What are typical closing costs included in uses on a real estate acquisition?

• A. Operating expenses and property taxes.
• B. Legal fees, due diligence, title, consultant fees, financing costs, transfer taxes, closing attorney fees.
• C. Leasing commissions after closing.
• D. Existing debt payoff and equity contributions only.

Answer: (B)

Closing costs are one-time fees paid to finalize a real estate purchase, covering the professional services, taxes, and other expenses required to transfer ownership and secure financing. The items in this set fit because they are all incurred at the moment of closing and are directly tied to completing the acquisition: legal fees for the transaction, due diligence costs to verify the property and its financials, title work and title insurance to establish and protect ownership, consultant fees for specialized reports (like appraisals or engineering reviews), financing costs such as loan origination and lender fees, transfer taxes imposed on the transfer of title, and closing attorney fees for preparing documents and conducting the closing.

Ongoing operating costs, such as operating expenses and property taxes, occur after closing and are not considered closing costs. Leasing commissions are typically paid when leases are executed, not strictly at closing. Paying off existing debt and contributing equity relate to financing and capital structure, rather than the closing costs themselves.