Average closing costs in California run about 2% to 5% of the loan amount for buyers and roughly 5% to 8% of the sale price for sellers. With the California Association of REALTORS® forecasting a 2026 median home price of $905,000, that translates to roughly $15,000 to $40,000 for buyers and $45,000 to $72,000 for sellers.1California Association of REALTORS®. C.A.R. Releases Its 2026 California Housing Market Forecast Every fee is negotiable, and regional customs in Northern and Southern California change who pays what by default.
What Buyers Pay at Closing
Buyer closing costs are calculated against the mortgage amount, not the full purchase price.2Fannie Mae. Closing Costs Calculator On a $905,000 home with 20% down, the loan would be about $724,000, putting closing costs somewhere between roughly $14,500 and $36,200. A smaller down payment means a larger loan and proportionally larger closing costs.
The common buyer charges in California:
- Loan origination fee: usually 0.5% to 1% of the loan amount.
- Appraisal: about $400 to $700 for the lender-required valuation.
- Title insurance (lender’s policy): generally 0.5% to 1% of the sale price, though who pays which policy varies by region.
- Escrow fee: typically $1,000 to $2,500, or about 0.2% to 0.5% of the purchase price.
- Home inspection: not required by the lender but strongly recommended, roughly $500 to $700.
- Natural hazard disclosure report: a few hundred dollars for the report California law requires on earthquake fault, flood, and high fire severity zones.3California Legislative Information. California Code CIV 1103.2
- Recording fees: $75 to $150 for the county to record the new deed.
- Credit report: $30 to $50.
FHA, VA, and USDA loans change the picture. FHA requires an upfront mortgage insurance premium; VA charges a funding fee that can be rolled into the loan.
Prepaid Items That Add to Cash Needed
Beyond the service fees, buyers fund several prepaid items at the closing table. These are not fees, they are advance payments on recurring costs the lender needs set up.
- Prepaid interest from your closing date through the end of the month. Close near month-end and this shrinks.
- Homeowner’s insurance: lenders generally require the first year’s premium paid up front. In California’s high-fire-risk areas, the premium can be substantial.
- Property tax proration between buyer and seller based on the closing date. If taxes have been prepaid for a period that extends past closing, you reimburse the seller; if they haven’t been paid, you get a credit.
- Escrow reserves: a cushion the lender collects to cover upcoming tax and insurance payments.
Prepaids often add $3,000 to $8,000 or more to the cash a buyer brings. Budget for both the fees and the prepaids.
What Sellers Pay at Closing
Sellers pay more than buyers, largely because of agent commissions. Historically, sellers paid a combined 5% to 6% commission covering both agents. That default shifted after the August 2024 National Association of Realtors settlement, which bars listing agents from advertising buyer-agent compensation through the Multiple Listing Service.4National Association of REALTORS®. NAR Reminds Members and Consumers of Real Estate Practice Changes Sellers can still offer to pay the buyer’s agent, but it is no longer automatic or standardized.
Other seller-side charges typically include:
- County documentary transfer tax (see below).
- City transfer tax, where the city imposes one.
- Owner’s title insurance policy, usually paid by the seller in Southern California and by the buyer in Northern California.
- Escrow fees, typically split in Southern California and often paid by the buyer in Northern California.
- HOA transfer and document fees, from a few hundred dollars to over $1,000.
- Payoff of the existing mortgage, including accrued interest, from the sale proceeds.
On a $905,000 sale where the seller pays a 2.5% listing commission and offers 2.5% to the buyer’s agent, commissions alone come to about $45,250. Add transfer taxes, title, escrow, and the rest, and total seller costs can easily reach $55,000 to $70,000 or more.
Documentary and City Transfer Taxes
California’s county-level documentary transfer tax is $0.55 per $500 of value, which works out to $1.10 per $1,000.5California Legislative Information. California Code RTC 11911 On a $905,000 sale, that is roughly $995, collected when the deed is recorded. The tax applies to the sale price minus any liens that remain on the property.
