Who Pays the Closing Costs in California?

Understanding closing expenses in California is important when buying or selling a home. These costs are the fees and expenses that come with finalizing a real estate transaction. Knowing who covers them can help you avoid surprises at the closing table.

In this guide, we’ll break down everything you need to know about closing costs in California, including average amounts, buyer and seller responsibilities, and estimated costs.

What Are Closing Costs?

Closing costs, sometimes referred to as settlement fees, in California, include a variety of charges for services like escrow, title insurance, loan origination, and more. Typically, these costs are paid at the end of the sale when the transaction closes. On average, closing costs in California can range from 2-5% of the home’s purchase price, making them a substantial expense depending on the property value.

Average Closing Fees

Since home prices in California are often higher than the national average, closing costs can be significant. For a home priced at $700,000 (a common price point in California), the settlement fees could range from $14,000 to $35,000. Keep in mind that the actual figures may vary depending on the specific details of the transaction.

Buyer Closing Costs

When it comes to closing fees in California, buyers are responsible for several expenses tied to the mortgage and other services. Common buyer-related costs include:

Loan Origination Fee:
0.5% to 1% of the loan amount

Appraisal Fee:
$300 to $600

Credit Report Fee:
$30 to $50

Title Insurance:
$1,000 to $2,000

Escrow Fees:
$1,500 to $3,000

Home Inspection:
$300 to $500

Recording Fees:
$125 to $200

Homeowner’s Insurance (1st-year premium):
Varies depending on the property and location

Seller Closing Costs

Sellers are also responsible for a share of the closing expenses. These typically include costs related to the transfer of ownership and commissions. Common seller costs include:

Real Estate Agent Commissions:
5-6% of the home's sale price (split between buyer’s and seller’s agents)

Title Insurance (Owner’s policy):
$1,000 to $2,000

Escrow Fees:
$1,500 to $3,000

Transfer Tax:
Varies by county but often around $1.10 per $1,000 of the sale price

Prorated Property Taxes:
Based on the sale date

Who Pays for What in California Real Estate Closings?

While there are standard guidelines on who typically pays which costs, many real estate closing fees in California are negotiable between the buyer and seller. In a buyer’s market, sellers may agree to cover part of the buyer’s costs to make the deal more attractive. Conversely, in a seller’s market, buyers might need to cover more fees to stay competitive.

Estimated Closing Costs

To give you a clearer picture, here’s a rough estimate based on a home priced at $700,000:

Buyer’s Total Closing Fees:
$10,000 - $17,500

Seller’s Total Closing Costs:
$42,000 - $45,000 (including commission)

How to Plan for Closing Costs

Planning for closing costs is essential for a smooth home transaction. Work closely with your real estate agent and lender to get a detailed breakdown of what fees you’ll be responsible for and whether any can be negotiated.

Need Help with Closing Costs in California?

If you're buying or selling a home and need expert guidance on navigating real estate closing costs in California, we’re here to help. Our experienced real estate team can walk you through every step of the process, ensuring you understand the fees involved and negotiate the best possible terms.

Contact us today to get started!