The Buying Process & Closing Costs

The eight stages

Strategy conversation, week 1

We talk through your finances, your timeline, and what you want. I map the loan programs and assistance worth pricing. No cost, no credit pull, no commitment.

Pre-approval, week 1 to 2

A lender pulls your credit and reviews income and assets. You get a written pre-approval and, just as important, a real monthly payment number including taxes and insurance. Compare at least two lenders, inquiries inside a short window count as one.

Touring, weeks 2 to 8

The part everyone pictures, and usually the fastest to resolve once your budget is real. Expect to see anywhere from five to twenty-five homes. We also check taxes, Mello-Roos, and HOA details on anything you like, before you fall for it.

Writing the offer

Price is one of roughly eight terms that matter. Closing timeline, contingency periods, deposit size, repair requests, and who pays which costs all shape whether a seller says yes. A well-structured offer regularly beats a higher one.

Opening escrow, days 1 to 3

Offer accepted. Your earnest money deposit, typically 1% to 3% of the purchase price, goes to a neutral escrow company, never to the seller. The clock on every contingency starts now.

Inspections and appraisal, days 3 to 21

You pay for a home inspection ($400–$700) and usually a termite inspection. Your lender orders the appraisal ($600–$900). This is your window to negotiate repairs or credits, or to walk away with your deposit intact.

Loan underwriting, days 7 to 30

The lender verifies everything. Expect requests for documents you have already sent, send them again without complaint, it is faster. Do not change jobs, open credit cards, or make large deposits during this window.

Signing and closing, days 28 to 45

You sign loan documents with a notary, wire your closing funds, and the deed records with the county. Recording is the moment you own it. Keys usually follow the same day.

What escrow actually is

Escrow is a neutral third party that holds the money and the documents so neither side has to trust the other. The escrow officer follows the written instructions in your contract, nothing more. They do not represent you, and they cannot give you advice.

Title insurance is separate and often confused with it. A title company researches the property's ownership history for liens, easements, unpaid taxes, and competing claims, then insures against what it missed. The lender's policy protects the lender; the owner's policy protects you. In Southern California, custom has the seller pay for the owner's policy, one of several local customs that differ from Northern California.

Wire fraud is the real risk in this stage

Criminals monitor real estate transactions and send convincing emails with altered wire instructions just before closing. The money is usually unrecoverable. Always call your escrow officer at a number you already have, never one from the email, and verify wire details by voice before sending anything. No legitimate escrow company will ever email you new instructions at the last minute.

Contingencies: your exits

A contingency is a condition that must be satisfied or you can cancel and keep your deposit. On the standard California purchase agreement the usual defaults are:

Investigation / inspection, 17 days. Your broad right to inspect anything and cancel for any reason you find.
Appraisal, 17 days. Protects you if the home appraises below the purchase price.
Loan, 21 days. Protects you if financing ultimately falls through.

These are negotiable in both directions. In a competitive situation, buyers shorten or waive them to look stronger.

Understand exactly what waiving means

Waiving a contingency does not just weaken your protection, it puts your entire deposit at risk. On a $700,000 purchase with 3% down as earnest money, that is $21,000 you can lose if the deal dies for the reason you waived. Sometimes it is the right call. It should never be a reflex, and you should never make it without understanding the specific number you are gambling.

Your closing costs

Budget 2% to 5% of the purchase price on top of your down payment. These are typical Los Angeles County figures on a $700,000 purchase, your actual numbers will vary by lender, escrow company, and city.

Illustrative buyer costs on a $700,000 purchase. Local customs and lender fees vary; your Loan Estimate is the authoritative document.
Cost	Typical range	Notes
Loan origination	$0–$7,000	0–1% of the loan; negotiable
Appraisal	$600–$900	Often paid upfront, not at closing
Home inspection	$400–$700	Paid directly, outside escrow
Termite inspection	$100–$250	Standard in California
Escrow fee (your share)	$1,200–$2,200	Commonly split with the seller
Lender's title policy	$500–$1,200	Buyer pays; seller covers the owner's policy in SoCal
Recording fees	$100–$300	County charge
Prepaid interest	Varies	From closing to your first payment
First-year homeowner's insurance	$1,200–$3,500+	Much higher in wildfire-exposed areas
Impound account setup	$2,000–$5,000	2–6 months of taxes and insurance held in advance
Property tax proration	Varies	Your share from closing to the period's end
HOA transfer fees	$200–$800	If applicable

Two costs that are not on this list

The supplemental tax bill arrives months after closing and is usually not covered by your impound account, see how that works. And insurance has become genuinely difficult to place in the high fire-risk areas on our edges, the Santa Clarita Valley foothills, Sylmar, Porter Ranch, Chatsworth, and the hillside pockets above Burbank and Glendale. Two homes on the same street can price very differently. Get a written quote on the specific address before removing your contingencies, not after.

