Home » Blog » 7 Things You Need to Know About Closing Costs

Selling your house can be costly. When the time comes to downsize or sell your home, there are a few financial aspects to consider, especially in the area of closing costs. If you’re hoping to pay off your existing mortgage in full, or maximize your profit to fund retirement, make sure you understand all of the fees associates with the sale of your home.

Real estate transaction fees are typically equal to a percentage of the sale. The closing costs, realtor, escrow, and attorney fees, and potential for repairs, can get expensive. Knowing all of your options up front will help you make the best financial decision for your future.

Building equity in your home is one of the perks of home buying. Don’t lose your nest egg to high fees and sale costs. If now is the time to sell your home, make sure you know exactly what to expect when it comes to closing costs and other financial obligations. A private sale may cost you more than it’s worth. Find out in our guide.

What happens to the equity in your home after selling?

When you sell your home, the equity is your profit. For example, when you buy a home for $300,000 and pay off $200,000 prior to selling, you could net $200,000 in profits after paying off the remaining $100,000 balance of your mortgage.

You’ll net this amount as long as you don’t have any other liens or other financial obligations assigned to your home. When selling your home, it is possible to absorb some of the costs of the sale, such as the realtor fees, and closing costs, to incentivize a buyer to move forward with the purchase.

The funds will essentially be deducted from your profits.

Oftentimes, a buyer will submit an offer with a request for the seller to absorb some of the closing costs so the buyer doesn’t have to pay out of pocket or roll it into their mortgage payment. When the seller concedes to some of the closing costs, it’s reduced from the overall profit, or net equity on the home.

7 Things every seller should know about closing costs

Whether you’re selling a home or purchasing, closing costs are one of the most pressing matters to address. When a seller is hoping to reduce their upfront costs or avoid rolling any additional payments into their monthly mortgage payment, they might request concessions from the seller.

Absorbing closing costs is a common tactic used to motivate buyers and sell your house quickly. The longer a house stays on the market, the harder it is to sell. Most sellers end up having to reduce their initial selling price if it stays on the market too long, which cuts into profits even further.

Make the best decision for your financial future by educating yourself on all of the potential fees that could be incurred from the sale of your home.

1. What are closing costs?

What are closing costs?

Closing costs include all fees associated with the sale or purchase of a home.

All closing costs must be paid in advance of the transfer of property from one owner to the next.  If the sellers are responsible for payment of the closing costs, they will either present a check at the closing or they will roll the costs into their monthly mortgage payments, in which case they will not be required to make an additional payment at the closing.

Closing costs are not the same as a down payment. The down payment is the percentage of the sale price that the buyer is required to give the seller. A down payment shows the bank a vested interest in the property, making foreclosure less likely.

A down payment is made once an offer is accepted, at the beginning of the buying process. Typically it’s put into escrow during the buying process while inspections and other housekeeping matters take place.

Closing costs will be the final payment a buyer pays prior to signing the paperwork. This payment is made at the very end of the buying process.

2. What’s included in closing costs?

What's included in closing costs?

Closing costs are meant to cover a wide variety of fees associated with the purchase of a home. Once the home buying process is initiated, fees will begin to incur. From the realtor commissions to obtaining the buyer’s credit report and checking the title on a house, fees are constantly stacking up.

Typical closing costs consist of:

  • Realtor fees
  • Credit reports
  • Title fees
  • Origination fees
  • Appraisal fees
  • Surveys
  • Taxes

There are other expenses included depending on the details of the transaction. Before the real estate transaction can close and the property can transfer ownership, the closing costs must be paid.

If the seller is paying the closing costs, or partial costs, those fees will be deducted from the sale of the home. If the buyer is paying closing costs, a check is required to be presented at the closing.

3. Who pays for closing costs?

Who pays for closing costs?

There is no obligation on either side to pay closing costs. Many buyers use closing cost concessions as a negotiation tool in order to get a better deal on a new home purchase.

For example, a couple looking to purchase a $150,000 home with a total savings of $30,000, could request the seller pay the closing costs of approximately $4,500, so they can use their full savings for the down payment.

The down payment needs to be at least twenty percent for the buyer to avoid paying private mortgage insurance. If the buyers don’t have enough in their savings to cover all of the closing costs plus the down payment, a seller can absorb the burden and still move forward with the sale of the home.

