How to Estimate Closing Costs for Investment Properties
Closing costs are one of the most frequently underestimated expenses in real estate investing. They range from 1-3% for buyers in a cash deal to 7-9% for sellers paying agent commissions and transfer taxes. Failing to account for them accurately can turn a profitable deal into a loss. For state-specific details, see our closing costs by state guide.
Buyer closing costs
| Item | Typical Cost |
|---|---|
| Title search and title insurance | $500-$2,000 |
| Recording fees | $100-$500 |
| Attorney/escrow fees | $500-$1,500 |
| Survey (if required) | $300-$800 |
| Transfer taxes (where buyer pays) | Varies by state |
| Prorated property taxes | Varies |
| Total (cash buyer) | $1,500-$5,000 |
Seller closing costs
| Item | Typical Cost |
|---|---|
| Agent commissions (if using agents) | 5-6% of sale price |
| Title insurance (owner's policy) | $500-$2,000 |
| Transfer taxes/stamps | Varies by state (0-2%) |
| Attorney fees | $500-$1,500 |
| Outstanding liens/mortgage payoff | Varies |
| Prorated taxes owed | Varies |
| Total (with agents) | 7-9% of sale price |
Closing costs for wholesalers
In a standard assignment, you pay minimal closing costs (usually just your portion of escrow/title fees). The seller and end buyer pay the bulk of closing costs. In a double close, you pay closing costs twice (once as buyer in Transaction A, once as seller in Transaction B), which adds $3K-$8K to your costs.
Closing costs for flippers
You pay buyer closing costs when you purchase (1-3%), then seller closing costs when you sell (7-9%). Total closing costs on a flip can easily be $15K-$25K on a $300K ARV property. This is why the 70% rule exists — it reserves 30% of ARV for repairs, holding costs, selling costs, AND profit.
How to reduce closing costs
- Negotiate with title companies for investor discounts on repeat business
- Sell without an agent (FSBO) to eliminate 5-6% commission (but factor in longer time on market)
- Use assignment instead of double close when possible (one set of closing costs instead of two)
- Negotiate seller concessions where the seller covers some of the buyer's closing costs
Related guides
- Closing Costs by State
- Estimating Holding Costs
- How to Analyze a Flip Deal
- Working With Title Companies
- How to Double Close