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Costs You Need To Know About For Selling Your House In California

Posted On Thursday, 21 July 2022 14:54
Costs You Need To Know About For Selling Your House In California

According to the Advisor Channel's report, California is at the 16th position in the ranking of growth in the US home prices by state. Between Q1 2021 and Q1 2022, California has observed a 20% increase in home values. But, due to increasing mortgage rates, real estate prices may drop in The Golden State in 2022 and 2023. So, if you want to sell your house in California, now is a good time. If you were ever wondering how does clever real estate work and what are the costs of selling a house in California, read on to learn the answer.

Your options as a seller in California

You have multiple options when you want to sell your house in California. Four of them are explained below.

Working with a full-service realtor:

A traditional full-service real estate agent handles all aspects of the selling process for you. This includes everything from the property's listing to the sale's closure. The advantages and disadvantages of this option are listed below.

Advantages: 
  • You will not have the headache of handling the sale and its minute details.
  • The realtor knows the ins and outs of selling a house. This minimizes the risk of something going wrong.
Disadvantages: 
  • You will need to pay a hefty commission to the real estate agent. In California, the average agent commission is nearly 5.5% to 6%.
  • You will have limited control over your transaction as every small detail will go through your agent.
  • The selling process will be slow as real estate agents mostly do things manually.

Working with discount real estate brokers:

Three types of discount real estate brokers can help you with the selling process.

Flat Rate Brokers: 
  • They handle all aspects of the selling process.
  • They charge a fixed rate that typically does not change with the services provided or the house value.
  • This method is recommended if you are selling a high-end property.
  • Houzeo recommends CA Flat Fee if your property is at the high-end of the price range.
  • CA Flat Fee provides good local coverage in California and offers a single flat rate package priced at $5,000.
Low Commission Realtors: 
  • The services of low commission agents are priced lower than the traditional realtor's price of 3%.
  • These discount real estate brokers charge around 1%-2%.
  • Houzeo recommends Redfin as it provides the advantages of nationwide coverage, additional services like Multiple Listing Service (MLS) listing, and a user-friendly technological platform. It also saves on commission fees.
Virtual Full-Service Brokers: 
  • This broker provides all the services of a traditional full-service realtor but virtually.
  • The advantages of this option include better management, lesser fees, and user-friendly technology that makes the selling process easier and quicker.
  • Houzeo is the top virtual Flat Fee MLS full-service provider in California.

By DIY-ing it:

When you sell your house without the help of a realtor, the method is called For Sale By Owner (FSBO). The advantage and disadvantages of this option are:

Advantage:

You do not have to pay hefty commission fees.

Disadvantages: 
  • The selling process is more difficult as you are responsible for all aspects of the sale.
  • The selling price may decrease as there will be less competition for your house. This is because you do not have access to MLS.
  • Unless the buyer is not represented by an agent, you might still have to pay the buyer agent commission.

Combining the FSBO method with a Flat Fee MLS Listing:

The best option for selling a house in California is combining the FSBO method with a Flat Fee MLS listing. You enjoy the following advantages because of this method.

  • You do not have to pay a hefty commission to a realtor.
  • Your property gets exposed to many websites like Redfin and Zillow.
  • You can get help with any aspect of the selling process whenever you want.
  • Changes can be quickly made, and the listing is fast.
  • You have complete control over the sale of your property.
  • There are many A-la-carte options available, like getting a yard sign.

 

Houzeo is the best Flat Fee MLS service in California.

Costs you should look out for while selling

The cost of selling a house in California is never limited to the broker's fee. Read on to know what other costs you might have to pay as a seller in California.

General costs:

  • Transfer Tax is incurred during the transfer of the title of your house from you to the buyer. The average value of the transfer tax is $1.10 per $1,000 of the property's selling price.
  • Capital Gains Tax: When you sell real estate, the capital gains tax is the tax levied on the profit made from the sale. It is the difference between the cost price (for the seller) and the selling price. California's average capital gains tax rate is between 1% and 13.3%.
  • Title Fee: This fee proves that you are the rightful owner of the property. It is approximately 0.31% and can be negotiated between the buyer and the seller.
  • Notary Fee: You pay this fee to the notary for preparing paperwork and establishing your identity.

Closing costs:

  • Mortgage Payoff: It is the most expensive closing cost. It is applicable when you have a mortgage on your house.
  • Lien Release Fee: You will need to pay this fee when you have paid all the debts related to your property to get a lien release document.
  • Real Estate Broker Commission: This only applies when you hire a full-service real estate broker to oversee the selling process. In California, the seller pays the commission, worth nearly 5%-6%, to the realtor.
  • Title Insurance: This insurance protects the buyer if there are any problems with the previous owner of the title. It can be negotiated between the buyer and the seller. In California, it costs nearly 0.37% of the final sale price.
  • Property Taxes: This depends upon when you close escrow and highly varies.
  • Escrow Fees: Escrow is a neutral third party. It receives or pays out money or property on behalf of the buyer and the seller. In California, Escrow charges are nearly $2.00 for every $1,000 of the selling price with a $275 flat fee. It is split between the buyer and the seller.
  • Seller Disclosures and Related Expenses: There are two disclosures. The first disclosure is the Natural Hazards Closure Report which is compulsory under California State Law. It usually costs $100. The second disclosure is Termite inspection and remediation, which is recommended but not mandatory in California.
  • Home Warranty: Sellers pay a home warranty that typically varies between $500 and $800. The amount depends upon the area, coverage, and the insurance company.
  • Homeowners Association (HOA)-related costs include a document fee at the beginning, a transfer fee at the end of Escrow, and HOA dues. They are only applicable if your house falls under an HOA.  
  • Closing Cost Concession: If the seller chooses, they can cover the buyer's closing costs. This varies between 1%-3% of the sale price.

Other costs include survey, home inspection, appraisal, and settlement or attorney fees. 

To finish off...

Navigating the maze of selling your house in California is no easy task. But, if you choose the option of FSBO with Flat Fee MLS Listing, that task got simplified. Houzeo is an excellent platform that ensures a hassle-free selling process.

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