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Selling a house in California

Selling a house in California
marlenka/Getty Images
Selling a house in California
marlenka/Getty Images

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If you live in California and are considering selling your house, the headlines about surging prices might have you thinking about a big potential profit. However, being in the seller’s shoes comes with plenty of questions. What’s the best way to list your home, what must you disclose to prospective buyers, how much does it cost to sell a home in California? Read on to find out.

Are you ready to sell?

Before you pack your bags and count your money, you need to know one key piece of information: Where you’re planning to go next. Buying a home right now comes with record-high prices and rising mortgage rates. Take a look at your finances to make sure you have plenty of cash to cover moving. Think about whether you can afford to move to a new place while your existing home is on the market — or if you’ll need to use the proceeds of the sale for a down payment on a new place. You might also consider renting if you’re not quite sure of where you want to land more permanently.

Preparing to sell

If you’re ready, it’s time to consider what to do before you list your house. Realtor Steve Davies of RE/MAX Gold in El Dorado Hills, California, says that the pre-listing stage is one of the most valuable pieces of the selling puzzle. Make sure the house is picture-perfect before you invite buyers to come calling.

“You never get a second chance to make a first impression,” Davies says. “When a potential buyer walks up to the property and steps inside, you want them to say ‘wow.’”

Is it worth upgrading your home before you sell?

You’re about to sell the place, so why should you invest even more money into it? The answer depends on what you can recoup from those upgrade costs. The reality is that most home renovations do not recoup 100 percent of their costs, so while small upgrades can help, you may be better off skipping really major expenses. And buyers might not share your same taste, so it’s probably not worth sinking a ton of money into a specific look.

What should you repair before selling your home?

The best way to determine what, if any, repairs you should make before you list your home is to get a professional pre-listing inspection. This will likely cost around $500 (more if your property is especially large), but it’s a proactive way of identifying major issues that a buyer’s home inspection will uncover. If it uncovers major issues with your roof or plumbing, for example, a buyer might request a credit to cover the repair on their own — or even walk away from the deal.

Staging your home

In addition to paying to take care of any issues that need to be resolved, you may want to consider paying to stage your home. Staging is exactly what it sounds like: designing a scene that makes a buyer want to be a character on that stage. This might involve simply rearranging your existing furniture in a setup that makes the rooms look more livable. Or it could be a bigger project that requires putting things in storage and renting different furniture. A good real estate agent will advise you on whether staging can make a meaningful difference in your home’s value.

When is the best time to sell a house in California?

Typically, the best time to put your house on the market, in California or anywhere, is when it can sell the fastest. If a property stays on the market for a long time, it could no longer be considered “hot” — and run the risk of prospective buyers thinking there might be something wrong with it. Davies says that seasonality is no longer a strong factor in his area, near Sacramento, but he does acknowledge that spring and summer tend to attract larger crowds, which can fuel more intense competition.

“Everyone is excited for seasonal change to warmer weather, and the market heats up during the spring,” he says. “The gardens are blooming and everything feels fresh and new, but there is more inventory and more competition.” In the fall and winter, he says there is typically less inventory and a smaller pool of buyers.

Find a local California Realtor

A real estate agent will cost you — sellers are typically responsible for covering their commissions out of the sale proceeds, usually between 5 and 6 percent of the total sale price.  But those fees can be well worth it. Selling is a complicated process that involves lots negotiation and the potential emotional weight of leaving a place you have called home for a long time. There’s also plenty of paperwork, which is especially true in California versus other states. The right real estate agent can make the process as smooth as possible, connecting you with the best resources and working on your behalf. Don’t hesitate to interview several agents before settling on one.

Price your home competitively

Davies says that selecting the right listing price is the most important factor that a seller needs to consider. And it’s where having an agent with expert-level knowledge about comps in the area makes all the difference.

“In Northern California’s current changing market, making sure not to overprice the property will allow a seller to have the most viewers,” Davies says. “This creates demand and gives the best opportunity to receive a great offer on both price and terms. You can do everything right, but if you miss on price, you’ll be sitting on the market with all the other overpriced listings.”

The same rule applies in Southern California: A competitively priced home is one of the best routes to a bidding war, while an overpriced home can be a pathway to frustration.

