How Much Are Closing Costs in California?

Closing costs are an essential part of buying or selling a home. Understanding what they are and how they work can help prepare you financially to enter the housing market.

What Are Closing Costs?

Closing costs are the various expenses involved in finalizing a real estate sale/purchase. Both buyers and sellers incur these costs, which can vary depending on the location, property price, and specific transaction details. 

Common closing costs include:

• Loan Origination Fees: Charges by the lender for processing the loan.
• Appraisal Fees: Costs for assessing the property’s market value.
• Title Insurance: Protects against potential title issues.
• Escrow Fees: Fees for the third-party service managing the transaction.
• Home Inspection Fees: Costs for a professional inspection of the property.
• Recording Fees: Fees for recording the sale with the local government.
• Attorney Fees: Legal fees if an attorney is involved in the transaction.

How Much Are Closing Costs in California?

In California, average closing costs are around 1% of the home’s purchase price, excluding realtor commission fees.1 As of June 2024, the median sale price for California homes was about $690,000.2 This translates to about $6,900 in closing costs.

The exact amount can vary based on several factors:

• Property Location: Different counties and cities may have varying fees and taxes.
• Loan Type: Conventional, FHA, and VA loans have different fee structures.
• Lender Policies: Some lenders may charge more for certain services.
• Negotiations: Buyers and sellers can negotiate who pays for specific closing costs.

Breakdown of Typical Closing Costs

Here are a few estimates of typical closing costs for a $500,000 home in California:

These and other related costs can vary, so it’s a good idea to calculate closing costs ahead of time and budget carefully. You may want to save 2-3% just in case.

Who Pays Closing Costs in California?

Sellers and buyers share the responsibility for closing costs, but the types of things they pay for may vary. 

Here’s how the costs are commonly distributed:

Negotiation plays a significant role in determining who pays for which costs. It's common for sellers to agree to cover more closing costs to make their property more attractive to buyers. In a seller's market, on the other hand, buyers might end up shouldering more of the costs to secure a deal.

Avoid Closing Costs by Selling Your Home for Cash

One way to avoid traditional closing costs is by selling your home for cash to 800CashToday. Cash sales often streamline the transaction, reducing the number of fees and time required to close the deal. Cash buyers also often skip the appraisal process, and fewer parties are involved, which can reduce or eliminate escrow costs.

If you want to sell your home fast at a minimal cost to you, call us now at 1-800-CashToday.

Sources:

1. https://www.bankrate.com/real-estate/closing-costs-in-california/
2. https://www.zillow.com/home-values/9/ca/
3. https://www.bankrate.com/loans/personal-loans/personal-loan-origination-fees/