Many California cities layer their own transfer tax on top, and in expensive markets these dwarf the county charge:
- San Francisco: tiered rates from $5.00 per $1,000 under $250,000 up to $60.00 per $1,000 at $25 million and above.
- Oakland: tiered from $10.00 per $1,000 under $300,000 up to $25.00 per $1,000 above $5 million.
- Los Angeles: a base city rate of $4.50 per $1,000, plus the Measure ULA surcharge of 4% on sales over $5,300,000 and 5.5% on sales at or above $10,600,000.6City of Los Angeles Department of Finance. Real Property Transfer Tax and Measure ULA FAQ
Not every California city charges a transfer tax, and rates change. Check with the local recorder’s office or your escrow company before listing.
Who Pays What: Northern vs. Southern California
No state law dictates which party covers which closing cost. Longstanding regional customs set the starting point.
In many Northern California counties, the buyer pays for title insurance and the full escrow fee. In Southern California, the seller more commonly pays for the owner’s title policy while the buyer pays the lender’s policy, and escrow fees are split evenly. These customs vary by county, so the purchase contract should spell out who pays what.
Every item is negotiable. A buyer can ask the seller for a credit covering some or all of the buyer’s closing costs. That request succeeds more often in a slow market and almost never in a competitive one. In a soft market, sellers sometimes offer credits proactively to attract offers.
Taxes Sellers Should Plan For
California Real Estate Withholding
California withholds 3⅓% of the gross sales price on real property sales.7Cornell Law School. California Code of Regulations Title 18 Section 18662-3 – Real Estate Withholding On a $905,000 sale, that is roughly $30,167 withheld from your proceeds and sent to the Franchise Tax Board. You can elect an alternative calculation on FTB Form 593 based on the actual gain you recognize, which may lower the withheld amount considerably if your profit is small or fully excluded. Several exemptions exist, including a principal residence sold for $733,333 or less. Review the form or consult a tax professional before closing.
Federal Capital Gains Exclusion
If you sell your primary residence after owning and living in it for at least two of the previous five years, you can exclude up to $250,000 of gain from federal income tax, or $500,000 for married couples filing jointly.8Office of the Law Revision Counsel. 26 USC 121 Exclusion of Gain From Sale of Principal Residence Given California prices, long-term owners often have gains that exceed the limits, which makes tax planning before you list worthwhile.
A Note for Buyers: Property Taxes Will Reset
Under Proposition 13, the county reassesses a property at fair market value whenever ownership changes.9California State Board of Equalization. Change in Ownership – Frequently Asked Questions If you are buying from a long-time owner, your tax bill will not resemble theirs. The assessed value jumps from their Proposition 13–adjusted base to today’s price, and your monthly carrying cost will reflect the new figure. Factor this into affordability.
How to Lower Your Closing Costs
A few strategies can cut what you bring to the table. Each has a trade-off.
- Negotiate a seller credit as part of the purchase agreement. Works best in slower markets.
- Ask about lender credits. The lender covers some costs in exchange for a higher interest rate. This makes sense if you plan to refinance or sell within a few years.10Consumer Financial Protection Bureau. How Should I Use Lender Credits and Points
- Shop at least three lenders. Origination fees and total costs vary more than advertised rates suggest.
- Choose your own title and escrow companies. California generally allows this, and bundled service charges differ even where title insurance rates are filed with the state.11Cornell Law School. California Code of Regulations Title 10 Section 2355.1 – Statistical Plan and Income Statement General Provisions
- Close near the end of the month. Prepaid interest only runs from your closing date through month-end, so closing on the 28th instead of the 5th saves roughly three weeks of interest.
Protect Your Funds From Wire Fraud
Wire fraud is a serious and growing threat in real estate closings. Criminals impersonate escrow or title staff by email and send fake wiring instructions that route your down payment to an account they control. Recovery after the wire goes out is rare.
Before sending any money, call your escrow officer at the number listed on the escrow company’s official website, not a number pulled from an email, and verify the wiring instructions by voice. Treat any last-minute change to those instructions as a red flag and reconfirm by phone. Use two-factor authentication on your email account and avoid handling transaction details over public Wi-Fi.