If you're also selling

Sellers in California generally carry the larger share of transaction costs, commonly 6% to 8% of the sale price all in.

Real estate commissions, negotiable, and now negotiated differently than before (see below).
Owner's title insurance policy, seller pays, by Southern California custom.
County documentary transfer tax, $1.10 per $1,000 of value. Several cities add their own, materially higher transfer tax; the City of Los Angeles also applies an additional tax to high-value sales above indexed thresholds, so check the specific city.
Escrow fee, commonly split.
Required disclosures, natural hazard disclosure report, HOA document package.
Negotiated repairs or credits, whatever comes out of the inspection.
Prorated property taxes through the closing date.

On the gain itself, federal rules let many sellers exclude up to $250,000 of profit, or $500,000 for a married couple filing jointly, if they owned and lived in the home for at least two of the previous five years. The conditions are specific, confirm yours with a CPA.

How agent compensation works now

This changed in 2024 and the old assumptions no longer hold.

Previously, sellers almost always paid both agents' commissions through the listing, and buyers generally paid their agent nothing directly. Following the National Association of Realtors settlement, two things are now true:

Buyers sign a written agreement with their agent before touring homes, stating what that agent will be paid.
Seller-paid buyer-agent compensation is negotiable and not guaranteed. Many sellers still offer it, because it widens their buyer pool. But it is a negotiation now, not a default, and where a seller offers less than your agreement provides, the gap can land on you.

I will put my compensation in writing before we tour anything, in plain numbers, and tell you honestly how it is typically handled in your price range and area. Anyone who is vague about this is not someone to work with.

Where deals actually fall apart

Almost never over price. Nearly always over one of these:

Changing your financial picture mid-escrow. A new car loan, a new credit card, a job change, or a large unexplained deposit can re-trigger underwriting and kill the loan days before closing. Freeze everything until you have keys.
A low appraisal. If the home appraises below the contract price, the lender lends on the lower figure. You cover the difference, renegotiate, or cancel.
Insurance that cannot be placed. Increasingly common in high fire-risk areas, and it stops a loan outright.
Missed contingency deadlines. In California these do not expire on their own, but miss your window and you can lose leverage you were counting on.
Underestimating the monthly payment. A buyer who budgeted from principal and interest alone, then met taxes, insurance, HOA, and Mello-Roos, sometimes walks away late. Better to see the full number on day one.

Common questions

How much money do I actually need to buy?

Down payment plus 2–5% in closing costs. On a $750,000 home with a 3.5% FHA down payment, that is around $26,250 down plus roughly $15,000–$37,500 in costs. Assistance programs can cover a meaningful share of both, and in some cases nearly all of it. See first-time buyer programs.

How long does the whole thing take?

Typically 60 to 90 days from serious start to keys: one to two weeks for pre-approval, two to eight weeks of touring, then 30 to 45 days in escrow. Cash purchases can close in seven to fourteen days. Assistance programs add time, which is why we start them early.

What credit score do I need?

FHA starts at 580 with 3.5% down, and 500–579 with 10% down. Conventional generally starts at 620. But pricing improves at 680, 720, and 740, so if you are at 670, spending two months getting to 680 can be worth more than anything else you do. Lenders use the middle of your three bureau scores.

Is my earnest money deposit at risk?

While your contingencies are in place, no, cancel properly within those windows and it comes back. Once you have removed contingencies and then back out, the seller can generally claim it. That is precisely why waiving contingencies is a real financial decision, not a formality.

Should I wait for interest rates to drop?

Nobody can tell you where rates are going, and anyone who claims otherwise is guessing. What is true: lower rates usually bring more buyers back and push prices up, so waiting is not a one-sided bet. The question worth asking is not "are rates good?" but "does this payment work for my life, and can I refinance later if they fall?"

Can I buy while self-employed?

Yes. It takes more documentation, and a bank statement loan may fit better than a conventional one if you write off heavily. The highest-leverage move is planning two tax years ahead with your CPA and loan officer together, see self-employed options.

Do I need a 20% down payment?

No. 20% avoids mortgage insurance; it is not required to buy. Many buyers close with 3% to 3.5%, and VA and USDA borrowers with nothing down. Waiting years to reach 20% in a rising market frequently costs more than the mortgage insurance would have.

What if the inspection finds problems?

Every house has findings. that is normal and not a reason to panic. You can ask the seller to repair items, request a credit instead, renegotiate the price, or cancel within your contingency window. What matters is separating cosmetic issues from the expensive categories: foundation, roof, sewer line, electrical panel, and anything structural.

I'm 55+ and want to downsize. Anything special?

Yes, and it can be worth thousands a year. Proposition 19 may let you carry your current assessed value to your new home anywhere in California, up to three times, even if the new home costs more. The timing and order of your sale and purchase affect the result, so this is worth planning before you list. See how the transfer works.

From first conversation to keys in hand