Closing Costs

Definition

Closing costs are the transaction fees, title charges, lender fees, recording fees, transfer taxes, and pro-rated property tax + insurance paid at acquisition and at sale. On a typical fix-and-flip, the buy-side closing costs run 2–4% of purchase price (lender origination, title insurance, escrow, recording, transfer tax). Sell-side closing costs run 5–7% of sale price (real estate commissions of 4–6%, transfer tax, title cure, seller concessions). The two sides together typically eat 7–11% of the project's gross value — the single biggest non-rehab cost line in the underwrite.

Worked example

A flip with $200k purchase + $480k sale. Buy-side closing at 3% of $200k = $6,000. Sell-side closing at 6% of $480k = $28,800. Total transaction costs = $34,800 — roughly equal to two months of holding costs and 7% of ARV.

How DealIntel uses it

DealIntel uses metro-specific transfer tax and commission rates to project closing costs realistically. Operators who model closing at a flat 8% across the country mis-budget materially in high-cost transfer-tax states (NY, NJ, MD, DC).

Related terms

• The 70% RuleA fix-and-flip discipline that caps the maximum allowable offer at 70% of ARV minus rehab and costs.
• Holding CostsThe total cost of owning a property during a flip — interest, taxes, insurance, utilities, and HOA — measured per month.
• After Repair Value · ARVThe estimated market value of a property after planned renovations are complete.

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