Attention all California home sellers – we’re here to help you quickly and painlessly understand how the home closing process works in California and what costs you should expect to incur. In this article, we’ll cover the following questions:
What does closing on a house work?
How much are closing costs?
Who pays for closing costs?
What are the common closing costs for sellers in California?
How Does Closing on a House Work?
Imagine Jim is selling his home in California (hurray!). He bought a property for $300K and ten years later is selling it for $500K. Great turnaround, Jim!
He is finally ready to close on the property, meaning that all money and documents are ready to be sent so that Jim can transfer ownership to the new buyer and receive the money.
The closing of Jim’s property is facilitated by a third party escrow company to make sure all of the documents and monetary funds are transferred safely.
Jim is ready to walk away with full pockets… but not so fast, buddy.
Like so many others, Jim is under the impression that the home closing process for sellers is as simple as receiving an offer and walking away with a sweet ROI.
In reality, there are several closing costs that sellers will incur during the final sale (closing) of their property.
Keep reading, California sellers, to prepare yourself for the money you’ll actually be making in the real estate closing process.
How Much are Closing Costs?
According to Realtor.com, the fees paid to third parties can amount to 2%-7% of the final sale.
Jim, for example, would pay anywhere from $10,000 to $35,000.
Check out this homesale calculator to help determine the costs around your specific situation.
Who Pays for Closing Costs in a Real Estate Transaction?
The contract drawn up around the purchase will determine which party incurs which closing costs (buyer or seller).
In the state of California, however, there are different county standards that determine who pays which closing cost.
For example, in Alameda the buyer is expected to pay the escrow fees, whereas in Alpine the buyer and seller split the escrow fees. Discover the division of closing costs by county in Californiaso you can anticipate what you’ll be expected to pay.
What Are Common Closing Costs For Sellers In California?
Regardless of whether you decide to sell your home through a real estate agent or go about it FSBO (for sale by owner), there are mandatory closing costs associated with the sale of your home which includes:
Title insurance fees