SELLER CLOSING COST IN LOS ANGELES
Closing Cost for Home Sellers in Los Angeles
The diverse and dynamic Los Angeles real estate market has no one-size-fits-all estimate for closing costs. Depending on your location in this sprawling city, these costs range between 6% and 10% for homes valued under $3 million.
Pre-Sale Fees When Deciding to Sell?
Are you considering a pre-sale inspection? These could also add to the cost. What does pre-sale inspection do? It offers transparency but requires disclosing any issues found, potentially impacting negotiations. In a competitive market, this step might be unnecessary, primarily if the property's value lies more in the land, influenced by favorable zoning, like the ability to build condos. Remember, a pre-sale inspection is an added cost and could lead to conflicts if the buyer's inspection differs. In cases of advantageous zoning, selling 'as is' might be more profitable, focusing on the land's potential rather than the home's condition. Need guidance on how this applies to your property? We're here to help with tailored advice.
Should I Renovate Before selling?
While certain improvements can significantly boost your investment returns, it's important to note that not all upgrades yield the same level of return on investment (ROI). Some enhancements offer better financial rewards than others. Enhancing your home's appeal through painting, improving the curb appeal, renovations, or key upgrades is an investment strategy that can significantly impact your final costs. Decisions like minor touch-ups, comprehensive remodeling, or upgrades to critical elements such as windows and roofing are all investments made before sale. Each choice directly influences your overall financial outcome.
City Transfer Fees, Los Angeles, Culver City, Santa Monica
Remember, each Los Angeles neighborhood comes with its unique fee structure. Unraveling these specifics is crucial in making informed decisions. We can always provide a net sheet that breaks down all the fees with a comprehensive estimate of your closing costs.
Example of a Closing Cost, Net-Sheet for Multi-Unit and Home Sale in Santa Monica: Please note that some details and figures are missing in this illustration, which is provided for example and educational purposes only.
Standard Closing Cost in Los Angeles, California, When Selling Your Real Estate Property
Real estate commission: It is between 5 to 6%. For land, it can go up to 10%
Prorated property taxes
Natural Hazard Disclosure Report: In California, sellers are legally required to provide an NHD (Natural Hazard Disclosure) report to potential buyers. This report contains crucial information about natural hazards like flood zones, fire hazards, earthquake faults, and seismic areas that might affect the property. Its purpose is to ensure buyers are aware of these risks and to protect sellers from future liability by confirming these hazards have been properly disclosed. The NHD law mandates that this report and an NHD Statement signed by both the seller and the listing agent be included in the property transaction.
Title insurance: Title insurance is a one-time policy that helps protect home buyers and lenders from financial loss due to property title problems. Title insurance aims to prevent risks instead of covering them as they happen. When you close on a home, you pay for the title insurance once, and it covers issues like mistakes in legal documents, unpaid taxes, and unknown heirs. It's especially recommended that homeowners get owner's title insurance to protect against legal claims on their property.
Home warranty: A home warranty is a contract that helps cover the cost of repairing or replacing important home systems and appliances when they break down from normal use. This warranty saves homeowners from high costs when things like heating, cooling, electrical systems, or major appliances like refrigerators and ovens need fixing. Some plans might include extras like trash compactors, ceiling fans, or roof and pest control services. It's different from homeowners insurance, which covers unexpected damages like fires or theft. The cost of a home warranty varies, and while sellers often pay for it, it can be negotiated.
City Transfer taxes: A city transfer fee, or city transfer tax, is a charge California cities require when real estate changes hands. It's usually a percentage of the property's sale price, and the exact rate depends on the city and can differ based on how much the property sells for.
County transfer taxes: A county transfer fee, or county transfer tax, is a charge some counties in the U.S. apply when selling property. It's often a percentage of the sale price. In California, and specifically in Los Angeles County, there are extra fees in some cities: Los Angeles and Culver City charge $4.50 for every $1,000 of the sale price, Santa Monica charges $3 per $1,000, and another city charges $2.20 per $1,000.
