The cost of selling is one of the first things owners in default want to understand, and for good reason. If most of what a sale brings in goes toward fees, commissions, and repairs, it changes the math on whether selling is even worth it compared to other options. The honest answer is that costs vary depending on the property, the sale price, and which selling path is chosen, but the categories themselves are predictable and worth understanding before you decide anything.
This page walks through every cost category involved in a typical Los Angeles sale, what’s different about a property in default Los Angeles, and how the numbers compare between a traditional listing and a direct sale.
Quick answer: Selling costs generally fall into five categories: paying off what’s owed on the loan (including any default-related fees), real estate commissions if an agent is involved, closing and title costs, transfer taxes, and repair or preparation costs if the property isn’t sold as-is. A traditional listing typically carries more of these costs but may bring a higher sale price with enough time. A direct sale usually removes commissions and repair costs, generally trading a lower price for lower expenses and a faster, more certain closing.
What You Owe on the Loan Comes First
Before any selling costs are considered, the loan balance and any default-related charges get paid from the sale proceeds through escrow. This typically includes:
- The principal balance remaining on the mortgage
- Accrued interest
- Any missed payments and late fees added during the default period
- Foreclosure-related fees the servicer has charged, such as trustee or attorney fees tied to the recorded Notice of Default
- Any second mortgage, HELOC, or other lien against the property
This isn’t a “selling cost” in the traditional sense, but it’s the first number that determines how much is left to cover everything else. If the property is worth less than what’s owed across all liens, a short sale, which requires the lender’s approval to accept less than the full payoff, may be part of the conversation, and that typically adds both time and paperwork to the transaction.
Real Estate Commissions
Commission structures changed nationally in 2024 following a legal settlement involving the National Association of Realtors. As of that change:
- Buyer-agent compensation can no longer be advertised through the MLS
- A seller is only automatically responsible for their own listing agent’s fee, not the buyer’s agent’s fee
- Many sellers still choose to offer buyer-agent compensation as part of their pricing strategy, since it can affect how many buyers’ agents show the property, but it’s a negotiated decision rather than an automatic requirement
- All commission rates are negotiable and not set by law or any industry standard
In practice, total commissions on a traditional California sale commonly land somewhere in the range of 4.5% to 6% of the sale price when a seller chooses to cover both sides, though this varies by agent, brokerage, and negotiation. A direct sale to a buyer typically involves no real estate commission at all, since there’s no listing agent or buyer’s agent commission built into the transaction.
Escrow, Title, and Closing Costs
These cover the administrative and legal side of the transaction:
- Title insurance, which protects the buyer (and often the lender) against title defects. In Southern California, it’s common, though not universal, for the seller to pay for the owner’s title policy.
- Escrow fees, split between buyer and seller according to local custom, covering the neutral third party that handles funds and documents.
- Recording fees, charged by the county to record the new deed and any releases of the old loan.
- Notary and document preparation fees.
- Natural Hazard Disclosure report fees, typically a modest flat fee paid to a third-party disclosure company.
None of these are usually large individually, but together they typically add up to a noticeable percentage of the sale price. An escrow officer or title company can provide an exact estimate once a sale price is known.
Transfer Taxes in Los Angeles
Every property sale in California triggers a documentary transfer tax, and Los Angeles has an additional layer worth understanding:
- Los Angeles County documentary transfer tax: $1.10 per $1,000 of the sale price (0.11%), which applies countywide.
- City of Los Angeles real property transfer tax: an additional $4.50 per $1,000 (0.45%) for properties within city limits, bringing the combined city-and-county rate to about 0.56%.
- Measure ULA (“mansion tax”), an added city tax that applies only to sales within Los Angeles city limits above a set price threshold. The thresholds adjust annually; for transactions closing after June 30, 2026, the added tax applies at 4% on the portion of sales above roughly $5.4 million and 5.5% above roughly $10.9 million. This affects a small share of sales overall and rarely applies to a typical single-family home in default, though it’s relevant for higher-value or multi-unit properties.
If the property is outside Los Angeles city limits, only the county tax typically applies, and Measure ULA doesn’t apply at all. Which cities and unincorporated areas fall under Measure ULA depends on city boundaries, not county lines, so it’s worth confirming a property’s exact jurisdiction before assuming either way.
Repairs and Preparation Costs
This is where selling paths diverge the most:
- A traditional retail listing often benefits from cosmetic repairs, cleaning, and staging, which cost money upfront but can support a higher sale price if there’s time to complete them.
- An as-is listing skips major repairs but may still involve minor cleanup, and buyers will typically negotiate credits for anything significant found during inspection.
- A direct sale generally requires no repairs, cleaning, or staging at all, with the offer reflecting the property’s current condition instead.
If you’re deciding whether repairs are worth the cost, it’s worth comparing the estimated repair expense against the realistic increase in sale price, factoring in the extra time a repaired listing takes. For a fuller breakdown of that decision, see our guide on selling a property in default without making repairs.
