Seller Closing Costs
Sellers always want to know how much their closing costs are going to be so they can figure out their net proceeds from a potential sale. The average seller closing costs in Los Angeles range from 7%-8% of the sale price as a general rule of thumb.
Some of the big advantages of real estate are tax savings, the stability of prices, appreciation in value, and you can live in it. One of the disadvantages of real estate is that it is a rather illiquid asset (can take 3-4 months on average to sell) and has a high cost to sell. Since California is heavily regulated and taxed, it is a percentage point or two higher to sell properties here than in more affordable parts of the US like the midwest (but California real estate also appreciates better which offsets the higher cost and then some).
The #1 largest closing cost for sellers is the real estate commissions. Real Estate commissions range between 5%-6% of the sale price for full-service brokerages in Los Angeles. The commission is divided into two parts, half for the listing agent, and a half for the buyer’s agent. Sometimes sellers complain why they have to pay a double commission when they sell, but they forget that they did not pay a commission when they purchased. In Los Angeles commissions are back end loaded to make it easier for buyers to buy, if the buyer agent commission was moved to the buyer side, they wouldn’t be able to offer as much on the purchase price. I say it averages out to 1 commission per transaction.
A few other noteworthy expenses are Title Insurance, Escrow Fee, and the City Transfer Tax.
Your real estate agent or Escrow Company can prepare a seller ‘net sheet’ that will accurately estimate your seller side closing costs and tell you what your net proceeds are for the listing’s price.
At closing, Escrow is required by law to prepare a HUD-1 final closing statement. This document is an accounting of all the actual closing costs. I recommend to carefully to review the closing statement prior to closing to make sure there are no mistakes.
Here is a breakdown of the typical seller closing costs:
(Optional) Home Inspection ($400) – it is becoming an increasingly popular trend in Los Angeles to have a home inspection done prior to listing. That way you as a seller you are aware of any problems that a buyer might find and can either disclose them upfront for an as is sale or repair them before you go on the market.
Any Remodeling or Updating (Price Varies)
Cleaning ($80/hr for professional maid service)
In Escrow Cost:
9A Report $80
HOA Documents – If you are selling a condo or property that is part of an association, the seller is responsible for paying the HOA Documents. HOA Docs typically cost between $300-$500 depending on the property management companies fees, they are the one that prepares them.
Costs due at Close:
Termite Inspection ($150 + Section 1 costs) can be done before you list or in escrow.
Retrofit– if you bought your property or it was built in the last 5-10 years it will probably already be retrofitted, if not this will be an expense. Typically ranges between $500-$2,000 depending on what is needed.
Title Insurance Policy ($3,000 to $3,500)
Seller Side Escrow Fee ($250 base + $1.75 per $1,000 of purchase price)
City Transfer Tax ($4.40 x $1,000 sales price city of LA)
Documentary Transfer Tax ($1.10 x $1,000)
Title Insurance ($1,500-$2,500 for 600K – 1M) Varies based on sales price
Prorated Property tax + HOA Dues (if applicable) Escrow balances the Property tax and HOA Dues to the date of closing, so you only pay for what you use.
Home Warranty ($400-$500)
Have more questions or need help closing your sale? Let’s chat.