Closing costs are the fees and expenses paid to finalize a real estate transaction. They include lender charges, title services, government recording fees, inspections, appraisals, and prepaid items like property taxes and insurance. Closing costs typically range from 2% to 5% of the purchase price for financed deals and 1% to 2% for cash purchases.
Investors who underestimate closing costs destroy their margins before they even own the property. A $200,000 deal with 4% in closing costs adds $8,000 to your all-in number—enough to flip a profitable deal into a breakeven.
Key takeaway
Typical buyer closing costs
- Loan origination fee: 0.5–1% of loan amount
- Appraisal: $400–$700
- Credit report: $30–$50
- Title search and insurance: $500–$1,500
- Survey: $300–$800
- Recording fees: $100–$400
- Inspections: $300–$800
- Prepaid taxes and insurance: 2–6 months
- Points: Optional, 1 point = 1% of loan
Typical seller closing costs
- Agent commissions: 5–6% of sale price (if listed)
- Transfer taxes: Varies by state/county
- Title insurance (owner's policy): $500–$1,500
- Attorney fees: $500–$1,500 (if required)
- Buyer concessions: Negotiable, up to 3–6%
- Outstanding liens or HOA fees: Must be paid at closing
How investors manage closing costs
- Negotiate seller concessions. Ask the seller to cover a portion of buyer closing costs, especially in buyer-friendly markets.
- Shop lenders. Origination fees and points vary significantly. Get quotes from at least three lenders.
- Use title company relationships. Volume discounts for repeat investors can reduce title costs.
- Cash purchases. Eliminate loan-related fees entirely—big savings on lower-priced deals.
Factoring closing costs into OffMarket Deck deals
When you underwrite a deal from OffMarket Deck, add estimated closing costs to your all-in projection before calculating profit. Use the MAO formula and include 3–4% for financed deals or 1–2% for cash. Small adjustments here prevent large surprises at the closing table.