Cost of Selling a House in California—How to Keep Fees Low

If you’ve previously had to sell a house for a job relocation or because the time finally came to move in with your spouse, you already know that what you net from the sale is often less than what you expected. Surprise fees always seem to find a way of creeping in. Even the costs you do expect somehow don’t add up—to an amount that you can comfortably absorb, anyway.

Unfortunately, the reality is that the average cost to sell a home in California is far more expensive than most homeowners expect. And, when money is particularly tight—and may even be the reason you have to sell—paying more than you can afford just to offload your home is not appealing. In fact, it can be downright painful.

One way to potentially keep your fees low is to determine in advance how much you might have to have to actually spend.

Determining the Cost of Selling Your California House

Not all homeowners think, “When I sell my house, what fees do I pay?” But, it’s a question that you should be asking whether or not you’ve had previous experience selling a home. Surprise expenses can take you off guard. If you’re not prepared, they’ll also steal away the net proceeds from the sale and leave you feeling robbed. The cost to sell a home just keeps going up, too. So, the fees you (or your neighbor) might have paid years ago are not going to be what you pay today.

To ensure you don’t suffer big time for making even the smallest assumptions about fees review each of the following calculations to determine the current cost of selling your home:

Real Estate Agent Commission

There are benefits to having a real estate agent help you sell your property. They usually know how to correctly price a home to sell, typically handle all of the marketing, and can negotiate with potential buyers on your behalf. They do charge a commission for their services, however: up to 6% of your home’s selling—not list—price.

Multiply your home’s selling price by 0.06 to estimate an agent’s commission.

Repairs and Upgrades

The cost to renovate your home will vary depending on the extent of the work that needs to be done. Because selling a house with knob and tube wiring won’t yield as much profit anywhere as a modern home with updated electrical, it’s always going to be worth your time and money to calculate rehab costs. A sleek renovation could make a difference to your bottom line when you sell the house.

First, have the home inspected to get an estimate of all the work that should be performed. The average cost for this inspection is $329 nationally, according to HomeAdvisor.com. Whatever you then choose to repair or update on the house is up to you, but the average amount most homeowners spend is $46,000. Though it can go as high as $100,000 or more.

Of course, you’ll pay these fees upfront before ever selling your home; but, they are still costs that subtract from what you earn in the end. So, you may want to get a few estimates in order to find the most affordable pros who still perform reputable, high-quality work.

Budget for a home inspection and get estimates for repairs and upgrades.

Cleaning and Staging

Even if you’re not selling a house that needs repairs or upgrades, you’ll likely need to clean, purge, and stage the home. Your house will present better when it’s dust-free, well organized, and minimally furnished. More importantly, by looking at a clean slate, buyers will have a better chance of imagining what life could be like if they made your house their home.

Again, your total expenses will depend on what you choose to do and how much material and labor cost in your area. Most homeowners spend nearly $5,000 to clean, haul junk away, and mow the lawn, according to Zillow—especially if they hire professionals to help. Doing the work yourself may save a little money. Even then, you should anticipate spending about 1% of the sale price preparing your home to sell. Don’t forget to factor in the cost of your energy and time, too.

Multiply your home’s selling price by 0.01 to estimate costs for cleaning and staging.

As with performing repairs and upgrades, do yourself a favor and get several quotes for this category before moving forward. Ask how much time each of these tasks will take as well.

Seller Concessions

Your buyer may ask that you pay for some of their expenses, no matter the condition of your house, in the form of concessions. If they’re going to have to perform repairs that you could not or they simply need help paying their closing costs, it’s likely they’ll make these concessions—which usually take the form of a price discount—a part of closing the deal.

Without having a buyer yet, the hard numbers are difficult to plug in. Depending on the loan, buyers can ask for concessions that max out between 3% and 9%, according to Fannie Mae. So, at the very least, expect to pay 3% of your home’s sale price to motivate your buyer to close.

Multiply your home’s selling price by 0.03 to estimate the cost of concessions.

Closing Costs

There are a number of costs you can expect to pay at closing, whether or not your buyer has asked for any concessions. Most of these fees vary, depending on where you live and how much you sell your house. So, again, you’ll have to do some digging to determine what fees you’ll be facing. Altogether, however, you can expect to pay about 4% of your home’s selling price in closing costs. These costs usually include:

• Title insurance
• Notary service
• Escrow fees
• Unpaid property taxes
• Home warranty for one year
• HOA fees for transferring ownership
• The Documentary and Property Transfer Tax
• Attorney’s fees are optional; it’s not required in California

Multiply your home’s selling price by 0.04 to estimate closing costs.