Using incentives like paying closing costs keeps a buyer interested. If you need to sell your home quickly, or you’re concerned about the amount of time that it’s been on the market, offering to pay closing costs is a great way to help attract motivated buyers.

4. Average closing costs for a seller in california

Average closing costs for a seller in California

Most people can expect to pay between two and five percent of the total cost of the home for closing costs.

The average cost of a home in California was $440,000 in 2015. If a buyer requested closing costs to be paid as a part of a sale, the seller could be responsible for up to $22,000.

If you’re anticipating a $100,000 profit from the sale of your home and end up paying $22,000 in closing costs, you’ll net less than 80% of your anticipated profit.

Preparing in advance for the cost of closing helps a seller either price their home differently, or look for alternative ways to sell their home that doesn’t include closing costs.

Considering the high price of homes in California, closing costs are significantly higher than in the rest of the country.

A seller could end up with a significant reduction in profit if they absorb the closing costs for the sale of their home. A buyer may be required to put down a large amount of money in addition to their down payment if a seller is unwilling or unable to make closing cost concessions.

The cost of fees involved could impact how quickly a house is sold. If the closing costs and down payment are high and the seller doesn’t offer concessions, a buyer may not be motivated to move forward with a purchase.

5. How to calculate your closing costs

How to Calculate Closing Costs

It’s difficult to know the exact costs that will be paid over the purchasing period, estimate between two and five percent to be safe. For example, if you’re looking to purchase a $350,000 home, you can anticipate closing costs between $7,000 and $17,500.

If you’re a seller looking to motivate a buyer by offering to pay closing costs, you could potentially be responsible for over $17,000.

Oftentimes, a buyer and seller will negotiate a compromise where one party agrees to pay a certain amount of closing costs and the other party is responsible for the remainder.

Since the sale of a home depends greatly on the current market, location, condition of the home, and other variable factors, sellers may need to offer incentives and take on more of the financial burden of the associated fees.

6. Is it worth it to pay a buyer’s closing costs?

Should you pay the buyers closing costs?

Since the sale of a house depends on many different key factors, sellers should be prepared to offer motivation.

During a buyer’s market, there are a lot of different options for buyers. They don’t feel a sense of urgency or motivation to make a purchase that isn’t attractive.

In order to sell your home in a buyer’s market, you have to make the purchase appealing, usually by offering financial incentive like the payment of closing costs.

Another reason sellers may need to incentivize buyers is the condition of the home. If your home is outdated in areas like the kitchen or bathroom and requires any major repairs, or may require major repairs in the next five years, offering to cover closing costs may help offset these renovation costs.

7. How to avoid paying closing costs

How to avoid paying closing costs

There are a few ways to avoid paying closing costs.

Your first option is to not offer to pay closing costs for a potential buyer. The pro of this option is that you will be able to net all of your equity. The cons are, you may not sell your house quickly and the longer it’s on the market, the longer it may stay on the market or you may end up having to reduce the sale price.

When reducing a sale price, you could end up losing as much as the closing costs anyway.

Your second option is to sell your home to SoCal Home Buyers. We make the selling process fast, easy, and simple.

Buyers are able to bypass the stress, hassle, and unpredictable costs of the selling process when they work with SoCal Home Buyers.

A Simpler Way to Sell Your Home

SoCal Home Buyers Happy Seller
“I felt the price was fair and consistent with the condition of the house. I wish more things in life would be this pleasant. Thank you!” – Richard C.

SoCal Home Buyers has been helping sellers for over twelve years and can guarantee a fast, smooth and painless transaction.

Specializing in helping buyers with a seamless selling process, you can avoid the unexpected closing costs, stress and hassle associated with selling a home on the real estate market.

You earned the equity in your home and deserve to access every cent. Working with SoCal Home Buyers to avoid paying closing costs helps you get the most for your home with the least amount of hassle – guaranteed!


Call SoCal Home Buyers today: 951-331-3844 or request a cash offer below to sell your house without closing costs, escrow fees, agent commissions or the uncertainty of falling out of escrow!

