Table of Contents
- What Are the Costs of Selling Your Home?
- The cost of selling your home
- Pre-selling stage
- Pre-sale home inspection: $250-700
- Home staging: $2,300-3,200
- Landscaping: $3,200
- Home repairs and improvements
- Negotiation stage
- Agent’s commission: 5-6% of the closing price
- Seller concessions
- Closing stage
- Seller’s closing costs: 1-3% of the sale price
- Additional fees
- The cost of selling your home without a Realtor
- Sell your home with Joe Brasil
Whether you are a seasoned or a first-time home seller, putting your house on the market is always a unique experience. However, there is one thing common to both types of sellers the reality of closing costs or the fees and expenses that come with sealing the deal on a home.
It is easy to get lost in the excitement of calculating how much you expect to make on the sale of your house. But it is also important to be aware of and prepared for the nitty-gritty of the process.
If you are looking to sell your home, learn as much as you can about the steps needed to complete the transaction. Be prepared for delays and curveballs, and know that it is best to consult with a Realtor.
To get you started, this guide will help home sellers get an insight into the cost of selling a house in California.
The Cost of Selling Your Home
Knowing the costs of selling a home in California will help you manage expectations and set a reasonable but profitable price for the house you’re selling.
Selling a home can generally take around seven months of planning and preparation, plus around three months from the listing up to closing. About 6% of the closing price will go to closing costs, which include commissions to your Realtor and the homebuyer’s agent, and about 2-4% to additional fees and taxes. In addition, there will be transaction costs involved throughout the whole process.
Let’s break them down.
Pre-sale Home Inspection: $250-700
While a pre-sale home inspection is optional, your real estate agent will strongly advise you to do this. Getting your house inspected before putting it up for sale will help you prepare for possible repairs as well as potential upgrades you’ll need to make to improve the value of your property.
A pre-sale home inspection usually costs around $250 to $700, depending on the size of your home. You can also opt to inspect the house yourself. However, a pre-inspection assessment from a professional will help you unearth issues not visible to an untrained eye such as structural damage, plumbing, and electrical issues, problems with the HVAC, and so on.
You will also receive a report that will give you an idea of how much you’ll spend on repairs.
Home Staging: $2,300-3,200
Home staging involves preparing your house to make it look attractive to prospective buyers – whether they visit in person or virtually. This is your opportunity to highlight the best features of your home to make it easy for buyers to imagine themselves living in it.
Hiring a professional stager can cost about $2,000 to $3,000. They know how to make your space look larger, cozier, or more modern to appeal to the market you’re aiming for. You can stage a home on your own but there are different home staging techniques for each room, and professionals will know the best practices. They will also help you identify what you need to purchase, such as paint, new fixtures, decorations, and furniture. Or they can bring in staging furniture and accessories to make your home even more attractive to buyers.
Along with the fee for staging services and the amount you will need to spend on new home items, consider the costs for deep cleaning your home, including carpet cleaners.
First impressions matter. Investing in landscaping will improve your home’s curb appeal. This is the first thing buyers see not only when they arrive outside your home but also in the listing photos. Some landscaping activities include pruning shrubs, planting flowers, mulching, repairing or installing new pavers, adding or upgrading light fixtures, and lawn care such as weeding and fertilizing.
If you are doing simple landscape maintenance like fixing your flowerbeds, it can set you back just a few hundred dollars. For more intensive activities, you may want to consider hiring a landscaper for around $3,000, depending on the extent of the landscaping job and the size of your yard.
Home Repairs and Improvements
The costs involved in home repairs and improvement will depend on the condition and size of your home. For repairs, check out the home inspection report. For home improvements and upgrades, ask your real estate agent for recommendations based on what they know buyers in your area are looking for.
Make sure to get everything done before you put your home on the market. The improvements you make can increase the value of your home and give you the competitive advantage over similar houses for sale in your area. It is better to deal with the repairs before your buyer orders their own home inspection and uncovers problems that might affect the closing of the deal.
