Selling a House in California: The Complete Guide

The California real estate market is one of the hottest in the US. According to Redfin, home prices increased by 30.2% year-over-year in June, while the number of homes available for sale dropped by 35.9%. The report also mentions that the median days on market (DOM) is 21 days. Metros with the fastest growing selling price include Newport Beach, Santa Cruz, Yucca Valley, Auburn, Big Bear City, San Marcos, and Santa Barbara.

If you want to learn how to sell your house in California, you are in the right place. In this article, we will discuss the process of selling a house in California, the costs involved, as well as the selling laws you need to be aware of.

Selling a House in California Without a Realtor

FSBO is an option when selling a house in California

When it comes to selling a house in California, you have two options; sell a listing For Sale By Owner (FSBO) or work with a real estate agent. There are no laws in the state of California that require homeowners to sell their property with the assistance of a real estate agent. Often, people work with agents since the process of selling a house in California can be intimidating and overwhelming. In addition, there are many confusing legal requirements that sellers are required to follow.

While a real estate agent can help you navigate the complexities of selling a house, it is possible to sell your property independently. Here are some of the benefits of selling your home without a realtor:

Save money: The greatest advantage is that you save the fee that you would have paid the realtor. In a typical sale, real estate agents are paid a commission of about 6% of the sale price. If your home is sold at $500,000, you will pay a whopping $30,000 as commission. Selling without an agent allows you to save this money
You are more familiar with your house: Since you have lived there, you know more about your house than anyone else. Therefore, you are in a better position to market the property than a realtor. Telling buyers about your experiences and memories in the home will grab their attention and spark their interest
Price flexibility: When selling your house by yourself, you have the freedom to set the price you want. A real estate agent might suggest a price that will make it difficult to find a buyer fast

Here are the steps for selling a house in California without a realtor:

Price your Home

Correct pricing is crucial for FSBO sellers. To get a good idea of your home’s value, look at comparable listings (real estate comps) in your neighborhood. The comps should be similar to your home in terms of size, age of construction, number of bathrooms and bedrooms, and amenities.

Write a Listing Description

Once the price is settled, draft a listing description that will capture the attention of potential buyers. Mention the listing price and highlight any architectural features that make your home unique. Don’t forget to talk about school districts and other amenities in the area.

Take Quality Photos

A photo is worth a thousand words. Your description should be accompanied by great photos showcasing all the spaces in your home. All you need is a good smartphone camera and good lighting to take excellent photos.

Advertise your Listing

Start by placing an FSBO sign in your front yard. Remember to add your phone number so potential buyers can get in touch about property showings and information. You can also advertise your home on Craigslist or on FSBO listing sites like Zillow, Trulia, FSBO.com, or HomeFinder.

Prepare the Paperwork

Once you find a buyer, the closing process begins. When selling a house in California, you will require the following documents:

2 forms of ID
Closing statement
Copy of purchase agreement and other addendums
Bill of sale
Signed Deed
Affidavit of title

In addition, you will need to submit the following disclosure forms:

California transfer disclosure statement
Megan’s law disclosure
Natural hazard disclosure statement/report
Statewide buyer and seller advisory

Most of these documents are legally binding agreements. Any mistakes can sabotage your sale and cost you dearly in fees.

California Laws for Selling a Home

There are several legal requirements for selling a house in California. Following the proper procedures will ensure a smooth transaction and help you avoid legal liability later.

Here are some of the laws you need to be aware of:

Completing a Transfer Disclosure Statement

Under Civil Code 1102, California sellers are required to disclose anything about their home that would influence the buyer’s decision to purchase it. The disclosure is done in a Transfer Disclosure Statement.

Completing a Hazard Disclosure Statement

Sellers must also complete a hazard disclosure statement where they disclose whether their home is in an earthquake fault zone, in a neighborhood with forest fire risk, or in a flood hazard area. Your local government can provide more details about these classifications.

You can learn more about disclosure laws in California here.

Using an Escrow Agent

Sellers and buyers of California homes must use escrow agents to facilitate the sale. The seller deposits the title deed in escrow, and the buyer deposits money in escrow. The escrow will then hold these items until all the conditions of the transaction are satisfied. When this happens, the escrow agent will transfer the deed to the buyer and the funds to the seller.

Paying Transfer Tax

One of the taxes on selling a house in California is the transfer tax. When property moves from a seller to a buyer, some paperwork needs to be filed with your local government to show that ownership has changed hands. Transfer tax is imposed when this document is recorded. You can negotiate with the buyer on who pays the tax. For more information about local laws about transfer tax, consult your escrow agent or real estate broker.

Cost of Selling a House in California

Selling a house in California can be very costly. Between closing costs, realtor commissions, repairs, and moving costs, the total expenses can eat up as much as 10% of the investment property sale price.

Here are some of the most common costs for California home sellers:

Preparing a home for sale: Unless you are thinking of selling a house as-is in California, you will have to incur some expenses to get the property market-ready. This includes costs like landscaping, home staging, painting, kitchen remodeling, and cleaning. Often, this could range from 1% to 2%
Realtor commission fees: As mentioned earlier, working with a realtor means paying commission fees. In California, the average commission is 5-6% of the property’s final selling price
Negotiations and buyer incentives: At times, you might have to make concessions or offer incentives to keep the potential buyer motivated. Making a concession means that you have agreed to pay specific costs on the buyer’s behalf. This includes repair credits, specific closing costs, inspection fees, etc. Usually, seller concessions range from 1.5% to 2%
Closing costs: Closing costs is a general term for the expenses and fees paid at the end of a real estate transaction. This includes title insurance, loan payoff, recording fee, attorney fee, and outstanding bills. Closing costs are typically in the 1-3% range.

Conclusion

Selling a house in California is not very difficult. Even if you’ve never sold property before, you can learn the ropes quickly and make a successful sale. Decide if you want to go it alone or work with a realtor. Get familiar with the cost of selling a home, the laws involved and the taxes required. You can also speed up the selling process by listing your property on the Mashvisor Property Marketplace.

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