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Made the real estate process efficient and hassle-free.
Betina R.
Betina R.
00:03 26 Feb 22
Trying to sell a house is a daunting task, ask anyone who's done it. The cleaning, the repairs, the showings, etc. It's especially difficult when the property you have doesn't reside in the same state you live in. After some extensive research I went with SoCal Home Byers. Not only did they provide a fair price but they made the process very easy. All I had to do was sign a few documents, get them notarized and send them back in. Closing was done before I knew it and funds were wired to my account. When you consider the money you'd have to spend to get your house sellable and factor in realtor fees and closing costs, you'd be surprised how close your net profit is when compared to a higher sale price through a realtor. This is the way to go!
Steve V.
Steve V.
23:28 18 Sep 21
What I love about SoCal home buyers is how prompt they came out and gave me a price on my father's house when he passed away. They did what they said and they said what they did. All the way through the process I knew what was going on and it went smoothly!
Chris A.
Chris A.
23:52 25 Aug 21
Had a great experience with SoCal home buyers. Was a fast and painless process and the offer was pretty good. Definitely worth selling to them over listing with an agent. Highly recommend👍🏻
Grant S.
Grant S.
00:57 21 Aug 21
Highly recommend SoCal Home Buyers if you need to quickly sell your home. We were in a difficult situation with a tenant in a rental who would not move so we could renovate and sell the home, due to eviction moratorium we could not evict. SoCal Home Buyers were amazing to work with, we got an acceptable price and quickly closed the deal with no issues. No brokers or other fees, give them a call if you need a non-traditional way to sell a home.
Denise G.
Denise G.
18:30 28 May 21
Honest company, doing business with them it was like a melody ! Everything went smooth. done by Text and email. I honestly never spoke to them by phone .but that's just me being a Guru and always trying to make the most of time. Thanks guys!!
Paco's D.
Paco's D.
21:34 05 Feb 21
I had the pleasure of working with SoCall Buyers, selling a rental home in the Los Angeles area, while living out of state. Appointments were always kept, I was always informed and kept up to date of any activity. I would definitely use this company again .
linda S.
linda S.
21:42 02 Feb 21
Terrific experience working with SoCal Home Buyers. From the first conversation, they were very responsive, easy to get a hold of on the phone or email, and very quick to answer any and all questions and taking the time to ensure we were comfortable the home sale. SoCal was transparent about the entire process and helped guide us step by step, which made the entire transaction very easy and comfortable. Would certainly recommend and use again in the future!
Andrew E.
Andrew E.
21:27 20 Dec 20
The team at SoCal Home Buyers is professional and caring. From my first interaction with Angel, and then Gavino, Cyndi, and finally, Doug, everyone answered questions and responded to emails and calls in a timely fashion. They made the selling process straight forward and effortless. I was concerned about selling to a "home buyer," but every promise was fulfilled from a 30-day escrow, an "as is sale" with no clean-up or haul-away, and finally, an agreed upon price. I will not hesitate to recommend them to family and friends.
Terri G.
Terri G.
19:59 19 Dec 20
Everyone was very knowledgeable and straightforward! No games and no stress!!!!
Christy J.
Christy J.
13:01 15 Aug 20
Dealing with everyone who worked with SoCal Home Buyers was such a pleasure. They walked me through the process from start to finish and were so personable and professional. I would highly recommend them to anyone who wants to sell their home fast and at a fair price. They are also willing to work with you on any concerns or problems that might arise. Great experience!
Lisa E.
Lisa E.
04:09 15 Aug 20
I had excellent experience with this company. Was selling a condo during this Covid time. They were very responsive, timely, and I closed in less than 30 days. I would highly recommend them.
Terry K.
Terry K.
16:43 22 May 20
I contacted SoCal Home Buyers, when my tenant gave me unexpected 30 day notice. We were planning to sell our home but not that quick. We knew that our home needed a lot of work and at this time we didn’t have the money nor the time to repair it for new buyer to take it off our hands and on time. We didn’t want to be stuck with another mortgage. I did my research on an investor and found SoCal Home Buyers which were highly rated. As soon as I contact them, they were friendly and quick. Lisa answered all my questions and stuck with us until the end. They offered to close escrow in 7 days but I needed 30days to at least let my tenant move out. They worked with me and made this process easy. We live in Arizona, so it was nicer that they accommodated us in every aspect to not drive to California to during this process. We appreciate everything they did. I would highly recommend them any day! Thank you!
