to $159. I found a company called MyNHD.com or First American Natural Hazard Zone Disclosure Company to produce a good report.
- Environmental Disclosure Report discloses if your property has an oil well on it or had one in the past…along with other issues.
- Title Insurance — provides coverage for certain losses in the title prior to your ownership. It protects against claims resulting from various defects such as prior fraud or forgery that might go undetected until after closing. Companies like Orange Coast Title Insurance and First American Title Insurance.
For title insurance questions, call Kristi Wry, Vice President of Orange Coast Title at 714-496-3678. - Tax Prorations – if any for unpaid taxes including any bonds or special assessments
- Any unpaid Homeowner’s Association (HOA) Dues (if a condo, town-home or your property is in a planned unit development).
- Home Warranty plans – after you have moved out, the home warranty company’s policy will cover service problems – offering you additional after-sale liability protection. They range from $550 to $900 depending on what they cover. We can review the different plans before you decide what to do.
- Any City Transfer or County Tax
- Document Transfer Tax
At the end of the sale, you receive a closing statement that itemizes all of the expenses.
Expenses
Typically, figure about 8% of the sales price for your seller costs with Realtor® commissions factored in when you are selling.
Who Pays for Closing Costs in Southern California?
When it comes to closing expenses in Southern California, it’s important to understand who is responsible for paying them. In general, both the buyer and the seller have some closing costs to pay.
Here’s a breakdown of who pays for what:
Expenses for Home Sellers
As the seller, you will typically be responsible for paying the following:
- Real estate agent commissions: This is usually the largest cost for sellers, varies per transaction. The closing costs for sellers may be different.
- Escrow fees: These are the fees charged by the escrow company for their services.
- Title insurance: The seller is usually responsible for purchasing title insurance for the buyer.
- Transfer taxes: In some areas, the seller is responsible for paying transfer taxes.
Expenses for Home Buyers
As the buyer, you will typically be responsible for paying the following:
- Loan origination fees: These are the fees charged by the lender for processing the loan.
- Appraisal fees: The buyer is usually responsible for paying for the appraisal.
- Home inspection fees: The buyer is usually responsible for paying for the home inspection.
- Title insurance: The buyer is usually responsible for purchasing title insurance for themselves.
- Property taxes: The buyer is usually responsible for paying property taxes from the date of closing until the end of the year. Figure 1.25% is an estimate of the purchase price for yearly property taxes.
- In 2024, the buyers may have to pay their buyer’s agent to represent. Let’s talk about how this works by phone or in person. Then, we can send you a list of services that we provide.
Frequently Asked Questions
Are You Ready to Sell Your Home? If so, tell me, Jay Valento, more about it.
If You Sold Your Home at the Current Market Value, How Much Would You Net?
Simply fill out the information about your property and we will send you an estimate of what your closing costs would be in California along with the current market value of your home:
Thank you for giving us permission to contact you even if your name and number appear on the Federal Do Not Call List. Your information will not be transferred to any third-party companies without your permission. If you have any questions, please call Jay Valento at 562-413-7655, your local real estate professional.
Thank you for giving us permission to contact you even if your name and number appear on the Federal Do Not Call List. Your information will not be transferred to any third-party companies without your permission. If you have any questions, please call Jay Valento at 562-413-7655 Local real estate professional.