After every closing, I ask my clients what surprised them. It’s rarely the price. It’s the money around the price.
A deposit that has to be wired within days. A property tax bill that shows up months after the move. Money held back at closing that the seller was counting on for the next down payment.
None of it is hidden. It’s in the contract, the Loan Estimate, the county’s rules. It just isn’t the number anyone talks about. Here are the five I see catch Peninsula buyers and sellers most often. The full list, in the order it shows up and with worked examples, is on a new page: What buying or selling really costs.
1. The deposit is due in days, not at closing
Under the standard California purchase contract, the initial deposit is usually wired to escrow within three business days of acceptance. On the Peninsula, about 3% of the price is common. On a $2.5 million home, that’s roughly $75,000.
It counts toward your down payment, but it has to be cash you can send this week. If part of your down payment is coming from overseas or sitting in investments, move it early. Lenders usually want to see where the money came from, often with two months of bank statements.
And before you wire anything, call escrow at a number you looked up yourself to confirm the instructions. If an email says the account has changed, stop.
2. The supplemental tax bill arrives after you’ve moved in
When you buy, the county reassesses the home at roughly the price you paid. It then bills the difference for the rest of the tax year, on a separate bill, usually within nine months. It’s due when it’s mailed, and it’s yours to pay directly. Even if your lender pays your regular property tax from an impound account, California’s required notice to buyers says it won’t pay supplemental bills.
A rough example: the seller’s assessed value was $1 million, you pay $2.5 million, and you close in November. At about 1.1%, prorated by the state’s factor for a November purchase, that first bill is around $9,600. Close between January and May, and you’ll usually get two bills, because the second one covers the next full tax year.
3. Earthquake coverage has a deductible most people never price
A standard homeowners policy doesn’t cover earthquake damage. Earthquake insurance is a separate policy. Through the California Earthquake Authority, homes valued over $1 million carry a minimum deductible of 15% of the dwelling coverage. On $1.2 million of coverage, that’s $180,000 before the policy pays.
That isn’t a reason to skip it. It’s a reason to decide with the number in front of you. Get insurance quotes early in escrow, too. Premiums in California have been rising, and some homes are harder to insure.
4. Sellers: the state may hold back 3⅓% at closing
Unless you qualify for an exemption, such as a qualifying sale of your principal residence, escrow generally withholds 3⅓% of the price for California income tax. On a $2.5 million sale, that’s $83,250. It’s a prepayment, credited when you file, not the final tax. But it’s cash you won’t have at closing, which matters if your proceeds are the next down payment.
The federal exclusion on a home sale is up to $250,000 of gain, or $500,000 for a married couple filing jointly. Many long-held Peninsula homes have gained more than that. Talk with a CPA before you list, not after.
5. Transfer tax depends on which side of a city line you’re on
Sales in San Mateo and Santa Clara counties pay a county transfer tax of $1.10 per $1,000 of price, customarily paid by the seller. Three cities on this site add their own: San Mateo at $5.00 per $1,000 ($15.00 above $10 million), Palo Alto at $3.30, and Hillsborough at $0.30. By custom, buyer and seller split the city tax.
On a $2.5 million sale in the city of San Mateo, the city tax is $12,500, so each side’s half is $6,250. The same price in San Carlos: no city transfer tax.
What to set aside
If you’re buying: the deposit, ready to wire. Cash to close from your Loan Estimate, plus a cushion. A separate fund for the supplemental bill. Move-in costs. And a repair reserve; a common rule of thumb is 1%–2% of the home’s value a year, more for older homes.
If you’re selling: a preparation budget, room for a repair credit after inspections, carrying costs if your move and the closing don’t line up, and the tax on any gain above your exclusion.
All of it, with a buyer example and a seller example, is on one page in English and Chinese: What buying or selling really costs.
What I’d do with you
Before you write an offer or sign a listing agreement, I’ll write out a cost and cash timeline with your numbers: what leaves your account and when, what comes out of the proceeds, and what to keep in reserve. Then your lender’s Loan Estimate and escrow’s estimate fill in the exact figures.
If you’re planning a move on the Peninsula, call or text me at (650) 866-9266.
This article is general information, not tax, legal, or lending advice. Rules, rates, and customs change, and the right numbers depend on your loan, your home, and your tax situation. Confirm the details with your lender, escrow officer, or a qualified tax professional before acting.
