Total cost of sale on an LA multifamily transaction typically runs 4% to 8% of sale price for sales outside LA City, and can run materially higher on LA City sales above the Measure ULA threshold. The primary components are broker commission, title and escrow fees, documentary transfer taxes, prorations, and — on LA City sales above the Measure ULA threshold — an additional transfer tax that can substantially shift the cost stack. Accurate pre-listing cost modeling is one of the most under-done parts of the sale process for most LA sellers.
Broker commission. Customarily paid by the seller. Rates are negotiable and specific to the engagement. This is typically the largest single line item in the cost stack.
Title and escrow fees. Customarily split, with the seller paying owner's title insurance and the buyer paying lender's title insurance. Escrow fees are typically split 50/50. Total costs vary with sale price.
Documentary transfer tax. LA County imposes a transfer tax on all real estate transactions. Cities within the county often impose additional transfer taxes. Rates are published and stable. Customarily split by convention, though allocation is negotiable.
Measure ULA (LA City transactions above the threshold). LA City imposes Measure ULA as an additional transfer tax on sales within city limits above a specified dollar threshold. The ordinance has been revised since its original 2023 enactment, and current thresholds and rates should be verified before any pre-listing cost model is finalized. On sales above the threshold, this is a material line item.
Prorations. Property taxes, rents collected, security deposits, utility bills, and similar items are prorated to the close date. Individually small, collectively meaningful.
Miscellaneous closing costs. Recording fees, wire fees, courier costs, documentary preparation. Small in aggregate.
Pre-listing preparation costs. Any capital work, documentation preparation, or compliance curative the seller elects to do before listing. Discretionary — the right spend depends on specific building conditions.
Measure ULA. Sellers who model closing costs against historical transaction cost norms (pre-2023) sometimes miss Measure ULA entirely. On large LA City sales, this is a mistake worth six figures. Any LA City sale above the Measure ULA threshold should model the tax explicitly.
Prop 13 basis reassessment consequence to the buyer. Not a seller's cost, but it affects the offer. The buyer acquires at market value and absorbs a property tax reassessment on top of their purchase. The buyer prices that reassessment into their offer. Sellers who do not understand this receive offers they interpret as "low" but that correctly reflect the buyer's post-reassessment economics.
Depreciation recapture. Not a closing cost but a substantial income-statement item for long-held buildings. Sellers often model capital gains tax but forget depreciation recapture, which is taxed at a higher federal rate than long-term capital gains.
California state tax. California taxes capital gains at ordinary income rates — currently among the highest state rates in the country. On a substantial gain, California state tax can be one of the larger tax line items.
On a small-building LA multifamily sale (sub-$5M, outside LA City or below the Measure ULA threshold), total sale costs typically run 4% to 6% of sale price. On a mid-size LA multifamily sale (outside LA City or below the Measure ULA threshold), total sale costs typically run 4% to 5% of sale price. On an LA City sale above the Measure ULA threshold, total sale costs including Measure ULA can run materially higher — the specific percentage depends on the revised thresholds and rates currently in effect. These are rough ranges. Actual percentages vary with specific transaction structure, negotiation, and building-specific factors.
Before signing a listing agreement, build a simple model:
Expected sale price. Subtract broker commission, title/escrow, transfer taxes (including Measure ULA if applicable), and prorations. Subtract anticipated federal and California taxes on the gain. The remainder is realistic net proceeds. Sellers who do this exercise before committing to a sale avoid the common mistake of modeling only headline price and being surprised by net. Sellers who skip the exercise often end up disappointed in net even when the headline price met expectations.
Request a free evaluation — including a full closing cost and net proceeds model specific to your building's size, location, and basis position →
What is Measure ULA and when does it apply?
Measure ULA is an LA City transfer tax that applies to real estate sales within the city above a specified threshold. It was originally enacted effective April 2023 with thresholds that have since been revised. Specific thresholds and rates in effect at the time of sale should be verified.
Can I negotiate the broker commission?
Yes — commission structure is negotiated as part of the listing engagement. Standard LA multifamily commission structures vary with deal size and complexity.
How do I estimate my tax bill on the sale?
Federal capital gains, depreciation recapture, California state capital gains, and (for long-held buildings) Medicare surtax apply. A CPA can produce a specific estimate based on your basis, holding period, and current income situation.
Michael Sterman is Senior Managing Director Investments at Marcus & Millichap.
Thinking about selling? Get a no-obligation evaluation on your building.
Request Free Evaluation →