How Much are Seller Closing Costs in LA?

After years or maybe even decades owning a property in Los Angeles, you’ve made the decision to sell your home and move on to your next chapter. 

As you begin to dream about how much money you’ll walk away with, keep in mind you will need to know more than just your potential sale price and mortgage balance to calculate your proceeds from the sale.

In Los Angeles, like the rest of California, there are significant closing costs paid by the seller. While high fees or taxes might not feel fair, they are a part of the transaction and you will want to know the details so you can make an informed decision.

Below we’ve highlighted the seller closing costs you can expect to pay and an expert tip on how to easily lower your closing fees.

Average seller closing costs in Los Angeles

The average seller closing costs in Los Angeles will average between 5% and 8% of the sale price. These closing fees can really add up for home sellers, so it is important to know what to expect by looking at an itemized list.

What are seller closing costs in LA?

• Broker commissions
• Title insurance
• Transfer taxes
• Escrow fees
• Seller concessions 
• Attorney (if applicable)

Broker commissions 

Real estate broker commissions are the single largest closing cost for home sellers in Los Angeles. The majority of traditional brokerages will demand a commission of 5% or 6% to sell your home. These high fees take a significant chunk out of your sale proceeds, and sadly commissions have not come down much over the years despite the advancements in technology to market home sales.

Title insurance

A title insurance policy insures the policy holder against any title defects, such as liens, that may encumber the property. Prior to a title policy being issued, an exhaustive search is completed to detect any open liens or other encumbrances against the title of the real property or home. When buying a home with mortgage financing, the lender will require the buyer to have such a policy in place for their protection.

The cost of title insurance premiums in California is based on a published rate applied to the purchase price of the property, and is paid to the title insurance company at the close of escrow. Title insurance rates will vary by provider, and title insurance companies are required to file their schedules of rates with the State of California’s Insurance Commissioner.

It is customary in Los Angeles for the seller to pay for the buyer’s policy. Note, the custom of who pays for the title insurance may vary from county to county within the state.

Transfer taxes

A real estate transfer tax is a transaction-based tax levied by the government on the transfer of real property. In Los Angeles County, there is a documentary transfer tax of $1.10 per $1,000 of consideration or value of property conveyed at the county level. In addition, several cities impose an additional tax ranging between $2.20 to $4.50 per $1,000 of value of property conveyed.

Escrow fees

Considerably less than broker commissions, escrow fees are the payment for services provided by the escrow company including document preparation. Escrow fees for sellers range from $200 base fee plus $2 per $1,000 of sale price up to $250 base fee plus $2.50 per $1,000 of sale price. The variation depends on the escrow company used.

For example, if you sold a $1,500,000 home in Los Angeles, escrow fees would be approximately $3,200 to $4,000.

Seller concessions

Any fees paid on behalf of the buyer by the seller are referred to as seller concessions. Examples of seller concessions include the seller paying for a home warranty, handling the cost of agreed upon repairs, or offering closing credits as an incentive.

These types of concessions will vary from transaction to transaction, and are typically ironed out as part of the overall negotiation. Seller concessions are not required, but can be a useful tool to bridge any gaps to get a deal done.

Attorney fees (if applicable)

While it is a normal occurrence to use an attorney for a home sale in other states, it is not very common for residential real estate transactions in California. In some more complex cases, an attorney may be involved. If so, the seller will pay the additional fees for their real estate attorney.

Seller Closing Costs - Los Angeles (Based on $1,500,000 home price)

• Sale price: $1,500,000
• Seller’s agent commission (3% of sale price): $45,000
• Buyer’s Agent commission (3% of sale price): $45,000
• Title insurance premium: $2,943
• County transfer tax: $1,650
• City transfer tax: $6,750
• Escrow fees: $4,000
• Total: $105,343 or 7.02% of the sale price

How to lower your seller closing costs

Title insurance and transfer taxes are unavoidable, however broker fees are a different story altogether. In fact, broker commissions are the largest cost that home sellers can control in their home sale. 

Despite what some might say, real estate commissions are negotiable, and you don’t have to agree to 5% or 6% to sell your home in Los Angeles. For example, sellers with Prevu, a tech-enabled brokerage in California, pay a fair 2% listing commission, allowing them to save significantly compared to other major brokerages.

Prevu agents deliver all of the expertise you’d expect from a traditional agent, however thanks to technology are able to offer much lower fees. From pricing strategy and marketing of the property, to private showings and negotiation, your Prevu agent is with you every step of the way.

Prevu Real Estate, Inc. is a licensed real estate broker in California, license number 02134758.