Documents and disclosures in California

Seller’s disclosures

Every seller in the state of California has a legal obligation to share a lot of information with buyers about the condition of the property, the potential for additional taxes and the natural hazards that could impact it. You will need to complete a lengthy transfer disclosure statement that informs a buyer about a broad range of questions: Is the water heater braced to prevent it from falling over during an earthquake? What kind of local taxes will the new resident be subject to? Your real estate agent can help walk you through it. Be honest about everything — otherwise, you could be liable for damages down the road.

Required documents

There are several documents you are required to present when you’re selling a house in California. These include:

  • Transfer disclosure statement: This is the form referenced above, which details all the information you can share about the property to the best of your knowledge.
  • Natural hazard disclosure: This tells buyers whether the property is located in an area prone to flood hazards, fire hazards and earthquakes.
  • Megan’s Law disclosure: Megan’s Law allows buyers to access a database that includes information about registered sex offenders who reside in the area.
  • Statewide buyer and seller advisory: A form that outlines the obligations of both buyers and sellers.

Outside of disclosure information, be prepared to prove that the property is indeed yours with a copy of the original purchase agreement, a signed deed and an affidavit of title.

Other common documents

Depending on where you live, you may have additional local documents, such as statements and advisories, you’ll need to complete. And if you live in a neighborhood or a condo governed by a homeowners association, you will need to share the HOA bylaws as well.

Need to sell your home fast? Consider these alternatives

If you need to move immediately, you might not have the luxury of waiting, comparing offers and crawling to a closing day. Here’s a rundown of how to sell your house in California quickly.

  • Compare iBuyers: Companies like Opendoor, Offerpad and RedfinNow will make an offer on your house without even seeing it. That might sound appealing, but there is a catch: iBuying is designed to buy your house at a below-market value, so that the company can then sell it for a profit.
  • Look for an all-cash offer: Instead of waiting for a lender to review and process a buyer’s home loan application, you might be lucky enough to receive an all-cash offer. Nearly 28 percent of all home sales are all-cash deals, according to the latest data from the National Association of Realtors, so it’s not as uncommon as you might think. Keep in mind, though, that someone buying with all cash may leverage the fact that there is no need for a lender and offer you a lower price.
  • List as-is: If you attach “as-is” to your listing, you’re making it clear that there is no room for the typical back-and-forth negotiation about repairs. That can speed things up considerably — but can also lead to lower offers if there is work to be done.
  • Add quick curb appeal: Rent a power washer to give your driveway or siding an extra shine, wash the windows, paint the garage — these are just a few fast and frugal ways to get your house ready to sell. Add curb appeal today, and list your home tomorrow knowing that it looks its best for buyers.

The closing

When closing day arrives, you have something to look forward to: your money. However, you don’t get to pocket all of it. If you have any outstanding mortgage debt, you’ll immediately need to pay it off. Plus, there are closing costs to cover:

Costs of selling a home in California

  • Realtor commissions: The real estate agents who helped make the deal happen have to get paid. Typically, the buyer’s agent receives about 3 percent of the purchase price, and your agent (the seller’s) also receives around 3 percent. The seller, however, is responsible for paying both of them. So, if you sell your home for $800,000, you would owe $48,000 in commissions. (Unless either agent has agreed to a commission discount, which is a definite possibility these days.)
  • Title insurance: In some parts of the state, you may have to pay for title insurance. The cost will vary based on the purchase price.
  • Transfer taxes: Budget an appropriate amount of money for paying to transfer the title or deed to the buyer. In most places across the state, transfer taxes are $1.10 per $1,000 of the purchase price. In some cities, like Oakland, Emeryville and Culver City, transfer tax rates can be higher.
  • Escrow fees: You may also pay for an escrow account to manage the buyer’s earnest money. The fees for this service vary based on the price of the home.
  • Seller concessions: You might wind up agreeing to some concessions to help the buyer with their closing costs. However, it’s a seller’s market, so think twice about whether you need to cover any of the buyer’s expenses.
  • Attorney fees: If you hire a real estate attorney, you will need to pay him or her at closing, too. These fees vary, so be sure to ask for an estimate as you compare different legal options.

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Written by
David McMillin
Contributing writer
David McMillin is a contributing writer for Bankrate and covers topics like credit cards, mortgages, banking, taxes and travel. David's goal is to help readers figure out how to save more and stress less.
Edited by
Senior real estate editor