What are closing costs in NYC for home sellers? What about New York City real estate closing costs for buyers? Read our comprehensive closing costs guide below!
Real Estate Broker Commission
It is important for consumers to understand that commission rates are negotiable and there is no legal or mandatory commission rate. However, home sellers in NYC will find that 6% of the sale price is the most common rate charged.
It’s important to understand that sellers typically pay both the buyer broker and seller broker commission. This is because most buyers are represented by agents and your listing agent will need to co-broke (i.e. share) 50% of the commission with buyers’ agents. Buyers’ agents will often complain if the commission co-broked to them is less than 2.5%. Therefore, you often see 5% total commission as a lower boundary for commission rates in NYC.
We are seeing more and more flexible commission structures these days. It’s important to understand that rates are not set by any regulatory body nor broker association. Consumers should always seek to negotiate commission rates.
Real Property Transfer Tax (RPTT)
New York City levies a tax on the sales, grants, assignments, transfers or surrenders of real property in NYC. The RPTT tax for residential real estate transactions is typically paid by the seller and consists of a tax between 1%-1.425% of the sale price along with a RPTT filing fee of $100
1% of the sale price: For home values below $500,000
1.425% of the sale price: For home values above $500,000
Please keep in mind that if you are selling 2+ un-attached units to your buyer at the same time, you are required to pay the commercial RPTT rates:
1.425% of the sale price: For sale values below $500,000
1.625% of the sale price: For sale values above $500,000
NY State Transfer Tax
New York State also charges home sellers a transfer tax of 0.4% of the sale price. The full NY State Transfer Tax is due and payable along with form TP-584 no later than the 15th day after the delivery of documents.
Most home sellers in NYC will face a total of 1.825% in city and state transfer taxes!
Move Out Deposit & Fees
The specific amount of move out related deposits and fees varies by building, however it’s fair to budget around $1,000 for a refundable move-out deposit and another $1,000 in potential non-refundable move out fees levied by your condo or co-op.
It’s necessary to have a real estate attorney represent you on your home sale in NYC. This is because purchase contracts are longer, customizable and negotiable. Furthermore, the closing process in NYC is longer and more complex than other parts of the country so you’ll need a seasoned real estate lawyer to guide you through it. It is illegal for your broker to advise and negotiate the purchase contract on your behalf.
It is possible to secure a good real estate attorney for a flat fee of between $2,000 to $3,000. The rate will depend on the complexity of your transaction and your specific negotiations with the attorney. We have great friends and family rates with some of the most seasoned attorneys in the city, please contact us today for a referral!
Assortment of Random Additional Fees
As a NYC seller, you will also face another random assortment of fees to complement the more substantial fees and taxes described above. The additional NYC seller closing costs can include:
$1,000 – Managing Agent Fee
$500 – Payoff Bank Attorney / Payoff Bank Fees / Loan Satisfaction Fee, which is levied by your mortgage provider upon paying down the remaining loan amount
$500 – Common Charge & Real Estate Tax Adjustment, which is the seller’s reimbursement of the purchaser for the percentage of common charge fees and/or real estate taxes which the seller is liable for during the transfer
$100 – UCC-3 Filing Fee
$75 – New York State Equalization Fee
$75 – Residential Deed Transfer Fee (or non-deed co-op transfer fee)
Co-op Seller Fees
Co-op sellers may have to pay a “flip tax” to their co-op corporation as an additional closing costs. Not all co-ops mandate flip taxes and the amount of tax varies by building. It is common to see 2% of the sale price as a flip tax paid by the seller.
The flip tax proceeds generally go into the co-op corporation’s reserve fund which will benefit all shareholders.
$500 – Co-op Attorney Fee
$50 – New York State Stock Transfer Tax, which consists of a tax levied by NYS of $0.05 per unit of stock being sold. While the number of co-op shares owned by sellers can vary widely, we’ve estimated $50 all in for the New York State stock transfer tax associated with our hypothetical NYC home sale
Closing costs for home buyers in NYC
New York State / NYC Mansion Tax
The dreaded Mansion Tax is levied only on home purchases at or above $1 million. The tax is 1% of the purchase price and is generally paid by the buyer.
If you are purchasing a property priced around $1 million, contact us today to see if various closing costs will push you over the threshold or not!
Title Insurance (Condo only) $7,500
Title insurance offers buyers and lenders protection against future, unexpected claims against the title of the property. This may happen if there was an error with the original title search conducted before closing or if an unforeseen historical owner pops out of the woodwork to make a claim on the title. Essentially this is to protect you if there was a mistake in title transfer at some point in the property’s history (i.e. a property was sold without the true owner’s permission).
The costs for a good buyer’s attorney will be in the same range as we discussed for a seller’s attorney. Especially if you’re purchasing a co-op, it’s important to select an attorney that can help you throughout the entire process. Contact us for great referrals to seasoned attorneys in the city who can also help put together your purchase application!
Buyer Move-In Deposit
Depending on the rules of the condo or co-op in which your unit is located, you may be required to make a refundable ‘move-in’ deposit. You can generally expect to recover this money in the future, however as it is a required cash outlay it’s worth budgeting for in your purchase calculations.
Additional Fees for Buyers Seeking Financing
Purchasers of real property will face the dreaded Mortgage Recording Tax. That means co-op buyers can skip this tax.
Mortgages below $500,000 = 2.05% of borrowed amount
Mortgages over $500,000 for 1-3 family residential unit and individual residential condo units = 2.175%
Mortgages on all other property over $500,000 = 2.80%
Please note that these figures include the NYS mortgage tax of 0.5% in addition to additional NYC-specific mortgage tax elements.
NYC home buyers who will be financing the purchase can also expect to pay most if not all of the additional costs below:
$750 – Bank Attorney Fee
$750 – Bank Loan Origination Fee
$450 – Property Appraisal Fee
$500 – Mortgage Application & Processing Fee
$100 – Credit Report & Employment Verification Fee
$1,000 – Title Search & Recording Fees
$200 – Financing / Recognition Agreement Fee (Co-op only)
Extra Fees for Purchases of New Construction Units
NYC home buyers who purchase new construction directly from sponsors are also responsible for costs which are normally paid by the Seller for existing construction units. They include the following:
$26,748 – NYC Real Property Transfer Tax (RPTT) & Filing Fee
$7,480 – NY State Transfer Tax
$2,500 – Seller’s Attorney Fee
Extra Fee for Purchase of NYC Co-ops
$100 – (Co-op Only) UCC-1 Filing Fee
Related articles & additional resources
Condo vs. Co-op
What’s the difference between condominium and cooperative apartments in New York City? Read our comprehensive guide on the various property types available for purchase in NYC before you begin your search. We’ll compare the pro’s and con’s of condos vs co-ops as well as townhouses and multi-family properties. Which one is right for you?
Looking for sales leads?
What’s the point of joining a brokerage that doesn’t give you something to do? Yet that is exactly how the rest of the traditional brokerage community operates. Agents are expected to source all of their clients, execute the entire deal on their own and then receive only 30-50% of the commission. That doesn’t sound fair to us at all! Contact us today to jump start your career!
NYC Closing Process
The NYC co-op and condo closing process is surprisingly easy as long as you have accepted an offer from a qualified home buyer. Assuming you’ve worked with a Mont Sky Real Estate agent on your home sale, you’ve already cleared the toughest part of selling your home in NYC which is properly engaging the 90% of buyers who are represented by agents!