What Is Closing Costs?

Closing costs are the fees and charges paid to complete a real estate transaction, separate from the purchase price itself. Common line items include title insurance and title search fees, recording fees to file the deed with the county, transfer taxes, sometimes called deed stamps or conveyance tax depending on the state, escrow or closing agent fees, and prorated items like property taxes. Who pays which cost is negotiable in the contract, but local custom in a given market often sets an informal default for what buyers versus sellers typically cover.

In wholesaling, closing costs matter twice. On a straight assignment, the wholesaler is not a party to the actual purchase, so the assignment fee is the main cost to track, though the end buyer still pays normal closing costs on their purchase. On a double close, the wholesaler is buying and then reselling, which usually means two full sets of title and closing fees, plus the cost of any transactional funding used to briefly fund the first purchase. That second set of costs is easy to underestimate and can quietly erase a spread that looked fine on paper.

Because fees vary by state, county, and even by title company, a wholesaler cannot assume the closing cost percentage from one deal applies to the next. The practical habit is to get an estimate from the title company or closing attorney early, before finalizing the offer, rather than backing into the numbers after the contract is already signed. For a lead-gen or acquisitions team, understanding that closing costs, not just repair estimates, eat into margin is part of making sure an offer is actually profitable, not just directionally cheap.