Property Taxes and Prorations
Property taxes are typically prorated at closing, meaning the seller pays their share of the current tax year up to the closing date, and the buyer takes over from there. If property taxes are also behind, the delinquent amount is generally paid off through escrow from the sale proceeds, similar to the mortgage payoff.
HOA Fees, If Applicable
If the property is part of a homeowners association, expect:
- A document preparation fee for the CC&Rs, budget, and related HOA paperwork
- Any unpaid HOA assessments, paid off through escrow
- A transfer fee charged by the HOA or its management company
These are usually a few hundred dollars combined, though they vary by association.
Possible Tax Consequences
Beyond the transaction costs themselves, a sale, particularly one involving debt that’s forgiven or reduced, can raise tax questions:
- If any portion of the loan is forgiven as part of a short sale, the lender may issue a Form 1099 reflecting that amount, which can have tax implications depending on your circumstances.
- Capital gains tax may apply if the sale price exceeds your cost basis, though many owners qualify for an exclusion on gains from selling a primary residence, subject to ownership and use requirements.
These questions depend heavily on your specific loan, ownership history, and tax situation. A tax professional can walk through what applies to you specifically. This page isn’t a substitute for that conversation.
Comparing the Cost of Each Selling Path
| Cost Category | Traditional Listing | As-Is Listing | Direct Sale |
|---|---|---|---|
| Real estate commission | Often included, negotiated with your agent | Often included, negotiated with your agent | Typically none |
| Repairs and staging | Often recommended | Usually skipped, buyer may negotiate credits | Not required |
| Closing and title costs | Standard | Standard | Standard, though a direct buyer sometimes covers more of these |
| Transfer taxes | Applies | Applies | Applies |
| Time to close | Often 60 to 90+ days total | Often 45 to 75 days total | Often 1 to 4 weeks |
| Typical price outcome | Highest, with enough time | Moderate, condition-adjusted | Lowest, reflecting speed and certainty |
The “cheapest” option on paper isn’t always the one that nets the most, and the one that nets the most on paper isn’t always realistic if a trustee’s sale date is close. The right comparison is the actual net proceeds after every cost, measured against the time actually available.
The Cost of Not Selling
It’s worth weighing selling costs against what continuing in default costs. Interest keeps accruing, missed payments and fees continue to build, and if the property reaches a trustee’s sale, any remaining equity is at real risk of being reduced or lost entirely. Selling before that point, even after accounting for commissions, repairs, and closing costs, is often the more direct way to preserve whatever equity remains, compared to waiting and hoping the situation resolves on its own.
How EZ Casa Buyer Can Help
If you want a clear, specific picture of what selling would actually cost and net for your property, we’re glad to walk through it honestly, including what a direct sale would look like compared to listing traditionally.
- Tell us about the property and where things stand with the loan.
- We review the numbers, including the payoff amount and any liens.
- We prepare an offer that reflects the property’s condition, with no commissions or hidden fees subtracted afterward.
- You review the offer and the numbers with no obligation.
- If you move forward, closing costs are laid out clearly before you sign anything.
If a traditional or as-is listing would actually net you more given your timeline, we’ll tell you that directly instead of steering you toward a direct sale regardless of fit.
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Frequently Asked Questions
What’s the biggest cost when selling a property in default? Usually the loan payoff itself, including any accrued interest, missed payments, and default-related fees, since that comes off the top before any other cost is considered.
Do I have to pay a real estate commission if I sell directly to a buyer? Generally, no. A direct sale to a buyer typically doesn’t involve a listing agent or a buyer’s agent commission.
How much is the transfer tax in Los Angeles? The Los Angeles County documentary transfer tax is $1.10 per $1,000 of the sale price. Properties within Los Angeles city limits also pay an additional city transfer tax of $4.50 per $1,000, for a combined rate of about 0.56%. A separate, higher tax under Measure ULA applies only to sales above roughly $5.4 million within the city.
Do I have to make repairs before selling? No. Repairs aren’t legally required to sell a property, though a traditional retail buyer may expect them or negotiate a lower price without them.
Will I owe taxes on the sale? Possibly, depending on your cost basis, ownership history, and whether any debt is forgiven as part of the sale. A tax professional can confirm what applies to your specific situation.
Is a direct sale actually cheaper once everything is accounted for? It typically removes commissions and repair costs, though the offer price itself is usually lower than what a fully marketed retail sale might bring with enough time. Which option nets more depends on the property’s condition and how much time is realistically available.
What if my property is worth less than what I owe? This is a short sale situation, which requires the lender’s approval to accept less than the full payoff. It’s still possible, but it typically adds time and additional paperwork to the transaction.
Are there costs to selling that I might not think of? HOA transfer fees, prorated property taxes, and possible tax consequences from forgiven debt are the ones owners most often overlook. A closing statement from escrow will itemize everything before you sign.
Where to Go From Here
Understanding what a sale actually costs is the clearest way to compare it honestly against continuing in default or exploring other options. If you want real numbers for your specific property rather than general ranges, we’re glad to put together a clear, no-obligation breakdown.
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