Agent’s Commission: 5-6% of The Closing Price
About 5-6% of the closing price goes to real estate commission fees, which are split between your agent and the buyer’s agent. The seller handles this cost most of the time. If you sell your house for $300,000, your commission fees will likely amount to $18,000.
Seller concessions are the costs and fees you’ve agreed to pay for the homebuyer, which lower the overall upfront costs the buyer has to pay. In a buyer’s market, these concessions are a buyer’s bargaining tool. In a seller’s market, the buyer asks for concessions to offset the cost of making a higher offer to compete with other buyers. Here are the common concessions:
Even if you’ve done your pre-inspection and have taken care of the necessary repairs, it’s normal for overlooked issues to appear in the homebuyer’s inspection report. As a result, you can offer to lower the closing price with the buyer agreeing to take on repairs after purchasing. Or, you can agree to complete repairs before closing the sale.
Home Warranty – Around $300-$600
One way to make your home more attractive to buyers is to offer to pay for the home warranty, which costs around $300 to $500, depending on the warranty coverage. A home warranty can cover repair and replacement costs for appliances as well as the electrical, plumbing, and HVAC systems. You can either offer to purchase a home warranty with coverage leading up to the closing date or pay for up to two years of warranty coverage after closing.
Buyer’s Closing Costs
The buyer may also request the seller to cover all or part of the buyer’s closing costs. On your end, this expense will be deducted from the profit of the closing price.
Seller’s Closing Costs: 1-3% of The Sale Price
The cost of selling your home includes taxes and closing fees. In addition to the buyer’s closing costs that you may offer to cover, sellers also have to pay closing costs, which are typically lower as there are fewer fees involved.
Closing costs total around 1% to 3% of the home’s sale price, which will vary depending on the value of your home and the tax rate. In California, the statewide minimum combined sales tax rate is 7.75%, while some local jurisdictions may also have additional district taxes. Closing costs may include:
Capital Gains Tax
When the sale price of your home is more than the price you bought it for, that counts as a capital gain that you have to report on your federal tax return. However, if the house you sold was your main residence for at least two of the last five years, you are eligible for a tax break, as long as you have not used it on another home sale within the last two years.
You can exclude up to $250,000 of profit from your tax if you are single or married filing separately, or $500,000 if you are married filing jointly. You will also be subject to capital gains tax if you have lived in the home for less than two years.
Your home’s property tax is your responsibility up to closing day, with the money placed in escrow. The prorated costs for the property tax will show up on your settlement statement. The property tax is paid in advance and depends on whether or not you are escrowing into your mortgage.
If you have already paid the property tax for the year before selling your home, you may get a rebate at closing. This is when the buyer will reimburse you for the part of the taxes you have already paid that apply after the closing date.
Also called a government transfer tax or title fee, the transfer tax applies when you transfer the real property title to another person. California levies a transfer tax of $0.55 per every $500 of home value.
The title insurance protects the buyer’s interest in the home if issues arise from a disputed title or outstanding liens. The title insurance policy can cost around $1,000 to $4,000 and will be deducted from your net profits.
Escrow fees can cost around $500 to $2,000 or about 1 to 2% of the price of the home, depending on the escrow company you employ and the location of the property. Costs are usually split between the buyer and seller. Escrow fees may also cover office expenses, notary services, and transfer fees.
Homeowners Association (HOA) Fees
If you live in a neighborhood with a homeowners’ association, you will be required to pay for the prorated HOA fees up until the closing date. Transfer of ownership fees may also apply.
If you are still paying a mortgage on the home you are selling, part of the proceeds of the sale will be used to pay off your outstanding mortgage balance, prorated to the date of the sale. Depending on your mortgage company, a prepayment penalty may apply, so make sure to check with your lender or pore over your loan documents. Prepayment penalties typically cost around 2% to 4% of your original loan amount.
While some states require an attorney to oversee the closing of home sales, California does not. The buyer and their agent may use the Residential Purchase Agreement and Joint Escrow Instructions form to make their offer, and it will serve as the final contract once you sign it. It does not need to be reviewed by an attorney. However, hiring one to represent you and give you legal advice remains your option.
