Closing costs are the fees on top of the price that are paid when the deal closes. Investors meet them twice on every flip: once when they buy and once when they sell.
01Buyer closing costs
- Lender fees: origination, points and underwriting, often about 1% of the loan.
- Title and escrow: title search, title insurance and the closing agent, often about 1% of the price.
- Recording, inspection and appraisal: usually a few hundred to about $1,500.
- Prepaids: the first insurance premium and the tax escrow the lender holds.
02Seller closing costs
- Agent commissions, often 5–6% in total when agents are involved.
- The seller's share of title and escrow.
- Transfer tax in many states and counties.
03A worked example
On a $300,000 purchase with 20% down, buyer costs of 1% lender fees on the loan, 1% title, $1,200 of fees and $2,500 of prepaids come to about $8,100. Cash to close is the $60,000 down payment plus $8,100: about $68,100. The seller, paying 5.5% commission, 0.5% title and 0.4% transfer tax, pays about $19,200.
04Why investors care
Buying direct from an owner, without agents, removes most of the commission and makes room for a better price for both sides. That is exactly why investors look for motivated sellers in county records instead of the MLS. Use the free closing cost calculator to see the numbers for your deal.
