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Selling a House in California by Owner in Today’s Market

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california home with white fence and blue window

According to CNBC’s annual America’s Top States for Business study, California is the second most expensive state to live in after Hawaii. In California, you’ll find that the taxes are high, the housing is expensive, car insurance is pricey, and regular goods cost more than in other states.

For this reason and others, the population of the nation’s most populous state is declining for the first time since it was founded in 1850.

If you’re considering selling a house in California in order to get out of dodge or simply to relocate to a better property for your family, there are a number of things you’ll want to take into account.

Let’s take a look at what you should know about selling your Golden State home.

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What Is the Best Time to Sell a House in Southern California and California Overall?

One of the most important decisions you’ll make when selling a house in California is choosing when to list. You can sell your home faster and for more money when you get the timing right.

The best month to list your home differs depending on which southern California city your property is in. For example, the best time to list your house in San Diego is between April 1 and 15. For San Francisco, the ideal timeframe is between April 16 and 30.

If you’re selling a home in Riverside, California, you’ll want to aim to list it between May 1 and 15. If the home you’re selling is in Los Angeles, the ideal timeframe is between May 16 and 31.

In general, March-June are the biggest months for selling in 85% of California markets.

When it’s time to sell your home, you’ll want to check out our definitive guide to selling a house.

Legal Requirements When Selling a House in California

California is considered the most heavily regulated state in the nation. This makes it a complicated place to do business including selling a home. To give you a sense of the types of regulatory restrictions you’ll be facing when you list your California home, let’s look at a sample of tasks and addendums you’ll be required to take care of.

Filling Out Your Disclosure Form

Sellers have to fill out any defects or “material facts” that could pose a risk to the safety or health of the buyer or could negatively impact the value of the home.

This is something that you have to fill out on your own as a seller. However, your agent can help a bit in terms of phrasing and can help answer questions you have.

Sharing Natural Hazard Risks

There are a number of natural hazard concerns in California, and sellers are required to provide a Natural Hazard Disclosure Statement to buyers within one week of accepting an offer so long as the home is in one of the following areas:

  • A “high fire hazard severity zone”
  • An area of potential flooding after the failure of a dam
  • A flood hazard zone
  • An earthquake fault zone
  • A wildland fire area
  • A seismic hazard zone

Disclosures are also required to include whether there is a farm, airport, abandoned well, ranch, gas pipeline, or mining operating in the near vicinity.

Death Disclosures

If someone has passed away on the property in the last three years, you’ll need to disclose this, too. This is true regardless of the cause of death.

Transfer Taxes

You’ll have to pay a real estate transfer fee in California when you sell your home. There is a tax at the county level and also some municipalities also have a transfer tax.

Alert Buyers About Wire Fraud and Other Safety Issues

California also requires disclosures that have to do with safety and privacy issues. These include:

  • Information about the registered sex offender database and Megan’s Law
  • Disclosure of any military ordinance within one mile of the home
  • A booklet about the home energy rating program
  • An advisory about the risk of wire fraud when electronically transferring funds
  • Disclosing water-conserving fixtures

It is common for escrow companies to send buyers secure instructions that include passcodes in order to combat wire fraud.

Comply With Municipal Inspections

There are specific municipal inspections that are required before a property sale in some neighborhoods and cities. You’ll want to look into any required inspections in your municipality as you’re getting ready to sell.

Acknowledge That Your Agent Works With Other Clients

It’s also required in California that people must be informed that real estate brokers and agents “may represent more than one buyer or seller.” This includes buyers who might have an interest in the same property. They also need to make sure that buyers and sellers know that they might have several different property listings at one time and that they are going to market all of the listings to interested buyers.

Essentially, this is a law that requires that real estate agents disclose what their job consists of.

What Is the Cost of Selling a House in California?

It can be quite expensive to sell a house in California. Between realtor commissions, repairs, moving fees, closing costs, and more, you might find that your total expenses amount to 8.9% or more of the sale price of your home.

Total out-of-pocket costs for selling a California home are going to vary depending on your situation. The average cost is the above listed 8.9% of the final sale price. This means that if you sell your house for the median home value in the state, which is $836,110, the cost of selling your home will amount to $74,413.