Dollish B.
Dollish B.
14:44 13 May 20
I had the responsibility to sell my sister's home when she moved into a care facility. The home was a real mess as my sister never had any cleaning or yard work done in the past 10-15 years along with having a lot of junk she had collected. I called SoCal Home Buyers, on December 12, to talk about the sale process and to get an offer from them to buy the property as my sister needed it sold quickly. I spoke with Lisa who gave me the information I needed and set up an appointment for December 14. The employee, Gabino, met me at the home, asked some questions and did a walk through of the home. When he finished he told me that he could give me a written offer in 10 minutes and went to his car to process it. The offer was fair and I asked for a month to finalize the sale, I think it could have been done in 2 weeks. Cyndi, the transaction coordinator, contacted me a few days later and explained the sale and closing process. She was frequently in contact with me regarding the paperwork and closing. The sale closed on time. I am very satisfied with SoCal Home Buyers. They were a pleasure to work with and I would recommend their services to anyone. Karl Gerlach
Karl G.
Karl G.
01:54 28 Jan 20
The transaction was smooth especially considering it was complicated by more than usual paperwork from the county. I was kept appraised of the progress. The SoCal team was responsive and understood my timeframe.
Corrlyn M.
Corrlyn M.
22:46 13 Jan 20
I just want to thank SoCal Home Buyers for being so pleasant, efficient, and kind. From the first email and conversation with Angel, to the meeting with Gavino, the texts and emails from Cyndi, the patience and amazingly fast response time from Jenny in escrow until the final meeting with Doug went so smoothly and everyone was so nice and professional and trust worthy. Everyone was patient and kind during a very stressful time for me. Every step of the way was seem less. I had very little time to sell my Mom’s home after she passed away and the whole crew made the experience pleasant when I was a ball of nerves. Thank you so much and I would definitely recommend your company and services to my family and friends.
Elisa C.
Elisa C.
02:21 03 Jan 20
Doug and his team at SoCal Home Buyers were beyond fantastic. We were selling from out of state, and they made everything extremely easy. They were always there with ready answers and solutions for any issues that arose. It was the smoothest selling process we've ever had, and they really helped us with what could've been a difficult transaction. We highly recommend them.
Brian D.
Brian D.
18:03 02 Dec 19
Great people very fast payment would use again.
Ali Z.
Ali Z.
10:44 08 Oct 19
The team at SoCal Home buyers are ethical, kind and professional people. I was going through a difficult situation while trying to sell my parents house. The team treated me with dignity, and respect and communicated with me at least once per week. The escrow company walked me through the process and answered all questions. Working with SoCal and the escrow company was very easy, during a difficult situation. Thank you SoCal Home Buyers!
Bridget T.
Bridget T.
22:42 26 Sep 19
This organization is run by a wonderful group of people who are easy to work with and have excellent communication skills. Looking forward to working with you again in the near future!
Steve D.
Steve D.
16:51 16 Aug 19
The team members at So Cal Home Buyers were friendly, courteous, and very professional. I was very hesitant to sell my home, but felt very comfortable with this company’s honesty and business ethics. The team members made the process of selling my home comfortable to fit my needs and timeline. I would strongly encourage anyone looking to sell their home to contact So Cal Home Buyers first before signing a contract with any other agency.
Barbara J.
Barbara J.
20:49 09 Jul 19
At one of the most stressful moments in my life, I was quite fortunate to have SoCal Home Buyers by my side. The family owned business was understanding, ethical, and professional in handling the sale of my parent’s home. Doug and his lovely wife offered support in all aspects including providing an excellent escrow company which always answered my quite numerous questions. I feel very blessed to have had SoCal by my side!
Michele G.
Michele G.
03:28 06 Jun 19
Doug & his team provide a great service. Highly recommended!!
16:56 07 Apr 19
SoCal Homebuyers are great! They were professional and friendly to work with on a complicated property. The staff is excellent. Especially Danielle Lane, shes knowledgeable and patiently explained every detail in the process. Thank you SoCal Homebuyers, from the beginning to the end you were excellent.
mike E.
mike E.
19:03 28 Nov 18
I will definitely refer my clients to them!
Rasheena M.
Rasheena M.
17:40 19 Jan 16