How to Calculate Escrow Fees in California: A Complete Guide

Calculating escrow fees in California can sometimes feel so arbitrary. How do you know exactly what you will be paying? What about fees you might be unaware of in the escrow process? With all the unanswered questions, it can seem impossible to budget for this important expense when selling a home.

In this article, we will help knock out all of your questions and get to the bottom of what to expect when dealing with escrow.

What Are Escrow Fees?

Let’s first understand what an escrow company is.

An escrow company is the independent middleman between the seller and the buyer who holds the money, paperwork, or anything of value until all transactions are completed. The service of escrow companies lowers the possibilities of fraud, helps you stay up to date on all the paperwork and transactions, and makes sure the buyer and seller follow through with their contractual agreement.

During the home closing process, once all the paperwork is done and it comes time to submit payment, escrow fees are included as a portion of the closing costs.  The Escrow fee is paid to the escrow company for providing escrow services.

How Much Does Escrow Typically Cost?

Escrow fees depend on two things: the escrow company’s rate and the cost of the estate.

As soon as you know those two prices, you’ve got your escrow fee.

For example, at New Venture Escrow,  the escrow fee includes a flat fee of $350 plus $1.75 per thousand on the total cost of the house property

Let’s say your property price is $500,000.

To calculate the escrow fee, it would be the flat fee of $350 plus $875 (500 times $1.75) which would equal an escrow fee of $1,225.

Who Pays the Escrow Fee?

This is the detail you should genuinely pay attention to.

The party that pays the escrow fee varies case to case. Typically the buyer and seller negotiate who pays the fees and it will be detailed in the purchase agreement. Sometimes the fee is split or one party agrees to pay it all.

For that reason, speak to the seller of the house or your real estate agent to establish this straight away.

But at the same time, some states/counties do specify which party pays.

Escrow Fees In California: Who Pays What

Buying or selling in California is a special case because the county you are in will determine who pays the escrow fee..

Here’s a small guide of who typically pays for escrow fees in California counties:

Buyer Seller Both 50%
Alameda San Mateo Santa Cruz
Contra Costa Santa Clara San Diego
San Francisco Sacramento Santa Barbara
Lake San Benito El Dorado
Marin Los Angeles
Mendocino Orange
Napa Fresno

*These are subject to change*

What are the Fees Associated with Escrow in California?

Now that you know what an escrow fee is and how to calculate it, you probably want to know what exactly you are paying for, am I right?

Once the offer on the table is accepted and the agreement is signed, you are now in escrow.

Afterwards, the buyer must deposit typically 1-2% of selling price to demonstrate their commitment. Along with that, the seller will get escrow instructions, commission instructions, tax forms, and other documents to look over and sign to get back to the escrow company and real estate agents in an efficient time.

The days following the buyer executes inspections and receives information about any issues of the area or house. With any issues discovered the buyers could request for repairs and/or renegotiate to a lower price.

The next part of the process is for the buyer to secure their finances and loans.

Finally, after the inspections and money necessities are settled it’s time for the closing. This is the time that the buyer secures title insurances, sends any final loan documents, and does a final walk through to make sure everything is correct. As soon as the funds are exchanged, the recording of the deed is done, and the buyer and seller sign the verification of property, the closing is complete.

Escrow is a complicated and tedious task that involves a great deal of documents and transactions. Having a trusted escrow company established ensures that your earnest money deposit is safe, covers paperwork together with the recording of the deed, and disburses the exchange of funds and property title once everything is executed as agreed.

Accordingly, the escrow fee that you pay assures all the paperwork, money exchanges, and above all takes the stress away for both parties and gives peace of mind knowing everything is safe and precise.

Here is an overview of our process of escrow with a COVID-19 update:


Other Closing Costs for Sellers in California:

I know what you’re thinking, aren’t there more fees? Yes there are.

Not including escrow fees, the standard closing costs for a seller in California can be broken down into five categories:

  • Real estate commissions
    • The commission for the real estate agent’s services. Commissions can vary, but the average price most seller’s pay is five to six percent of the final purchase price.
  • Title insurance
    • There are two types of title insurance: owner’s policy which protects the buyer from any potential complications & lender’s policy which protects the lending party against problems with the title.
  • Transfer taxes
    • In California, there are county and sometimes city transfer taxes. The tax amount depends on the final purchase price and who pays the tax depends on the sales agreement.
  • Miscellaneous items
    • There might be several miscellaneous fees like notary fees, inspections, etc.

Choosing Which Escrow Company

We know this process might still sound confusing and stressful.  At New Venture Escrow, we can help make the process as smooth as possible with our cutting-edge technology and forward-thinking approach.  Your choice in escrow makes a difference!

Contact us here for an improved home closing experience.

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