Do you currently own a home in Los Angeles and are planning to sell, but aren’t sure how much your closing costs will be? In this episode of Highest Or Best, I’m going to break down your seller closing costs so you’ll know exactly how much you’ll walk away with at the end of your transaction. We’ll discuss everything from commissions to fees so you know exactly what to expect.
Selling Your Los Angeles Home
Selling your house can be very stressful. You have to think about moving, packing, and adjusting to new surroundings. Do you know what’s even more stressful? Not knowing what it’s going to cost you.
If it’s time for you to sell after years—or maybe even decades—of owning a property in Los Angeles, there are some things you’ll need to know. Once you’ve decided to sell your home and move on to your next chapter, you might begin to dream about how much money you’ll walk away with. Keep in mind, there’s more to this than just your potential sale price and mortgage balance to calculate your proceeds from the sale.
In Los Angeles, like the rest of California, there are significant closing costs that are paid by the seller. When you know your selling costs upfront, you’ll be able to negotiate with the upper hand, knowing what your bottom line net walkaway figure will be. Because the average seller closing costs in Los Angeles will generally be between 6% and 10% of the sale price, these closing fees can really add up. It’s important to know what to expect by looking at an itemized list.
Seller Closing Costs
What are the seller closing costs in Los Angeles? We have broker commission, title insurance, transfer taxes, escrow fees, seller concessions, and possibly attorney’s fees. Let’s look at each of these areas and break them down one by one.
Real estate broker commissions are the single largest closing costs for home sellers in Los Angeles. The majority of real estate brokerages, both large and small, charge a commission of 5% to 7% to sell your home. These fees may seem high—until you take into consideration all that your realtor does for you.
Realtor services range from pre-listing consultations and vendor coordination to marketing, negotiating, and advocating. Many times, your realtor also serves as a coach and advisor, getting the complicated real estate transaction to a successful close.
Another fee to consider is your title insurance policy. This ensures the policyholder against any title defects, such as liens, that may encumber the property prior to a title policy being issued. An exhaustive search is completed to detect any open liens or other encumbrances against the title of the real property or home.
When buying a home with mortgage financing, the lender will require the buyer to have such a policy in place for their protection. The cost of title insurance premiums in California is based on a published rate applied to the purchase price of the property. This will be paid to the title insurance company at the close of escrow.
Title insurance rates will vary by provider. Title insurance companies are required to file their scheduled rates with the state of California’s insurance commissioner. Additionally, it is customary in Los Angeles for the seller to pay for the buyers’ title insurance policy.
Taxes And Escrow Fees
The next cost to account for is taxes. Real estate transfer tax is a transaction-based tax that’s levied by the government on the transfer of the real property in Los Angeles County. There’s a documentary transfer tax of $1.10 per $1,000 of the value of the property being conveyed at the county level. Most cities also impose an additional tax, ranging from $2.20 to $4.50 per $1,000 of the value of property conveyed.
Next, we have escrow fees. Escrow fees are the payment for services provided by the escrow company, including document preparation. Escrow acts as a neutral third party, with escrow fees for sellers generally ranging from a $200 base fee plus $2 per $1,000 of the sale price up to as much as $250 base fee plus $2.50 per $1,000 of the sale price. The variation depends on the escrow company used.
For example, if you sold a $1.5 million home in Los Angeles, escrow fees would be approximately $3,200 to $4,000.
Seller Concessions And Attorneys
The next closing cost is seller concessions. Any fees paid on behalf of the buyer by the seller are referred to as seller concessions. Examples of seller concessions include the seller paying for a home warranty, handling the cost of agreed-upon repairs, or offering closing credits as an incentive.
These types of concessions will vary from transaction to transaction, though they’re typically ironed out as part of the overall negotiations. Seller concessions are not required but can be a very useful tool to bridge any gaps and get a deal done.
While it’s a normal occurrence to use an attorney for a home sale, it’s not very common in other states for residential real estate transactions. In California’s more complex cases, attorneys may be involved. If so, the seller would pay the additional fees for their real estate attorney.
Getting Top Dollar On Your Home Sale
I hope this video gives you a good idea of how much seller closing costs are in Los Angeles real estate transactions. Of course, there are many variables to consider to get an exact number you could expect to pay when you sell your home. While everyone’s situation is different, I can do the necessary work to provide you with a solid estimate of what your particular closing costs would be if you were to sell.
So if you’re interested in discovering what your closing costs will be, feel free to reach out to me and I’d be happy to help. You can also subscribe to my channel so you never miss an episode of Highest Or Best, my show all about maximizing your Los Angeles real estate assets. Stay tuned to see what I feature next!