Mortgage Payoff

Assuming you’re still paying on the loan for the house you’re selling, you’ll have to make one final—and potentially large—balloon payment at the close of the sale. As with most loans, the payoff amount may be different than the balance listed on your last bill. Unfortunately, a penalty may be assessed for the early payoff of the loan, too. To correctly calculate this expense so that you can more closely determine your actual net, call your mortgage holder for an exact quote.

Get a final payoff quote from your mortgage holder.

Moving Costs

Additional costs can include the mortgage payment on your new house; the cost to rent another one until you find a home to buy; and the expense of packers, moving trucks, and storage facilities. These items all go into calculating the cost of selling a house since they all subtract from your bottom line. Sometimes, these costs overlap with ongoing expenses tied to the home you’re selling—like the loan payment—which makes the total cost of transitioning potentially pricey.

Since every homeowner’s situation is different, make a few calls to help you plug in the numbers that apply to you. To get a general idea of what you might have to pay, it’s safe to assume these costs will add up to at least one or two percentage points of your final sales price.

Calculate specific estimated costs directly, or multiply your home’s selling price by 0.02 to estimate the additional costs you’ll face for moving.

How to Cut Your Costs When Selling Your House

Now that you’ve estimated the cost of selling your house, it’s probably easy to see how the numbers really add up fast. It may even be frustrating to realize just how big of a dent your total expenses will put in your net profit. Whether you need the extra cash or not, it’s never a bad idea to find ways of reducing your costs.

There are some costs that are inevitable and fixed, like paying off your mortgage or transferring the title. Still, there are others that can be reduced, even removed. For example:

• You can save several percentage points by selling your home without a REALTOR®. It’s not easy selling a house without someone to market it. You’ll still have to give the buyer’s agent a fee for helping to sell the home, too. That said, pocketing an extra 2% or 3% isn’t a bad deal—unless, of course, you’re unable to sell the home on your own.
• Selling your home as-is in California, without performing any repairs or upgrades, can save you a lot of money, too. Though, it can also backfire depending on the condition of your home. Most homebuyers prefer a move-in-ready house. If yours is in rough shape, they may give it a pass. On the other hand, if all that’s really needed is a fresh coat of paint, then painting your house before selling it may be more trouble (and money) than it’s worth.
• In theory, with an as-is sale, you should be able to save on seller concessions, too. After all, buyers are informed in advance that what they see (or don’t see) is what they’ll get. Even so, you may have to explicitly deny concessions either in your ads or if and when you counter an offer. Keep in mind that this could turn away a lot of buyers, especially if your local market is a competitive one that’s not currently favoring sellers.
• It’s hard to avoid moving costs and paying for two homes, but you have a few options that may ease the transition. You can make the sale of your old house contingent on your ability to find a new one so that you’re not without a place to live or locked into a rental contract that’s hard to break. If you’ve already found another house, you can request a fast close from potential buyers. Since most home buyers are backed by a lender, they may need at least 30 days. Though, some buyers can pay all cash and close in less than a week.

One easy way to quickly implement all of these tips so that you can reduce most of your costs is to sell directly to a real estate investor who is also a home-buying specialist. Not only can they typically close in fewer than 30 days, pay you all cash, and take your home as-is—often, they don’t need you to have a real estate agent. If they’re reputable, they won’t ask for concessions or expect you to clean, either. Altogether, this can significantly lower the cost of selling the home and, as a result, raise your net earnings. Your stress level will benefit, too.

Lower Your Costs and Your Stress By Selling Direct

The team at Sell Your House Direct is one such buyer. Working as home-buying specialists in the San Diego area for nearly two decades, SYHD will also show you how to keep your costs low with the end goal of helping you net more. They do this by providing you with a one-page document—a net sheet—that lays out all of the potential costs associated with selling your home. This allows you to quickly assess how much you will net once all of your expenses are accounted for—without having to calculate the cost of selling a house on your own.

Once you get your net sheet, you may find that selling your house as is to SYHD for cash and a seven-day close may benefit your bottom line more than pouring your own cash into the home in the hopes of getting more out. Then again, performing a rehab and hiring a REALTOR® to help you sell your house at full retail may make better sense—and earn you more dollars. You won’t know until you crunch the numbers or until you call SYHD to ask that they do it for you.