Closing costs and property value

[Jorden House-Hay]

Hi all! 

Question: Should closing costs be included in property value (and subsequently in appreciation and ROE)?

Context: I've been developing a deal analysis tool based off the walk through in this Bigger Pockets post. In the full financial analysis, the closing costs are included in the starting value of the property along with improvements when calculating appreciation. 

The unit in this example has a purchase price of $400k, improvements of $10k, and closing costs of $8k for total cost of $418k. It seems to me that the starting value of the property should only be $410k (purchase price + improvements) and that closing costs should be considered a sunk transactional cost that wouldn't be recovered in a sale. 

When calculating ROE, I run into a similar issue.  Would the amount you paid in closing costs contribute in any way to your equity in the property? If not, doesn't that mean they also shouldn't be used to calculate appreciation? 

I have come across several other examples of closing costs being included in property value. Am I overlooking something about how they contribute to value? Or is this just some sort of industry standard when calculating appreciation and ROE? 

Thanks in advance!