You’ve probably heard multiple times that selling your home is one of the biggest financial transactions that you’re likely to make – and for this reason, it’s often crucial that you take the time to not only find the right buyer, but also that you understand all the different costs involved and what this means for you.
What closing costs can you expect when selling a house in San Francisco?
There are quite a few different closing fees that you might need to pay, which can be broken up into 5 different categories, which are:
- California’s real estate commission
- Documentary transfer taxes
- Escrow insurance
- Miscellaneous fees
- Title insurance
Each one is different and some are even negotiable – which is why a little research could go a long way to saving you time, money, stress, and effort. Here’s a little bit of information on each of the fees mentioned above:
Real estate commission in California
In most cases, real estate commission is about 5% of the final selling price, which is quite a large sum. The good news is that you may be able to lower this cost depending on certain factors (for instance if you sell without a Realtor, or if your agent will agree to a lower commission).
Documentary transfer tax
In general, you’ll need to pay county and city transfer taxes when selling your property. Together, they’re often referred to as documentary transfer taxes. Whenever a property changes ownership, the state takes a small percentage of the money through this fee.
County transfer tax can often cost $1.10 for every $1,000 of the final sale price, and city transfer taxes in San Francisco are often 0.5% to 2.5%.
This insurance can vary quite a bit depending on where in California you’re planning on buying. In some cities, the cost is split 50/50, where as in others the seller is fully responsible for the payment. Unfortunately, those selling in San Francisco will often have to pay the full cost of Escrow fees.
Typically, this will cost you $2 for every $1,000 of the final sale price, along with an additional $250.
In most cases, there are likely to be several miscellaneous fees on your settlement statement. These can pertain to a variety of things; from inspections that weren’t paid for upfront, to recording fees.
The title insurance policy
Title insurance is primarily in place to protect buyers from financial losses caused by defects on the property’s title (for example, if someone claims ownership of a property after it’s been sold). This is just one way that this insurance policy can help, as there are quite a few instances where it can be enforced to protect a buyer financially. In general, the cost of this insurance is the sale price of the property × 0.00225%.
Calculating all the costs
You could wait until you see the monetary amount on your settlement statement at the end of your closing date, although it often helps to be a few steps ahead and have an idea of what you could be looking to pay. In general, sellers in San Francisco can expect to hand over roughly 7% of the overall purchase price of their property, so be sure to take this into consideration when deciding how much to set the asking price at, and what you are willing to accept.
Buyers will also have a number of fees to take care of too, and there are several costs that you’ll both have to cover together (like property taxes).
You could take all the numbers and factors into consideration yourself, or you could use a seller closing costs calculator to help you get a good estimate of what you’ll need to pay. Alternatively, you could get the numbers you need and plenty of information and advice from a professional Realtor.
Working with a qualified Realtor
Many individuals will find that it can be a good idea to work with a Realtor. In general, one of these kinds of experts can help you to fully understand all of the fees related to your closing costs, oversee these, and even negotiate for a lower payment. For these reasons and more, they can be a very valuable asset to the entire process.
With this in mind, it’s not hard to see why taking the time to find the best Realtor San Francisco has to offer is often recommended for those hoping to sell their property in the near future. Team Hatvany has helped many of their clients get a fast sale at the right price. Contact us at 415.345.3022 or team(at)teamhatvany(dotted)com.