Closing costs when buying a house with cash typically run 1% to 3% of the purchase price. On a $400,000 home, that’s $4,000 to $12,000 on top of the price itself. Paying cash cuts out loan origination charges, private mortgage insurance, and lender-required appraisals, but the rest of the closing bill still shows up: title work, settlement services, government taxes, insurance, prorated expenses, and a handful of obligations unique to cash deals that no lender is standing by to flag.
Title Search and Title Insurance
A title search confirms the seller owns the property free and clear. The examiner combs public records for liens from unpaid contractors, delinquent property taxes, court judgments, and anything else that could cloud ownership. The search usually costs $150 to $400 depending on how tangled the property’s history is.
After the search, you’ll want an owner’s title insurance policy. It’s a one-time premium, generally 0.5% to 1% of the purchase price, so $2,000 to $4,000 on a $400,000 home. The policy covers you if something the search missed surfaces later: a forged deed somewhere in the chain, an unknown heir with a claim, an old lien that was never properly released. Coverage lasts as long as you or your heirs own the property.
Cash buyers sometimes ask whether title insurance is really necessary with no lender demanding it. It is. In a financed deal, a lender’s policy sits alongside the owner’s policy. In a cash deal, your owner’s policy is the only thing between you and a six-figure fight over who actually owns the house.
Settlement, Attorney, and Wire Fees
A title company, escrow officer, or settlement agent runs the closing: preparing the final settlement statement, coordinating signatures, handling notarization, and distributing funds. Escrow or settlement fees typically fall between $500 and $2,000 depending on price and local custom.
Some states require a real estate attorney; in others it’s optional. Hiring one on a cash deal is often worth the money because no lender’s legal team is reviewing documents on your behalf. Flat fees for closing-related legal work generally run $750 to $1,500, with hourly rates of $150 to $500 if things get complicated. The attorney reads the deed, purchase agreement, and title work to make sure the language protects you.
One small item that’s easy to overlook: the wire transfer fee for sending funds. Banks typically charge $15 to $40 for an outgoing domestic wire, and some settlement agents charge an incoming wire fee too. The amount barely registers against a six-figure purchase, but it belongs on your estimate.
Transfer Taxes and Recording Fees
State and local governments charge transfer taxes to document the change of ownership. Structures vary. Some jurisdictions calculate the tax per $500 of sale price, others apply a flat percentage, and a handful of states charge nothing. Rates can run from a fraction of a percent to over 2% in high-tax areas, so this line swings from negligible to substantial depending on where you’re buying.
Recording fees cover filing the deed with the county recorder’s office so your ownership enters the public record. These are usually modest, often $25 to $175, depending on the county’s fee schedule and the length of the document. Paying them isn’t optional. Until the deed is recorded, the public record doesn’t reflect your ownership, which creates problems if you later try to sell, refinance, or contest a tax assessment.
Inspections and Appraisal
Without a lender requiring due diligence, every inspection is technically optional. That cuts both ways: nobody forces you to look for problems, but nobody protects you from buying a money pit either.
A general home inspection runs roughly $300 to $500 and covers the roof, electrical, plumbing, HVAC, and foundation. If the inspector flags something, specialist tests for radon, mold, or asbestos usually add $100 to $300 each. A pest inspection for wood-destroying organisms runs $75 to $150 and is worth every dollar in termite-prone regions.
An appraisal is the expense cash buyers most often skip, and that’s a mistake on higher-priced homes. A professional valuation costs $300 to $500 for a standard single-family property, more for complex or rural homes. The appraisal tells you whether the price you agreed to reflects actual market conditions. When you’re wiring six figures with no lender backstop, an independent opinion of value is cheap insurance.
Prorated Taxes, Insurance, and HOA Fees
Several ongoing expenses get split between you and the seller at closing based on the transfer date.
Property taxes are the biggest prorated item. If the seller has paid taxes through year-end and you close in September, you’ll reimburse them for the months they prepaid but won’t own the property. If taxes haven’t been paid yet, you’ll get a credit from the seller covering their share.
Homeowners insurance is a closing-day expense too. Lender or not, you need coverage in place before taking ownership. The national average for a policy with a $300,000 dwelling limit runs around $2,400 per year, though premiums vary with location, the home’s age, and replacement cost. Many closing agents require the first year’s premium paid in full at settlement. If you’re buying in a flood-prone area, price flood insurance separately; standard homeowner policies don’t cover flood damage, and without a lender enforcing the requirement, it’s easy to skip coverage and regret it later.
If the property has an HOA, expect a transfer fee of $100 to $500 or more for updating the association’s records and providing governing documents, financial statements, and the rules. Monthly dues are also prorated so each party pays only for days of ownership. Some associations charge separately for document preparation or capital contributions, so ask for a full fee breakdown early.
Federal Reporting Requirements
Cash deals trigger federal reporting rules that financed purchases largely avoid.
Form 8300 for Large Cash Payments
Any person in a trade or business who receives more than $10,000 in cash during a single transaction must file IRS Form 8300 within 15 days.1Internal Revenue Service. Form 8300 and Reporting Cash Payments of Over $10,000 In a real estate deal, the filer is typically the closing agent, title company, or seller’s attorney, not you. But the requirement affects you indirectly: the recipient must collect and report your name, address, Social Security number, and the amount received. The same rule covers multiple related payments exceeding $10,000 within a 12-month period.2eCFR. 26 CFR 1.6050I-1 – Returns Relating to Cash in Excess of $10,000
Under these rules, “cash” means currency, cashier’s checks, bank drafts, traveler’s checks, and money orders with a face value of $10,000 or less. A personal check or wire from your own bank account isn’t “cash” for Form 8300 purposes, so how you deliver the funds affects whether reporting is triggered.
FIRPTA Withholding When the Seller Is Foreign
If the seller is a foreign person or entity, you as the buyer are legally required to withhold 15% of the total amount realized and send it to the IRS under the Foreign Investment in Real Property Tax Act.3Office of the Law Revision Counsel. 26 U.S. Code 1445 – Withholding of Tax on Dispositions of United States Real Property Interests On a $400,000 purchase, that’s $60,000 going to the IRS instead of to the seller. If you fail to withhold and the seller doesn’t pay the tax, the IRS can pursue you for the full amount.4Internal Revenue Service. FIRPTA Withholding
One exception matters for many buyers: if you’re purchasing the home as your personal residence and the price is $300,000 or less, no withholding is required. To qualify, you or a family member must plan to occupy the home at least 50% of the days it’s used during each of the first two years after closing.5Internal Revenue Service. Exceptions From FIRPTA Withholding Above $300,000, or for investment property, the withholding obligation is real. The closing agent will typically handle the mechanics, but the legal responsibility is yours.
Supplemental Property Tax Bills After Closing
The cost that blindsides the most cash buyers isn’t on the settlement statement at all. It’s a supplemental property tax bill that arrives weeks or months after closing.
In some states, a sale triggers reassessment at current market value. If you paid more than the property’s previously assessed value, the county issues a supplemental bill covering the difference, prorated from your purchase date through the end of the fiscal year. The assessor subtracts the old assessed value from the new market value, applies the local tax rate, and prorates by the months remaining in the fiscal year.
A quick example: you buy a home previously assessed at $300,000 for $450,000 in a jurisdiction with a 1% tax rate. The supplemental assessment applies to the $150,000 gap. Depending on when you close, the bill could be a few hundred dollars or a few thousand. Not every state works this way, but if yours does, budget for it so the mail doesn’t bring an unwelcome surprise once you’ve moved in.