The costs of your final utility bills will be prorated to the closing date. Ideally, even if you move out before selling your home, you will continue to pay for the utilities while the house is still up for sale so that you can use it during staging and for showings and open houses.
Home Transition and Moving Costs
The transition period is the time between selling your current home and moving into the new one. During the transition, you might have already bought your new home, and so the costs involved in this stage are the ownership costs of both houses, including mortgages, utilities, HOA fees, property taxes, and insurance.
On the other hand, if you are still looking for a new home while the current one is up for sale, you will need to budget for a temporary place to live, as well as storage facilities, if you need it. Self-storage fees are around $60 to $150 a month. During this period, you may need to move twice – to a temporary residence and then to your new home.
Your moving costs depend on the size of your home, the number of your belongings, and the distance of the move. Typical moving costs include:
- Truck rental
- Loading, transportation, and unloading services.
- Full-service movers
- Moving supplies, such as boxes and packing materials.
- Transportation surcharge
- Full value protection insurance
- Charges for moving vehicles
- Extra for moving large or fragile items.
- Extra should the movers need to walk more than a specified distance between the door and the truck or if they need to use stairs.
The Cost of Selling Your Home Without a Realtor
Those who sell homes on their own will need to list their property as for-sale-by-owner (FSBO). This means that you will represent yourself and assume the usual duties of a real estate agent.
Because the cost of selling a house without a real estate agent is far greater than the commission you would’ve paid them. Also, FSBOs sell far less than homes marketed with the help of an agent.
Not working with a real estate agent will cost you time, energy, and money, and heighten your stress levels. The money you “save” on broker fees will seem paltry compared to what you face:
- Pricing a home from an emotional point of view instead of based on an analysis of the market.
- Paperwork you’ll need to keep track of
- Scheduling virtual and in-person showings
- Negotiating offers
- Crafting counteroffers
- Searching for a professional photographer or having to take professional photos of your home by yourself.
- Marketing, including creating, publishing, and printing ads.
- Local multiple listing service (MLS) fees.
- Costs for the materials you may need for the open house.
The majority of these services are normally undertaken by a real estate agent.
Many buyers still want to buy homes whose sellers are represented by Realtors. As a seller, you want a transaction that’s easier and stress-free. An agent will do that for you.
Consulting with a real estate agent will help you make more informed decisions, and guide you when it comes to contracts and, from a first-time home seller’s point of view, a complicated transaction process.
Sell Your Home With Joe Brasil
If you are planning to sell your home in California, let me, Joe Brasil, be part of your home selling journey.
I will be your expert counsel when it comes to the cost of selling your home to questions about each stage of the process. I know that selling a house is just as life-changing as buying one. This is why, I am committed to making your home selling journey as smooth and hassle-free as I can.
I have worked with many home buyers and sellers in Napa Valley throughout the years, and the favorable reviews I have received speak for themselves.
“We have worked with Joe over the last 10 years buying and selling several homes. Early on we recognized Joe’s great expert knowledge, integrity, kindness, patience, and professionalism–a rare combination in anyone and something you wouldn’t dare to hope for in your real estate agent, so we always felt very fortunate to be working with him.”
“Our most recent experience selling a high-end Napa Valley estate with a large acreage, which had been our family compound for nearly 30 years, gave us an even greater insight into Joe’s character and negotiation skills as he represented both the buyers and us.”
“Not once during the complex negotiations that took place over the course of two months did Joe ever lose his professionalism, focus on the facts, fairness, kindness, sensitivity, and deep understanding of the human psyche, nor his sense of humor.”
“And not once did we lose our trust in Joe’s ability to negotiate the deal with everyone’s best interest at heart, and it is clear to us that his exceptional negotiation skills brought this deal home.”
“Joe is an outstanding agent and negotiator, and a truly exceptional human being. The industry is fortunate to have individuals like him representing it. Thank you for everything, Joe, once again.” – Susanne D., via Yelp