What Are Commercial Closing Costs and Who Pays for Them?

Considering purchasing or selling a commercial property? It’s helpful to understand the closing costs associated with the transaction. A little knowledge upfront will help prepare buyers and sellers for closing day. Benchmark’s Jaimee Keene has put together a list of information for your future commercial purchase/ sale.

Closing Costs – What are They?

Closing costs are the fees paid for services that are needed to complete the sale of a commercial property. This could be an office, industrial, or retail property, or alternatively a piece of land for commercial development. Most of these costs become due when the buyer’s funds are received as payment for the property, and both parties have signed the transaction closing documents, usually on closing day, facilitated by the title company or a competent real estate attorney. Some transaction expenses, such as appraisal, environmental, and inspection reports, are incurred during the transaction, and may be paid prior to closing based on agreements with the vendors providing the services.

Commercial Transaction Costs

Commercial property transactions typically include the following items.

Property appraisal. The asking price for a commercial property can be tricky to figure out, and a professional real estate appraiser can be a big help in this process. Often, you might pay around $4,000-$5,000 for an average-sized commercial property appraisal, but this can be more for larger buildings or lots, or complex specialized properties. This is often paid for by the buyer, but this can be negotiated between buyer and seller.

Property inspection. Both a seller and buyer of a commercial property can have their own licensed commercial inspection performed to address any concerns about issues with a property’s condition. This can help with pricing and negotiations. The scope of the inspections can vary widely, as do the costs. Prudent buyers should be prepared to pay for inspections at their own cost, while prudent sellers may also want to have the property evaluated prior to listing the property to prepare them for any deferred maintenance items that may arise during a buyer’s inspection.

Property repairs. Generally, property repairs consist of issues such as mechanical systems, roof, or site improvements (including parking lots, landscaping, drainage, etc.) or problems in the building’s exterior and common areas. The inspection report will help to identify any items of deferred maintenance, and the buyer and seller can use these repair costs in the negotiation of price or credits at closing.

Marketing expenses. When selling a commercial property, a seller will incur costs to market the property. If working with a competent listing broker who will market the property on behalf of the seller, these expenses can be included in the agent/broker’s negotiated commission rate. These expenses include photography, drone photography/video, virtual tours, marketing materials, and listing fees on commercial MLS platforms. Premiums can be paid by the Seller to the listing brokerage for enhanced marketing efforts, including increased exposure on listing websites.

Commercial Closing Costs

Other commercial property closing costs include:

• Agent/broker commission. The average commercial property commission is about 4-8%. This varies widely based on the expected sale price, and can include the commission paid to both the listing broker and the broker representing the buyer.
• Outstanding property debt – this can include any outstanding balances, prepayment penalties, and pro-rated interest amounts. The existing lender will provide a payoff quote with these items based on a specific closing date, and this amount is subject to changes if the closing date changes.
• Title or other selling fees
• Pro-rated real estate taxes
• Closing fees
• Transfer fees for utilities
• Transfer taxes for local municipalities
• Title Insurance

Here is a list of common commercial closing costs along with who typically pays for them.

Real estate broker commission fees- Seller
Property appraisal fees- Buyer
Property inspection fees- Buyer
Property repairs- Seller
Marketing expenses- Seller
Outstanding debt- Seller
Title or other closing fees- Buyer & Seller


“With inflation concerns making headlines, have you reviewed your lease lately for CPI escalations?  Benchmark Commercial offers complimentary lease reviews to better understand your exposure to lease language with CPI (Consumer Price Index) escalation clauses.  The more informed you are, the better you can prepare your business for the year ahead.”


-Jaimee Keene, Benchmark Commercial


Advice From A Newbie!

Our newest broker, Tish, has been a major asset to the Benchmark team after just one month!  We are so thrilled to have her.  As we set out on this blog journey, it was important to start from the beginning.  I simply asked Tish to give me a short statement about what she has learned/ encountered her first month.  Words from the wise!

“As a new broker you will enter a new world of acronyms. Don’t worry, you will learn it. Write it down. Look it up and if you still don’t know, ask.  I think if you love learning and you enjoy people this can be such a wonderful career.  I was surprised at the diverse nature of personalities in this industry.  It has been such a great experience to get so many perspectives on the approach to being a successful broker.  The one thing that is key, is patience.  So don’t look at this as a sprint but rather a marathon.”- TISHA BRADY



Yeti Cycles

We met Yeti’s team through a referral from an existing client. At the time, Yeti Cycles was looking to buy an industrial building or build their own. They had a specific requirement of needing to be within a five-minute ride to a certain mountain-bike trailhead. After analyzing existing nearby warehouses for sale, we focused on land availability. After making an introduction to the local economic development council, running build scenarios, and introducing contractors, we shifted gears towards finding a warehouse for lease. This allowed Yeti to keep the capital required for a building acquisition/build and apply it toward further growing the renowned Colorado company.

We structured a new warehouse lease with a brand-new buildout with room for expansion, complete with showers and lockers for post-ride, Yeti turquoise on walls, and a bar for post-work team building.

OUTCOME:  A perfect vision-filling space that turned from a want to purchase to the desire to lease using information provided by the team, as well as growth options for the future

Applied Control Equipment

One of the Benchmark Commercial owners was referred to Applied Control Equipment, an Emerson valve distributor. Applied Control assembles and refurbishes large valves for the oil and gas industry, as well as others, such as Coors Brewing; they’re a culture-driven company that has been voted “Best Small Company to Work For” multiple times by CoBiz magazine!

Originally Applied Control preferred the idea of expanding at their current location. However, after interviewing and building a team with a Project Manager, Developer, Architect, and contractor, we found that they had a long-term business plan of 20+ years. The current space would work for up to five years, but looking 20 – 30 years ahead, we needed to look outside the current building to find the ideal warehouse office space.

As part of due diligence, we met with county officials to determine possible incentives for Applied Control. After doing so, we recommended they consider building the ideal office space and warehouse to meet their business needs.

Seven acres of land was purchased, and 40,000 SF of office space, complete with a mountain-facing glass curtain wall, and 25,000 SF of warehouse and assembly was built. With two cranes and additional poured concrete footing ready-to-go today, Applied Control is ready to add up to an additional 50% more SF to this space as they continue to grow. Additionally, we were able to negotiate having most of the utilities to the site paid for by the seller, making this an all-around win!

OUTCOME:  Applied Control Equipment is set up for the future; they can continue their long term upward trajectory without previous facility limitations.