Cash to Close vs Purchase Price
The listing says $85,000. Your wire on closing day says $93,400. The gap is not a surprise fee—it is the predictable stack of title work, government recordings, prorated taxes, and lender charges that every land transaction carries. Knowing the cash-to-close number before you make an offer keeps you from scrambling for funds the week of signing.
On a typical vacant-land deal the extras run 3–8 % of purchase price for a cash buy and 5–10 % when financing is involved. That range depends on the state, the county’s transfer tax rate, whether a survey exists, and how many inspections the parcel needs. A $150,000 rural parcel in a county with high transfer tax and no existing survey can easily add $12,000–$15,000 in costs above the contract price.
Title, Escrow, Recording, and Local Fees
A title search confirms the seller actually owns the parcel free of liens. Title insurance protects you if a missed lien surfaces later. Together they run $400–$2,500 depending on sale price and state rating bureaus. The American Land Title Association publishes rate-filing summaries by state if you want to benchmark quotes.
Escrow and closing fees cover the neutral third party that holds funds, prepares documents, and disburses at settlement. Expect $300–$800 for a straightforward land close; complex deals with seller financing or multiple parcels run higher.
Recording fees are the county clerk’s charge to file the deed and mortgage (if any). Most counties charge $25–$100 per document. Some tack on a per-page surcharge. These look small individually but stack up when you record a deed, a mortgage, an affidavit of title, and a survey plat.
Survey, Environmental, and Due-Diligence Add-Ons
A boundary survey for a clean rectangular lot under five acres might cost $500–$1,200. Irregular parcels, dense tree cover, or disputed fence lines can push that to $3,000+. If the lender requires an ALTA/NSPS survey the cost rises further because of the additional certification requirements.
Environmental due diligence matters most on parcels with agricultural or industrial history. A Phase I Environmental Site Assessment (ESA) typically runs $1,500–$4,000. If the Phase I flags concerns, a Phase II with soil sampling can add $5,000–$20,000. For residential raw land with no prior structures, many buyers skip Phase I—but if the parcel was ever used for fuel storage, auto repair, or commercial agriculture, the assessment is cheap insurance against a remediation bill that dwarfs the purchase price.
Perc tests ($300–$800) and soil borings are essential anywhere you plan a septic system. Well-water testing adds another $100–$400. These are not optional extras—they determine whether the parcel is buildable at all.
Financing Costs: Points, Prepaids, Reserves
Cash buyers skip this section entirely—one of the real advantages of an all-cash close. Everyone else should budget for:
- Origination fee. Usually 0.5–1.5 % of the loan amount. On a $120,000 loan that is $600–$1,800 at closing.
- Discount points. Each point is 1 % of the loan and buys down the interest rate. Worth doing on long-hold land loans; often not worth it if you plan to flip within two years.
- Prepaid interest. Covers the gap between closing day and the first payment due date—typically 10–20 days of daily interest.
- Escrow reserves. Some lenders require 2–6 months of property tax and insurance collected upfront to seed the escrow account. On a parcel with $2,400/yr tax that is $400–$1,200 on top of everything else.
Land loans typically carry higher rates (1–3 points above residential mortgages) and require 20–50 % down, per Consumer Financial Protection Bureau guidance on land-loan basics. Factor that larger down payment into your cash-to-close estimate—it is often the single biggest line item.
Prorations, Taxes, and Timing Traps
Property taxes are prorated to the day of closing. If you close on March 15 and the seller already paid the full year, you reimburse them for the remaining 291 days. On a $2,400 annual tax bill that proration is roughly $1,912 added to your side of the settlement statement.
Timing traps to watch for:
- Closing late in the tax year means you owe a large proration plus the lender’s escrow reserve—a double hit.
- Supplemental tax bills in states like California arrive months after closing and reflect the reassessment to your purchase price. Budget an extra 1–1.25 % of purchase price for the first supplemental bill.
- HOA or special-assessment districts. Transfer fees, working-capital contributions, and delinquent-assessment payoffs can surface at closing. Ask for a resale certificate or estoppel letter early in escrow. The Holding Cost Estimator helps you project these ongoing charges over your intended hold period.
Offer-Ready Checklist (Before You Sign)
Before submitting an offer, run through this list so cash-to-close holds no surprises:
| Item | Typical Range | Who Pays |
|---|---|---|
| Title search + insurance | $400–$2,500 | Buyer (most states) |
| Escrow / closing fee | $300–$800 | Split or buyer |
| Recording fees | $50–$250 | Buyer |
| Boundary survey | $500–$3,000+ | Buyer |
| Perc test / soil boring | $300–$800 | Buyer |
| Loan origination + points | 1–3 % of loan | Buyer |
| Tax proration | Varies by close date | Buyer (reimbursement) |
| Transfer tax / stamps | $0–2 % of price | Seller or split (varies) |
Add the ranges that apply to your deal, layer them on top of your down payment, and the sum is your realistic cash-to-close. Compare that number against your liquid reserves—not your total net worth, your available cash—before you commit.
Once you own the parcel, use the Land Value Appreciation Projector to model how the total acquisition basis (not just purchase price) compounds over time, and the Holding Cost Estimator to see carrying charges layered on top of that basis.
Figures above are typical U.S. ranges for educational budgeting. Actual costs depend on your state, county, lender, and transaction specifics. Always review the official Closing Disclosure or settlement statement prepared by your title company or attorney before wiring funds.