The city required mandatory retrofitting: To successfully close escrow, certain retrofitting measures are required. This process includes checking and installing carbon monoxide detectors in appropriate locations, ensuring toilets are low flush for water conservation, and securing water heaters to withstand earthquakes. These steps are crucial for meeting safety and environmental standards. A professional retrofitting company must conduct these checks and confirm that everything is up to code. If any areas don't meet the standards, the retrofitting company will provide a list of necessary corrections. Once these adjustments are made, a certificate of compliance is issued, indicating that the property meets all required retrofitting standards. This certificate is essential for the smooth and compliant completion of the escrow process.
Staging: The National Association of Realtors (NAR) reports that staging a home can lead to a 1-5% higher sale price than non-staged homes. Furthermore, staged homes tend to sell quickly. The cost for home staging varies, depending on the property's size and how extensive the staging is.
Escrow fees: It depends on the price.
Attorney fees, If applicable
Recording fees: The type of property and the transaction details can affect the fee.
Wire transfer fees: if you are transferring funds to balance your mortgage
Homeowner association fees: Applies to condos or townhouses.
City Transfer Tax When Selling In Los Angeles
The transfer fees you'll encounter when selling a property vary based on location; each city has its own set of fees. Sellers must know these specific rates and how they might affect closing costs. Planning can help in managing these expenses more effectively.
What is the home sellers ’ closing cost in Culver City?
Culver City City Transfer Tax Fee for Home Sellers in Culver City
0.45% on amounts of $1,499,999 or less
1.5% on amounts from $1,500,000 to $2,999,999
3% on amounts from $3,000,000 to $9,999,999
4% on amounts $10,000,000 and above.
What is the home sellers’ closing cost in Santa Monica?
Santa Monica City Transfer Tax Fee For Home Sellers in Santa Monica
$3.00 (Per $1,000) in amounts of $4,999,999 or less
$6.00 (Per $1,000) in amounts of $5,000,000 thru $7,999,999
Measure GS, passed by Santa Monica voters in November 2022 and effective from March 1, 2023, introduces a new tax rate for property sales over $8 million. This tax, set at $5,600 for every $100,000 of the sale price, is used to support schools, prevent homelessness, and finance housing projects.
$56.00 (Per $1,000) on amounts $8,000,000 and above effective date 3/1/2023
What is the home seller’s closing cost in Los Angeles?
Los Angeles City Transfer Tax Fees When Selling Your Home
$4.50 (Per $1,000) or anything up to $5M for the city transfer fee.
Effective April 1, 2023, Measure ULA or mansion tax, introduced new taxes on high-value real estate sales in Los Angeles. It adds a 4% tax on sales between $5 million and $10 million and a 5.5% tax on sales over $10 million. This is in addition to the existing city and county taxes, making the total tax rates 4.56% and 6.06%, respectively. Known as the 'mansion tax, this measure significantly increases the tax on expensive property sales. For example, for a real estate transaction valued at $10 million, the city transfer tax before the implementation of Measure ULA would have been $56,000. After Measure ULA took effect, the transfer tax for the same property sale increased to $456,000. A $12 million property sale that would have been taxed $67,200 before April 1, 2023, now faces a $727,200 increase of over 1,000%.
Staying Informed about New Measures
It is crucial to understand the latest measures and how they can impact your home sale and closing costs. Keeping abreast of these changes ensures you're well-prepared for a successful transaction. It's important to note that these measures also affect the sale and closing costs of commercial properties and multi-unit buildings.
Conclusion:
Selling a property in Los Angeles involves navigating various closing costs and legal requirements. Understanding these costs is crucial for a successful sale. Who you work with matters. If you need to sell your home or commercial property, feel free to reach out for a complimentary consultation. If you need a seller net sheet, we will provide it.