Figuring out the closing costs associated with your property is important process for a seller in California and nationwide.

Selling your home is probably one of the biggest financial transactions you’ll ever make. It’s important you understand the costs involved and how they’ll impact your bottom line.

We’re going to break these down in detail.

First, I’ll outline all of the closing costs for a seller in California. I’ll also run through examples so you can get an idea of what your cost for each of these might be. 

Then, I’ll show you all of this together so you can see what your total closing costs might look like when selling your home in the Golden State.

By the time we’re done, you’ll be able to get a really good idea of your total estimated costs and how much you might walk away with.

What are the typical closing costs for a seller in California?

The average closing costs for a seller in California can be broken down into six categories:

  • Real estate commissions
  • Escrow fees
  • Title insurance
  • County transfer taxes
  • City transfer taxes
  • Miscellaneous items

Some of these costs are based on the county and city you live in.

Assuming you don’t owe more than what your home is worth, all of your closing costs are paid out of your proceeds, meaning you don’t pay anything out of pocket.

You’ll see these costs toward the end of your estimated closing date on a settlement statement. This is a one-page document detailing the final selling price, your total closing costs, and your net proceeds. 

I’ll show you what this looks like later.

California real estate commission

This is going to be the chunk of your costs. The average total commission most sellers pay in California is five to six percent of the final selling price.

Do you have to pay this amount?

Nope.

Real estate commissions are negotiable.

In fact, there are numerous options to pay lower real estate commissions in California. These include the following:

  • Discount brokerage
  • Flat fee company
  • Selling without a Realtor
  • Negotiating a lower commission with your agent

Just like with many things in life, a lower price can mean you’re sacrificing something else in return. When it comes to selling your home, this usually means you’ll be missing one or more of these:

  • Service
  • Experience
  • Marketing
  • Negotiating

Here’s how the commission works…

Let’s say you list at a five percent total commission. You’re technically paying the five percent commission to the brokerage you list with (this is how it’s worded in the listing agreement).

The total commission is usually split fifty-fifty between the brokerage you hire to sell your home and the brokerage who the buyer’s agent works for.

This is detailed in the listing agreement you’ll sign with your agent.

Here’s an example of what that looks like:

Real estate commission on a California real estate contract

 

Five to six percent of your final selling price can be a chunk of change.

Working with a top agent can help you make more than what it will cost you.

And you might be able to use the commissions as a tax write-off.

Many sellers want to know if realtor fees are tax-deductible in California.

I’m not a CPA, so don’t take this as tax advice, but you should feel pretty confident that all of the real estate commissions can be used as a tax write-off. Of course, I would make sure by confirming with your accountant.

Escrow Fees In California

You might be asking what the heck are escrow fees and what is an escrow company? I won’t dive into the specifics of what an escrow company does, but here’s the short version:

An escrow company is a neutral third party between the seller and the buyer. They are responsible for making sure that the buyer doesn’t receive the property and the seller doesn’t receive payment until everything is executed as agreed upon in the contract.

This isn’t the first thing that usually comes to mind when selling, but it is an important part of the overall closing costs a seller pays in California.

Ok, now that you know what an escrow company is, let’s talk about the escrow fees.

Escrow fees

For providing their services, the escrow company charges a fee. These are usually referred to as “escrow fees” on your settlement statement.

Depending on which county you’re in, you may or may not have to pay this. Each county has a preset “standard” of determining if the buyer or seller pays for this.

This will be detailed in the offer contract you receive from a buyer and is negotiable.

A rough calculation of the cost is $2.00 for every $1,000 of the sales price, plus $250.

So if your home sells for $1,000,000, and you live in a county that requires the seller to pay, you’ll pay an escrow fee of roughly $2,250. Most escrow companies charge around the same amount.

Here are a few examples of who typically pays for the escrow fees in California:

Alameda County  Buyer

Contra Costa    Buyer

El Dorado     Split 50/50

Fresno   Split 50/50

Los Angeles   Split 50/50

Orange  Split 50/50

Riverside   Split 50/50

San Francisco Buyer

San Mateo  Seller

Santa Clara  Seller

Santa Cruz  Split 50/50

Ventura  Split 50/50

What is title insurance?

