What Fees Do You Pay When Selling a House?

what fees do you pay when selling a house

Buyers aren’t the only ones who spend money during the sale of a house. In traditional sales, sellers must also pay some costs to close the transaction smoothly. These fees can take up to 10% of the home’s final sale price (in San Diego, it can range from 7 to 10%). These costs can include home preparation expenses, relocation costs, buyer incentives, realtor commission fees, and closing costs such as mortgage pay-offs, title fees, and taxes.

Some of these fees are variable, negotiable, and optional depending on the terms of the sale. Others, specifically the closing costs, are common in real estate sales and often required.

Seller Closing Costs

Closing costs refer to all the fees that both buyers and sellers must pay to close the sale of a house. Buyers sometimes will pay the bulk of the closing costs, but sellers still shoulder a large part  that can add up rather quickly. Here is a breakdown of common closing costs that sellers pay for in California.

Realtor Commission

Realtor commission fees are the largest closing costs for sellers. Particularly if you’re taking the traditional real estate route, by transacting a full-service listing and buyer’s agents. In California, commission rates are typically 5 to 6% of the house’s sale price and are split evenly between the two agents.

Sellers can save on realtor commission fees by listing their homes as FSBO (for sale by owner), but hiring a full-service realtor with a lower commission rate (some take as low as 1 to 3%) can be a cheaper route if available. Working with a home buyer like Trusted House Buyers directly lets you skip on the costly real estate commissions, not to mention we cover all closing costs associated with the sale – guaranteed.

Mortgage Pay-offs

Sellers must pay any outstanding mortgages (prorated to the date of sale) on the house before the sale is closed, after which the buyer handles the subsequent payments. Depending on the loan schedule, there may also be prepayment penalties (a fee that the mortgage company charges if you pay in advance) to account for.

Title Search and Title Insurance

A title search authenticates the seller’s legal ownership of the property, signaling that they have the right to sell the house. This also clears the title of any liens (claims or legal rights to the home as collateral for a debt or obligation).

Title insurance is a policy that protects the buyer from risks of title disputes, legal claims, or outstanding liens related to the property that may have been undisclosed or unknown during the sale.

Both of these title-related fees can add up to 0.5% of the sale price, often totalling between $1,000 to $4,000.

Escrow Fees

Escrow companies are third-party service providers that handle the exchange of documents and funds at the close of a sale. This is typically split between the buyer and the seller and often amounts to around $1,000 to $3,000 in total. It can include office expenses, transfer fees, and notary services on top of the main bill.

Attorney Expenses

Attorneys aren’t required when closing real estate sales in California, but if a seller hires one to be a representative in the transaction, the cost can run between $150 to $300 per hour.

Transfer Tax

A transfer tax is a fee charged by the state government for the transfer of a property from one owner to another. In California, the rate is $1.10 per $1,000 of the sale price, though some cities charge a higher rate. 

Capital Gains Tax

Capital gains tax is a tax applied to the profit a seller earns on the sale of an asset, such as a property. Depending on how much profit was earned, how long the seller has owned the property, and whether or not the seller is married, affects how much capital gains tax needs to be paid.

Miscellaneous Fees

There are also other miscellaneous fees that must be settled before closing the deal, including homeowners’ association fees, recording fees, notary fees, utility balances, and any outstanding property taxes.

Other Seller Expenses

Aside from closing costs, sellers can expect to pay 1 to 3% of their sale profits for:

  • Home improvement – cosmetic or functional repairs to the house to attract buyers. Selling to a buyer that takes the property as-is can help save on expensive repair and maintenance costs.
  • Relocation – moving from the for-sale house to temporary housing or a new home
  • Buyer incentives – concessions to sweeten the deal for the buyer

How Do I Save on Fees when Selling a House?

Selling a house can be stressful and expensive. But there is a way to skip the hassle and expenses of selling a house. If you’re in San Diego, you can get a cash offer on your home regardless of the condition it’s in, with all closing costs covered by us, Trusted House Buyers.

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