Typical Closing Costs For Commercial Real Estate
The closing process takes longer in commercial real estate deals, but there are more tools to resolve issues than in residential purchases. This article gave a broad overview of the commercial real estate closing process, but as always, it’s best to consult a competent real estate attorney to discuss your particular situation.
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Closing costs are the extra expenses that buyers and sellers pay on top of the purchase price at settlement of a real estate transaction. Closing costs include mortgage origination fees, discount points, appraisal fees, and more. Average closing costs on the median home sales price of $230,000 are 2 percent to 5 percent, or $4,600 to $11,500.
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· Also, you should know that with fluctuations in the real estate market, closing costs are also fluctuating. A 2012 US News article pointed out that closing costs dropped 7 percent over 2011-2012 to an average of about $3,754.
Some closing costs may be shifted to the Seller through custom or effective contract negotiation, but many will unavoidably fall on the Buyer. These can easily total tens of thousands of dollars in an even moderately sized commercial real estate transaction in the $1,000,000 to $5,000,000 price range.
Closing a commercial real estate deal involves many of the same costs as you would find in a residential closing. The main difference is the costs are normally much higher for a commercial deal. In 2018, commercial real estate transaction volume reached the second highest.
Typically closing costs end up being between two and six percent of the mortgage amount. This means that if you invest in a $200,000 home you could pay as much as $12,000 in total closing costs so it’s definitely beneficial to have someone covering these costs for you.