Let’s take a look at some of the common expenses you will be faced with as well as their estimated cost ranges:

  • Sale preparation: $700-$14,300
  • Realtor fees: $20,500 to $47,700
  • Buyer incentives: $7,100 to $21,000
  • Closing costs: $4,000 to $6,700
  • Relocation expenses: $8,600 to $12,200

This brings the grand total up to a range of $40,100 to $87,700. With real estate commissions being the highest cost item in the above list, some people might consider selling their home FSBO. However, there are definitely risks to going that route which we will outline further below.

You can save money on every aspect of this process by selling your home to an iBuyer. While you might end up accepting an offer that is lower than you would get for the home on the open market, you avoid having to pay all of these exorbitant fees while also making the process a lot less stressful.

You can learn more about what iBuying is here.

Taxes on Selling a House in California

There are a lot of different factors that influence what your tax burden will be when you sell your California home. This includes how long you lived in the home, how much the home sold for, and how much profit you’re taking home.

When selling a house, you have to consider both federal taxes and state taxes. In terms of federal taxes, you can usually exclude most or all of the profit you made so long as it was your primary residence. However, if it was a rental property or a second home, then you’ll have to consider capital gains taxes.

That being said, if you made more than $250,000 in gains on the sale of your home then anything beyond that will be subject to capital gains taxes.

As far as state taxes go, there are real estate transfer taxes in California. Who ends up paying this tax is largely negotiable.

However, traditionally there is a standard in both Northern and Southern California. In Northern California, it is normal for the buyer to take care of this tax. In Southern California, it is common for the seller to pay it.

The transfer tax in most of California is $2.25 per every $500 of the property’s sale price. There are also additional city transfer taxes in some places, such as San Francisco, Los Angeles, and Riverside.

How to Sell a House in California By Owner

The median home value in California is $836,110. Considering that the average realtor commission in the state is between 3 and 7%, a huge chunk of your potential profits ends up going to real estate agents and brokers. For this reason, you might end up learning how to sell your house yourself in California.

If you are willing to put in the time and effort to sell your own home, this is a viable option. However, there are a number of risks to sell your California home “for sale by owner” (FSBO).

It typically takes longer for FSBO homes to sell than it does for agent-listed homes. On top of that, FSBO homes sell for less than those that are sold with the help of a real estate agent. When you factor in the fact that you’ll usually still have to cover the commission of the buyer’s agent, this can start looking like a less appealing proposition.

You’ll have a number of responsibilities if you choose to sell your home on your own on the open market. These include:

  • Competitively and accurately pricing your home
  • Getting your home prepared for the market by cleaning, making repairs, and staging your home
  • Marketing your home by taking high-quality photos, writing a listing description, promoting your home, and listing it on a variety of sites
  • Making sure buyers are financially qualified for a home to avoid the deal falling through
  • Negotiating repair concessions, contingencies, the final price, and all of the other aspects of the purchase agreement
  • Properly completing all of the paperwork that is necessary as a part of a California real estate transaction

You can advertise your home in a number of different ways. You can put out a yard sign, post your home on Craigslist and other similar websites, and list your home on FSBO websites. There are also flat-fee MLS listing services you can use so that your home will be listed on your local Multiple Listing Service.

There are other alternatives to listing with an agent, though, if you’re hoping to sell your home in a hassle-free way. If anything, going the FSBO route is likely going to be more stressful than having an agent do the heavy lifting for you.

One increasingly popular option is selling your home to an iBuyer. These are real estate investors who will make a cash offer on your home. Because they will be buying your house as-is, you won’t have to put the time and money into making repairs, cleaning, and staging.

You also don’t have to deal with endless showings and open houses. On top of that, the whole process is way faster than selling your home the traditional way since you don’t have to go through the lengthy process of a buyer getting financing from a lender.

If you’re choosing between hiring a real estate agent and selling to an iBuyer, check out this article.

Are You Selling a House in California?

If you’re selling a house in California but don’t want to deal with realtor commissions, showings, open houses, and the overall headache of the selling process, there’s another path you can take. When you sell your home to an iBuyer, the process is quick, simple, and hassle-free.

Would you rather just sell your house and move on rather than having it take over your life for months or even years? If so, you can get a free home valuation here to learn how much an iBuyer will pay for your home in cash!

Interested in your home’s current market value? Receive a free online home value estimate!

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