No one likes a surprise when it comes to their money. And a lot happens between listing a home and closing escrow, but oversight or misguided calculations can’t be one of them. The list below is a standard break down on what’s deducted from the final sale price, along with a brief explanation of what those costs are to the seller.
Consider the list price is $500,000, this is how it breaks down.
1.) Commission: The Seller pays the entire commission, which is then split between the agents on both sides. The standard is 5% of the sales price, and that gets broken down to 2.5% for each agent. It might sound exorbitant, but the agent has a lot of requisite costs and fees to cover on their end.
Commission = $25,000 ($12,500 to each agent)
2.) Escrow Fees: Usually a purchase agreement will read “each to pay own fees” and this is because escrow is not an even steven 50/50 split. Escrow fees in California are usually $2.00 per every thousand dollars of the purchase price, added to a base fee of $250.00. In addition they might add clerical fees, such as a processing fee $75.00 and notary fees $125.00, a wiring fee $25.00, archive fee $50.00, loan pay off $50.00 per loan, but all fees will be itemized, and explained.
Escrow Fee = $1,250
3.) Title Fees: The seller pays to insure that the title to the house is clean. Even though a transaction requires a clean title, there is always the possibility that someone comes out of the wood work and claims to have a personal lien, or rightful ownership to the house in some way. If this occurs no one has to deal with the issue, except the title company who holds the policy. Simply put – It will not be your problem. Title Insurance is calculated by property type (i.e. Single Family Residence) and sale price. Their fees are regulated by the Dept. of Insurance. As they sale price goes up the fee levels down. For a SFR at $500,000….
Title Fee = $1,505.00
4.) Retrofit Certification Fee: When a house changes ownership it has to be certified for safety and conservation. That means Low-flow toilets and shower heads are installed. There must be bracing and strapping around water heaters, seismic gas shut-off valves at the gas meters, along with smoke detectors in each bedroom, and carbon monoxide detectors. Once done to standard the house is given certification, the cost of which can vary according to the amount of work required. Some homes have these in place, but they must qualify at the standard in order to be certified.
General Cost: Approximately
Certificate = $50-$100.00
Low flow Shower Head = $20.00
Low flow Toilet = $200.00
Water Heat./ Sec. = $85.00 -$200.00
Water Heater Stand $75.00
Smoke Detectors $45.00
Carbon Monoxide $45.00
Seismic Gas Shut Off $300-500
5.) Natural Hazard Disclosure Fee: The seller will pay a NHD company to generate a report on possible hazards to show probability, these include Flood, Dam inundation, Fire risk, and Wildfire risk, Earthquake Fault Zone, and seismic hazard. It can be supplemented with additional information, too. For example: Megan’s Law, which reports registered sex offenders in the area.
NHD Report = $100. 00
6.) County Transfer Taxes: Property tax is $0.55 for every $500.00 of the purchase price. However, in addition to this the City of Los Angeles adds $4.50 to every $1,000.00 of the purchase price.
Transfer Tax = $550.00
*Los Angeles = $2,250.00
Total = $2,800.
7.) HOA Fees (if you’re selling a condo) A lot of CC&R and paperwork, has to be handed over. The seller pays for these documents, which assure that the seller’s HOA fees are up to date, and also shows the financial status of the Association, along with any assessments, legal action, Association rules, and general information on CC&Rs [covenants, conditions, & restrictions.]
$200 – $300.00
8.) Termite Inspection: Every house has termites, so don’t worry. An inspection is usually paid for by the seller, which will generate a report on two types of work to be done Section 1 Repairs, which is damage already done, and in need of repair. And then there’s Section 2, which are preventative measures to avoid damage. Usually, the report and Section 1 repairs are paid for by seller. However this is negotiable.
Fee for Inspection Report: $125.00
Cost of Section 1 work: Varies
Average Cost to Tent: 1,500 sq. ft/ $2,000.
9.) Home Warranty: A policy taken out, and usually requested in the purchase agreement by the buyer’s agent asking that the seller pay for a 1- year warranty on major appliances in the home, should something break down. It’s not mandatory, but it is a standard gesture of politesse.
$300 – $500.00
10.) Request for Repairs: This is Negotiated. The buyer has the property inspected, and if they find something to be a notable issue, they can Request Repairs, or ask for a credit. The negotiations are between both parties via the two agents. Each agent has a feduciary commitment to their clients, which includes looking out for, and protecting, their best interest, and doing so with decorum, and respect. Smooth, easy and low-key is best.
* Negotiated (call to discuss)
No two transactions are the same. The narrative is always different because the elements vary, as do the people, the framework, and the structure of the loans and timelines, etc. It’s important to prepare sellers, and eliminate surprises. As the old adage says, there are no stupid questions, even if the answers and explanations have to be repeated it’s a great way to build repoire, and get confident about the change ahead.