On a land sale, the seller and the buyer each pay their own set of closing costs, and every line is negotiable in the purchase agreement. The seller generally covers the brokerage commission, transfer taxes, deed preparation, and clearing title. The buyer generally covers the survey, soil and environmental testing, appraisal, title insurance, recording fees, and any loan charges. Escrow and attorney fees are often split. Because raw land has no house on it, several buyer-side costs — the boundary survey, perc testing, environmental review — tend to run higher or get more involved than on a typical home purchase.
What the Seller Usually Pays
Real Estate Commission
The brokerage commission is almost always the seller’s biggest closing expense. On vacant land, total commissions commonly run 5% to 10% of the sale price, higher than the 5% to 6% typical of residential homes. The premium reflects the extra marketing and the longer listing periods vacant parcels tend to need. On a $100,000 parcel, that is $5,000 to $10,000 out of the seller’s proceeds.
Transfer Tax and Deed Preparation
Most jurisdictions impose a documentary transfer tax (sometimes called a deed tax or conveyance tax) when real property changes hands. Rates vary widely, from as little as 0.01% of the sale price in some areas to more than 2% in others. On a $100,000 sale, that is anywhere from $10 to more than $2,000 depending on where the land sits. The seller also pays to have the warranty or quitclaim deed drafted, usually a modest attorney or title-company fee.
Title Search and Lien Payoff
The seller has to deliver clear title. A title professional pulls public records to check for ownership disputes, unpaid taxes, judgment liens, and other defects. For raw land, searches typically cost roughly $200 to $500, and sometimes more where the chain of title is long or the records are sparse. Anything the search turns up — back property taxes, mechanic’s liens, old encumbrances — has to be paid off at or before closing so the buyer receives the land unencumbered.
What the Buyer Usually Pays
Boundary Survey
A professional boundary survey confirms the exact property lines and corners. For a small lot of a few acres, expect roughly $500 to $1,200. Costs climb steeply with acreage and terrain. A 40-acre wooded parcel with unmarked boundaries can run $5,000 to $12,000 or more. Lenders usually require a current survey before funding a loan, and skipping one on a cash deal is risky when fences, roads, or a neighbor’s improvements may encroach.
Perc Test and Septic Evaluation
If the land is not on municipal sewer, you will likely need a soil percolation (“perc”) test before you can obtain a septic permit. A technician digs test holes and measures how fast water drains. A straightforward test on a small lot runs a few hundred dollars; larger parcels or sites needing multiple bore holes can hit $1,500 or more. Failing a perc test can sharply limit what you can build, so many buyers make the purchase contingent on passing one.
Environmental Assessment
An environmental site assessment looks for hazardous substances, petroleum contamination, and protected wetlands that could restrict development. A Phase I reviews historical records and site conditions. A Phase II involves actual soil and groundwater sampling if the Phase I flags something. Wetlands on or near the parcel can trigger federal or state restrictions on grading, filling, or building, so the assessment should cover whether regulated wetlands exist and what buffer rules apply.1US EPA. Revitalization-Ready Guide – Chapter 3: Reuse Assessment
Appraisal
If you are financing the purchase, the lender will require a professional appraisal to confirm the land’s market value supports the loan. Appraising vacant land is harder than appraising a home. Comparable sales are scarce, and factors like access, zoning, and utility availability weigh heavily. Expect roughly $1,000 to $3,000 for a vacant-land appraisal, depending on size and location.
Title Insurance
Title insurance protects against ownership claims that surface after closing, such as a previously unknown heir, a forged deed somewhere in the chain, or an unrecorded easement. There are two policies. A lender’s policy, which most lenders require, covers the loan amount. An owner’s policy, which is optional but strongly recommended, protects your equity in the property.2Consumer Financial Protection Bureau. What Is Owners Title Insurance Owner’s policies generally run 0.5% to 1% of the purchase price, so $500 to $1,000 on a $100,000 parcel.
Recording and Loan Fees
Recording the new deed with the county recorder is a mandatory step to put your ownership in the public record. Fees vary by jurisdiction and are usually modest, often under $100. If you are financing, add the lender’s origination fee (commonly 0.5% to 1% of the loan amount) plus any other required charges, such as a credit report or flood-zone determination.
Zoning Verification Letter
Before closing, ask the local planning department for a zoning verification letter. It confirms the parcel’s current zoning classification and lists permitted uses, setbacks, and overlay restrictions. Fees are usually $50 to $100 per parcel, and the information can keep an expensive surprise from showing up after you own the land.
