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The Golden State offers golden opportunities for homeowners to sell their residences, potentially for a handsome profit. While California has a higher cost of living and higher home prices than many other states, it remains a go-to destination for those who covet comfortable weather year-round, natural scenic beauty and a coastal atmosphere.
However, it’s important to carefully factor in the costs involved with selling a home in California. Closing costs and other expenses can be steeper than many sellers anticipate. Here we’ll break down the cost to sell a house in California.
Sellers’ closing costs
Selling a house isn’t all profit. Californians getting ready to list their homes need to be ready to cover the closing costs that all sellers must pay. These can typically include the following:
- Title insurance: If you’re in Southern California, you’ll likely cover the cost of title insurance, which protects against problems with the property’s title that could delay or derail the transaction. In Northern California, the buyer typically pays this cost.
- Transfer taxes: What you will pay for what’s called “documentary transfer tax” in California will vary based on your specific location. It follows a consistent rate of $1.10 per $1,000 of the sales price across the state, but some cities impose an additional city transfer tax, and these rates can differ. This fee can be negotiated, so it might be paid by either the seller or the buyer.
- Property taxes: You’ll need to be up-to-date on property taxes for the time you owned your home, right up to closing day. California’s property-tax rate is 1 percent of the assessed value of the property.
- HOA fees: The same goes for any HOA fees, if applicable. Both these and property taxes are prorated based on the closing date. For instance, if you sell your home on September 15, you would pay your portion of property taxes and HOA fees for that month, through the 15th.
- Seller concessions: Some sellers choose to entice buyers with incentives or concessions. A common sweetener that sellers throw in the deal is to pay for the cost of a one-year home warranty, which can run a few hundred dollars. Other seller concessions can include agreeing to cover the cost of a particular repair, for example.
- Legal fees: Unlike some states, California doesn’t require the involvement of attorneys in the closing process. However, it’s worth enlisting a real estate attorney’s services anyway: With so much money at stake, a legal eye on the contract is always recommended.
Real estate agent commissions
Whenever you sell a house, the most expensive of your closing costs will be the real estate agent’s fees, which fall to sellers to pay.
While commissions usually account for 5 to 6 percent of a home’s price, Clever data shows that the average commission in California is 4.91 percent. Let’s say you sell your house for the statewide median single-family home price, which according to the California Association of Realtors (CAR) was $859,800 in August 2023. Taking 4.91 percent of that price results in $42,216 in closing costs.
But median prices vary across the state. In the Central Valley region, where the median price is much lower than the statewide median at $485,000 according to CAR, a 4.91 percent commission would come to $23,813. But in the notoriously pricey San Francisco Bay Area, with a high median of $1.26 million, it comes to more than $61,000.
Factoring real estate agent commissions into the equation, the total closing expenses in California typically make up around 5.7 percent of the property’s sale price, says Bart Waldon, managing partner for Land Boss in El Dorado Hills, California. (This percentage doesn’t encompass property taxes, which can vary depending on the specific location.)
Home prep and moving costs
Getting a house ready for sale and managing a move requires careful preparation and budgeting. To make the home more appealing to buyers, you might choose to put money into small repairs, staging, sprucing up the landscaping outside, professional cleaning inside and more.
Furthermore, the average cost to hire movers in California can be steep. In such a big state, even an in-state move can be considered long-distance — and cost as much. According to recent data from the Sacramento Bee, a local move of up to 300 miles within California will cost approximately $2,000 to $3,000. Longer distances will cost more, even if you’re staying within the state. That’s much more than the average cost of a local move, which according to HomeAdvisor is $1,702.
How much do I get from selling my house?
The amount of money you’ll actually receive when you sell your home in California can vary significantly depending on a number of factors. The price you bought it for, the sale price you’ve negotiated, any remaining mortgage balance and closing costs will all directly influence your net proceeds.
If, like many California properties, your home has significantly increased in value over recent years, you could pocket a handsome profit. The median sale price in the state has increased 4.8 percent year-over-year, according to Redfin data. And over the past five years, its data shows that the statewide median increased by $219,200. If you sell for $219,200 more than you paid, and subtract 5.7 percent for closing costs and commissions, as Waldon recommends, that still leaves you with more than $200,000 in profit.
There are several approaches you can take to reduce your closing costs. In fact, as a seller, your biggest expense is actually one of the most negotiable: real estate agent commissions. With California’s high prices, even a fraction of a percent less can equate to thousands of dollars in savings.
Your agent can likely advise you on the most cost-effective approaches to marketing the home as well. For example, if the home is in need of repairs that you’d rather not invest in, it may be smart to sell in as-is condition, which lets buyers know the cost of any repair work is on them. If you do make repairs or any other home improvements prior to listing, take the time to compare different service providers to assess their costs before you select one.
“By pricing competitively, offering buyer incentives and concessions if necessary and negotiating your commission, you can help reduce seller costs,” says Waldon.
If you want to save on commission altogether, and often avoid all other closing costs as well, consider more non-traditional options:
- Cash homebuying companies: Selling directly to a company that buys houses lets you avoid Realtor involvement, and many buy homes in any condition with no fees at all. There are several national options, or consider a local cash-homebuying company in California. These will typically pay less than you’d make in a traditional sale, though.
- iBuyers: These online-only operations make cash offers quick and can close much faster than a typical sale, too. Offerpad, one of the biggest, purchases homes across California, including in the Los Angeles, Sacramento, San Diego and San Francisco areas. These companies often charge fees, however, and they also aren’t likely to pay you top dollar.
- FSBO: Selling your house by owner is also an option. While this lets you skip the listing agent’s fee, since you’re selling without one, you will still be on the hook for your buyer’s agent’s commission.
- Home equity: If you don’t need the cash from the sale right away, consider leveraging your equity instead with a home-equity loan or line of credit. The money could go toward renovations, which could benefit either you whether you decide to stay or eventually sell.
- Renting: Again, if you can afford to hang on to the home for a while, renting it out to tenants can bring in steady income in the meantime.
Next steps: Ready to sell?
“California’s market remains stronger than many other states, with faster sales, quicker turnover and higher prices,” says Waldon. If you think a traditional sale is right for you, your first step should be to connect with a local real estate agent in your area to explore a pricing strategy. If you’re interested in exploring a non-traditional route, do some online research to see what homebuying companies and iBuyers operate in your area. Their cash offers are typically free and you’re under no obligation to accept, so it can’t hurt to see what they’re willing to offer. You can always decide to work with an agent instead.
Sellers in California must cover the cost of real estate agent commissions, which typically cost around 5 percent of the home’s sale price, per Clever. If you sell for the statewide median price of $859,800, that comes to just under $43,000. Sellers may also be on the hook for other closing costs, including transfer taxes and title insurance. Overall, sellers can expect to spend a total of around 5.7 percent of the home’s sale price in closing costs.
Usually. The cost of the state’s transfer tax, which typically runs $1.10 for every $1,000 of the sale price, can be negotiated — it’s typically paid by sellers but can be covered by the buyer if it’s negotiated and written into the contract as such.