Maybe you’ve found a commercial property that seems to be within your budget, so you’re thinking about purchasing it. But it’s important to pause for a moment because what you’re actually seeing is only the listed price. Other costs might surprise you. For instance, how much do you know about closing costs? In this article, you’ll learn more about the most common commercial property closing costs.

Lender Processing Fees

When applying for a commercial property loan, somebody has to write the papers. So, you can expect to pay this person for all the hard work they do. This expense is generally referred to as underwriting or processing fees. This fee is often collected in advance. It may also be deducted from the deposit. Generally, it should be considered a necessary and non-refundable expense.

Credit Checks

Credit checks are an unavoidable part of purchasing a commercial property. As you probably already know, your credit score includes things like how much debt you already owe, and if you’ve defaulted on any loan payments in the past. Lenders run a credit check before making a decision about whether or not to offer someone a loan. This is another one of those commercial property closing costs that people often forget about.


Since you’re buying real estate, you’ll need a third-party to appraise the property before the sale. This person is a professional who visits the location and reviews the property’s true value. He or she reports back to the lender. For federally-regulated lending or financial institutions, this appraisal is a must. However, even for private lenders, commercial property appraisal is a standard practice.

Environmental Report

A commercial property transaction is more likely to run into trouble with environmental factors than a private residence. For this reason, it may be best to obtain an environmental report in order to avoid any unexpected delays during the sale.


An inspection is a little different from an appraisal, although they’re similar. While an appraisal determines the value of the property, an inspector will notify you of its condition. Specifically, you’ll want to know if there is any damage and, if so, the associated repair costs. Any issues with the property will obviously affect its value. So, you can see how paying for an inspection is worth the cost, especially as it provides you with room to negotiate.

Title Insurance Policy

Title insurance is meant to ensure your ownership rights of the property. When you pay for this service, a title insurance agent searches public archives to see if there are any liens or levies against the property. Records like this could affect your ownership of the property, so it’s important to conduct this search in order to avoid any unwelcome surprises down the road. Essentially, this step is all about ownership status. The good news is that you’ll only need to pay a title insurance company once for this service.

Mortgage Registration

Obtaining a commercial property will require you to register the mortgage with the government. This can be a little confusing because different locations require different recordings for mortgages, liens, and deed transfers. In some areas, you pay a flat fee, while others charge a certain percentage of the price.

Don’t Ignore Commercial Property Closing Costs

The points mentioned above are only a few of the potential items that can contribute to your final closing costs. Of course, the most important thing is to never underestimate the total cost of a commercial property sale, and to gather all the information you need to make an informed decision. If you have further questions about commercial property closing costs, feel free to contact us at Bay Area Escrow. Our San Ramon office can be reached at (925) 831-9099, or fill out a contact form by clicking here.