Costs That Are Often Split or Negotiated
Escrow or Closing-Agent Fee
The escrow or closing agent runs the whole transaction: ordering the title search, holding funds, preparing settlement documents, running the signing, recording the deed, and disbursing money. The fee generally runs 1% to 2% of the sale price, with flat-fee arrangements available for lower-value land deals. In many markets buyer and seller split it equally, but the purchase agreement can assign it any way the parties want.
Attorney Fees
Some states require an attorney at closing; in others a title company handles it. Even where an attorney is not required, one can be worthwhile on a raw-land deal where zoning, easement, or access issues may lurk. Real estate closing attorneys typically charge a flat fee of roughly $500 to $1,500 for a straightforward transaction, with complex deals costing more. Whether the buyer, the seller, or both hire counsel depends on the agreement and local practice.
How Property Taxes Are Prorated at Closing
Property taxes accrue through the year, but the bill may not come due until months after closing. The settlement statement handles this with a proration that splits the annual tax between seller and buyer by the closing date. The seller is responsible for the portion of the tax year during which they owned the land; the buyer takes over from closing forward.
The common method divides the estimated annual tax by 365 to get a daily rate, then multiplies by the days each party owned the parcel during the tax year. If annual taxes are $2,000 and the seller owned the land for 200 days of the tax year, the seller owes roughly $1,096 and the buyer picks up the remaining $904. The credit shows up on the settlement statement as a debit to the seller and a credit to the buyer.
Every Cost Is Negotiable in the Purchase Agreement
The customary split described above is just that: a custom. The purchase and sale agreement is the governing document, and it dictates exactly who pays what. If you want the seller to cover part of the buyer’s title insurance, or the buyer to absorb transfer taxes, the contract can say so.
Closing-cost negotiations often ride alongside the price discussion. A seller who will not drop the asking price may agree to pay a larger share of closing costs instead, which produces the same economic result for the buyer without changing the headline number. A buyer competing with other offers might volunteer to cover all escrow fees to sweeten the bid. The key is to put every anticipated cost in writing before signing, including items like utility connection fees or special assessments that otherwise fall into a gray area.
Taxes the Seller Should Expect After Closing
Beyond the closing table, a seller who makes a profit on the sale owes federal income tax on the gain. If you held the land more than one year, the profit qualifies for long-term capital gains rates (0%, 15%, or 20% depending on your taxable income).3Internal Revenue Service. Revenue Procedure 2025-32 – 2026 Adjusted Items Land held one year or less is taxed at ordinary income rates, which can be substantially higher. The $250,000/$500,000 home-sale exclusion does not apply to vacant land; it is reserved for property that was your principal residence for at least two of the five years before the sale.4Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence
If you plan to roll the proceeds into another piece of real estate held for investment or business use, a like-kind exchange under Section 1031 can defer the gain. Raw land qualifies, improved or unimproved, as long as both properties are held for investment or business and not primarily for resale.5Internal Revenue Service. Like-Kind Exchanges – Real Estate Tax Tips You have 45 days from the sale to identify replacement property in writing and 180 days to close on it (or your tax return due date, whichever is earlier), and most sellers use a qualified intermediary to hold the proceeds, because touching the funds yourself can blow up the exchange.6Office of the Law Revision Counsel. 26 USC 1031 – Exchange of Real Property Held for Productive Use in a Trade or Business or for Investment
Expect the closing agent to file IRS Form 1099-S reporting the gross proceeds on any land sale of $600 or more. The form explicitly covers improved or unimproved land, and the transaction is reportable even if you sold at a loss.7Internal Revenue Service. Instructions for Form 1099-S – Proceeds From Real Estate Transactions
One boundary worth noting: if the seller is a foreign person (not a U.S. citizen or resident), the buyer is generally required under FIRPTA to withhold 15% of the amount realized and send it to the IRS. The seller later files a U.S. return to claim back any amount withheld beyond the actual tax owed.8Internal Revenue Service. FIRPTA Withholding The withholding duty falls on the buyer, not the closing agent, so it is worth confirming the seller’s status early.
Reading the Settlement Statement
Every land closing produces a settlement statement itemizing all of the above: commissions, transfer taxes, title charges, prorated property taxes, recording fees, escrow fees, and any loan costs. Financed deals that trigger federal mortgage disclosure rules use a Closing Disclosure from the lender. Cash purchases, seller-financed deals, and transactions outside those rules typically use an ALTA Settlement Statement.9American Land Title Association. ALTA Settlement Statements Debits are money owed; credits are money deposited or owed back. Both parties should get the statement before the signing appointment and compare each line to the purchase contract. Keep a copy with your permanent records; it is the definitive financial record of the sale.