Are you relocating to California(Foreign or Domestic)? Need to Know This.
I have been contemplating writing this post for some time now. Recently I had three different clients, who were considering relocating to the greater Los Angeles area from three different parts of the world and the concerns and questions were similar, hence this post.
Some of the questions seem basic to us, but not to someone who is not accustomed to buying Real Estate in California.
- Who pays the commission? Is it the buyer or the seller? In California, customarily the Seller pays. It is negotiated by the Seller and the Seller’s Brokerage. This is shared by the Buyer’s Brokerage generally evenly. They in turn pay the Seller’s Agent and the Buyer’s Agent from these proceeds, depending what their arrangement is, anywhere from 50% to 95%.This is an important question since if you are a Buyer in Germany, you would pay 5% to the Seller’s Brokerage vs. in California you would not pay anything to the Buyer’s Broker nor to the Seller’s Broker. Visualize this on a $1million sale that is a $50,000 savings to a buyer.
- What are the Property Tax rates? Well this is a difficult one to answer. It depends which city you end up purchasing the Home in. Generally the Property Taxes are determined by the local municipalities. A good planning number is about 1% -1.3% of the Purchase Price.
- In order to get financing how much do we have to put as down payment? This is a very difficult question to answer in our current financial volatility with the Lenders. As of this past week, (Lenders have tightened up their lending to Foreign Nationals) you need to be able to put 50% down. So the same $1million dollar investment you need $500,000 you must be able to show to the Lender, that you will be generating income here in the USA to pay the Loan. To be able to acquire this Loan you would be paying about 1.5%-2% of the Purchase Price to the Lender.
- What other cost are involved with buying in California? Plan on paying for a Home Inspector (generally depends on the size of the home any where from$400-$800); Then you could be paying for a Geologist if the home is on a hillside (strongly recommended by this Realtor, another $700-$1000) If the home has Fireplace (another $200-$300 for an inspector) If the home has a Septic Tank or the Sewer is connected (either way I would recommend another inspection $200-$300). These are minor costs but add up. Another cost is the Escrow Company’s cost to navigate the paper work between buyer and seller and dealing with the Title Company and ultimately recording the Deed with the City and County where you bought the property. All these could add up to for round figures another .5% of the Purchase Price.
In conclusion if you plan for all this, then you will not be unpleasantly surprised when they are presented. So if you are Relocating from a Different State other then California, the good news is you just need to plan on 20% down payment.
If you are a consumer living inside or outside of California and are considering buying or selling investment real estate, vacation homes, or beach properties in Southern California, Beverly Hills, Marina Del Rey, Venice or Malibu, feel free to give me a call at 310.486.1002(USA) or email me at EndreBarath@themls.com or visit one of my websites http://www.endrebarath.com