Title insurance is an insurance policy that protects the buyer from a financial loss due to defects on the title. An example of this is someone claiming ownership of the property after it sold.

It can also protect against liens that might pop up during or after the transaction closes. Sometimes in the process of selling a property, it can turn out that more people have a right to ownership than previously thought. Potential unpaid debt that the seller may have had might also come up after the sale closes. Title insurance works to protect against all of this.

In most real estate transactions, there are two title insurance policies: one that covers the buyer and another that covers the buyer’s lender. If the buyer is obtaining financing, this policy is required.

The policy that covers the buyer is usually referred to as an owner’s title policy. The policy that covers the buyer’s lender is typically called a lender’s policy.

Title insurance cost in California

Unlike escrow fees, there isn’t a set calculation to determine the cost of title insurance.

We’ve found that title companies in California usually charge around the same price. To get an idea of what this is, take the sale price and multiply it by .00225.

For example, if your final selling price is $1,100,000, then the cost for title insurance might be $2,475. The cost can vary depending on your final selling price.

You can use this free title insurance calculator to get a more accurate estimate.

Unless they ask the seller to cover some or all of their closing costs, the buyer will pay for the lender’s policy.

Who pays for the owner’s title policy (the policy that protects the buyer) can also vary by county.

You can see a breakdown of who pays for escrow and title fees in California here.

California Transfer Tax

Part of the closing costs for a seller in California is city and county transfer taxes. These are also referred to as “documentary transfer taxes”.

What exactly is a transfer tax?

Think of it this way. Every time a property changes ownership, the local governments want a piece of the pie.

County transfer taxes

Every county in California has a transfer tax.

The cost of the county transfer tax in California is $1.10 for every $1,000 of the sale price, except for San Francisco County.

So if your house sells for $1,000,000 and your property is not located in San Francisco County, then the county transfer tax would be $1,100.

San Francisco’s transfer taxes operate under its own unique calculation. Here’s how it works…

 

Example of San Francisco transfer tax as part of the closing costs for a seller

 

City transfer taxes

Not all cities in California have a transfer tax. For example, in Santa Clara County, the only cities that have a city transfer tax are San Jose, Palo Alto, and Mountain View.

The cost of the city transfer tax in these three cities is $3.30 for every $1,000 of the sale price. On a home that sells for a million dollars, this comes out to $3,300.

The cost for city transfer tax can vary for each city.

Who pays for these documentary transfer taxes?

Similar to the escrow and title fees, it can vary by area. In almost every scenario, the seller will either pay both or these costs will be split fifty-fifty between the buyer and seller.

Miscellaneous Fees

You might see several miscellaneous fees itemized on your settlement statement.

Some of these include the following:

  • Recording fee
  • Notary fee
  • HOA fee (if the property has an HOA)
  • Any reports and/or inspections that are not paid upfront

Ok, as promised, here’s an example of a settlement statement detailing the closing costs for a seller in California.

Example of a seller's settlement statement showing how much the closing costs are in California

 

You’ll notice on this settlement statement that the seller’s pro-rated amount for their county taxes and mortgage payoff are included. And you’ll see the same on yours.

 

sample of settlement statement showing prorated taxes and a mortgage payoff as part of the closing costs for a seller in California

 

These aren’t necessarily costs, but they are itemized with your closing costs on your final settlement statement. 

Conclusion

Now that we’ve gone through each cost you might see as part of the total closing costs, let’s quickly recap…

What are the closing costs for a seller in California?

  • Real estate commissions
  • Escrow fees
  • Title insurance
  • County transfer taxes
  • City transfer taxes
  • Miscellaneous items

How much are seller closing costs in California?

  • Real estate commissions = 5% (can be higher or lower)
  • Escrow fees = $2.00 for every $1,000 of the final sale price + $250
  • Title insurance = sale price x .00225%
  • County transfer tax = $1.10 for every $1,000 of the final sale price
  • City transfer tax = depends on the city you live in (you can see the costs here)
  • Miscellaneous items = varies for each transaction

Selling a home is a big financial transaction.

Educating yourself on your estimated costs is key to planning for your next move. Hopefully, this gives you a better idea of what your total costs might look like. If you’d like to see numbers specific to your sale, you can try our California seller closing costs calculator