Selling Your Property?
When you sell your property you should know your typical closing costs for a seller. The most important thing should be the bottom line figure you’ll walk away with after closing. What you walk away with is more important than your gross sales price. Regardless of how much equity you have in your home, you should get an accurate net sheet (closing cost sheet showing your walk away figure) up front so that you can be prepared to make a decision quickly on any offer presented. Do you like negotiating blindly? I didn’t think so, GET A NET SHEET! It’s crazy to me how many sellers list their properties without having an idea of what their walk away figure it going to be. Without knowing the typical closing costs involved for a seller, how can you determine what an acceptable sales price is for your property? One of the first things you should do before you put your home on the market is to ask your agent to prepare a net sheet. A net sheet should give you accurate information on the NET number you will walk away with after all typical closing costs for a seller. This is the number you should be most concerned with. When you have a net sheet done up front, you are able to make a decision fast and know what to expect.
I had a client who bought a house in 2016, but needed to sell his condo first. He had a substantial amount of equity in his condo, but limited funds on hand. That meant that we would need to sell his condo first before purchasing the new house. The very first thing I did for him was have an estimated net sheet prepared at our target sales price so he could get an idea of what his take home would be. This also helped determined his budget as all the net proceeds would serve as his down payment. Within two weeks, we had an accepted offer that was within 1% of our target sales price and we found his new home and successfully closed on it within 45 days after selling his condo.
“How are you to make an educated decision when buying the new place without knowing how much you’ll take home?”
They told me that they never thought about it that way. They were prepared to just sell the condo and “wing it” once we had a property in escrow. Doing it that way would have wasted time and potentially have us miss out on properties because we were looking at the wrong price points. Back to the story… Within two weeks, we had an accepted offer that was within 1% of our target sales price and we found his new home and successfully closed on it within 45 days after selling his condo. They have been living in the home for a few months and LOVE it.
Here’s a good estimate of Los Angeles Area Closing Costs
Realtor’s Commission– Commissions are negotiable, but if you shop around I would guess that you would quotes between 4-6% of the sales price depending on your agent and the services being provided to you. Many people view this as a burdensome cost of doing business, but I disagree. If you have a good agent who knows how to properly market your home that results in minimum sales price of 5-6% higher than doing it yourself or the lower price competition, then where’s the cost? One question to ask any potential agent is “Why are you worth what you’re charging?”
Title Insurance Fees-This will vary on sales price and title company, but most title companies will range in the ~$600 ($100,000 purchase price) to ~$2,100 ($1,000,000 sales price). Sellers in California typically pay the title insurance. There will be some miscellaneous title fees as well. Escrow fees-This will vary based on the sale price and company, but many companies charge a rate around $250 base fee plus $2.00 per $1,000 of purchase price. For a $100,000 transaction, the escrow fee would be $450. For a $1,000,000 transaction, the escrow fee would be $2,250. There are also miscellaneous escrow fees as well added on top of these figures (recording fees, document preparation fees, etc.) County and City Transfer Fees-Transfer fees are charged whenever a property is sold. The fees vary per county and even some cities charge their own transfer fees such as Los Angeles. For Los Angeles county transactions, the transfer fee is $1.10 per $1,000 of purchase price. Properties that fall within Los Angeles city limits are charged an additional $4.50 per $1,000 of purchase price. Real Estate Tax Prorations-Typically, the seller pays taxes up until they stop owning the property. This is not really a cost since it’s a bill that you owe since you occupied the property during the time the bill was due, but it will deduct from your bottom line. Payoffs To Any Existing Loans-This is your payoff owed is their is debt on the property. Miscellaneous Fees-There are other miscellaneous fees that are charged in a Los Angeles Real Estate transactions. These would be a home warranty policy (if negotiated in the contract), Natural Hazard Disclosure Report (typically $95-$115), Retrofit Inspection (typically $50 or more if work is needed).
These are the majority of expenses involved when selling your house. There will be are some miscellaneous fees, but the major closing costs are covered here. When you eventually get an offer for your property this is very important number to know. If you would like a more precise closing cost estimate on your home please email me at [email protected] I will put together something more accurate for your specific situation.
Have Any Questions?
When I meet with a potential seller client I walk them through the entire house selling process up front. This will help you decide if selling your home is right for you at this time. If you would like to to set up a time to see how if selling your property is right for you, just fill out the form below or contact me and I will be glad to assess your situation. Don’t worry I don’t bite and there is no charge to have a conversation :).