How much are closing costs in New York? Unfortunately, the average closing costs in New York for buyers will depend on many different factors, but this article seeks to shed some light on the process. New York City real estate closing costs are one of the substantial parts of the overall cost of the deal, homebuyers should keep this in mind when planning to buy a house, co-op or condo. Real estate attorney fees for closing are an additional cost to consider.
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Closing is the period during the real estate sales process where the title of the property is transferred from the seller to the buyer. Closing involves costs. Closing costs can include many of the following items:
The exact fees will vary by lender and the type of property you wish to purchase (house vs. co-op vs. condo). Prior to closing, lenders are required to detail all closing costs on an initial loan estimate when you apply for the loan. This is known as the Loan Estimate. Lenders must also update their closing costs estimate a few days before closing occurs and disclose them on the Closing Disclosure. This way, you will always have the opportunity to know what your closing costs will be before the closing actually occurs.
Let us first examine the seller’s side of the transactions. Among other things the seller generally pays for realtor’s commission and transfer taxes. Realtors generally charge anywhere between four to six percent of the purchase price. While a seller might be tempted to go with a lower end of the spectrum realtor, remember “you get what you pay for.” This past summer I assisted a client in selling her Bedford-Stuyvesant multifamily brownstone. The seller had hired one of the best realtors in the area. The brownstone sold for way above asking price and over $500,000 more than a similar brownstone which sold several months earlier on the same block. While the seller might have paid one or two percent more to the realtor, the price increase alone was well worth it.
The other major fee that is incurred by a seller during a real estate transaction is New York City and New York State transfer taxes. New York City transfer taxes depend on the type of property you are selling but generally for residential properties are 1% if the sale price of the property is $500,000 or less and 1.425% if the sale price is $500,000 or more. New York State charges the seller $4 for every $1,000 of the sale price. Additionally, a seller might incur a Capital Gain tax at the conclusion of the tax year but that discussion is better left to a C.P.A.
Generally, a purchaser will incur higher costs than a seller during a real estate transaction. If a purchase requires a mortgage, most counties in New York State will charge a mortgage recording tax. In New York City, the mortgage recording tax is based on the mortgage amount. If the mortgage amount is less than $500,000 on a residential property, the tax is 1.8% of the mortgage, if the mortgage is $500,000 or more than the mortgage recording tax is 1.925%.
Additionally, a purchase price of the property is $1,000,000 or more, the buyer will pay New York State’s mansion tax, which is 1% of the entire purchase price. The other big expense that is incurred by the purchase is title insurance fee and mortgage insurance title fee. Both fees are controlled by the purchase prices. There are other bank and title fees which may be influenced by an increase in the sale price, but generally, the ones previously listed have the biggest impact to be considered.
As explained above, the Loan Estimate is a document that includes the breakdown of the approximate payments due upon the closing of a mortgage loan. As the outline is simply an estimate, the actual closing costs could be either lower or higher at closing, but the outline is always reasonably accurate. The most commonly incorrect estimates are those for third-party services such as home inspection fees and moving fees.
The Loan Estimate helps borrowers shop and compare the costs of loans with various lenders. The Loan Estimate contains several pieces of information including the loan amount, loan term, the interest rate, payment penalties, and other fees and charges. The Loan Estimate also outlines the closing fees, some of which will be paid by the buyer and some by the seller. These fees are normally broken down into several categories:
The Closing Disclosure is a real estate document required by the government to itemize all of the charges imposed upon the parties. Due to the amount of information it contains, it is one of the most important documents of the closing process. Once you receive the Closing Disclosure from the lender, it is highly recommended that you review the Closing Disclosure with an attorney because of its complexity.
Generally, a real estate lawyer NYC will walk you through the document and explain each item. You will need the trained eye of an attorney to spot any errors made by the lender. As explained above, the amount estimated by the Loan Estimate is generally pretty close to the amount contained in the final Closing Disclosure.
The average closing costs in New York can vary a bit depending on several factors. Closing costs in New York can range from as low as 1.5% to as high as 6% of the purchase price for buyers. As for sellers, the closing costs can vary from 8% to 10% of the price. As expected, New York can be expensive. But, mistakes in the closing process can cost large amounts of money. Without the proper guidance, unwary sellers and buyers can find themselves with a lot of unexpected costs. With an experienced NY real estate attorney helping you through the closing process, the likelihood of such mistakes is much lower.
Purchasing real estate in New York comes with hefty amounts of fees and taxes. Buyers and sellers both pay certain fees at closing and the amount of fees will vary with the type of sale or purchase you are making. Some things that both buyers and sellers typically encounter at closing include:
Average closing costs in NY for the buyer are between 1.5% and 5% of the purchase price. How much are closing costs for the seller in NY? Unfortunately, they are slightly higher that the costs for buyers, ranging from 8% to 10% for sellers. Simple mistakes in the property sale negotiation or filling out paperwork could cost thousands of dollars. Having an experienced real estate attorney by your side is important at all stages of the real estate transaction, but having legal counsel at closing is crucial.
For NYC buyers who are purchasing a co-op, the buyer can expect to pay somewhere around 1–2% of the purchase price if the co-op is below $1 million. If the price is over $1 million, generally the condo closing costs nyc buyers between 2–3% of the price. There are also some special fees and expenses associated with co-op purchases, such as:
Closing costs on condos in NYC tend to be higher than the cost of co-ops in NYC. For those buying a condo in NYC, they can expect to pay between 2–4% of the purchase price for condos under $1 million dollars. For the condos that have prices over $1 million, the price can be much higher and can even go over 5% of the purchase price. Condos are generally more expensive than co-ops because of the additional taxes and fees paid for the mortgage and for title insurance. Co-op apartment owners technically buy “shares” in the co-op, whereas a condo buyer pays for a mortgage on the home that gives the buyer the title to the condo. Some of the condo closing costs the buyer can expect in NY include:
Description | Formula | Fees for Sales Price of $342,500 |
Real Estate Commissions* | 6% | $20,550 |
New York State Transfer Tax | 0.4% | $1,370 |
Attorney Counsel Fees | $1000 – $2000 | $1,500 |
County Recording Fees | $50 – $100 | $75 |
Pickup Fee to Title Closer | typically about $250 per mortgage | $250 |
Total Closing Costs for Seller in NY | $23,745 |
Description | Formula | Fees for Sales Price of $342,500 |
Flip Tax/Fee | 1% – 3% | $5,137 |
Cooperative Attorney Fee | about $450 | $450 |
Transferring Agent Fee | $250 – $750 | $500 |
Moving Out Fees | $500 – $1000 | $750 |
Pay off the Bank Fee/Pickup Fee | $250 – $500 | $375 |
UCC-3 Filing Fee | $75 – $125 | $100 |
Total Closing Costs for Coop in NY | $7312 |
Description | Formula | Fees for Sales Price of $342,500 |
Condominium Attorney Fee | about $500 | $500 |
Moving Out Fees | $500 – $1000 | $750 |
Waiver Application Fees | $250 – $750 | $500 |
Miscellaneous Condo Fees | Varies | $250 |
Total Closing Costs for Coop in NY | $2000 |
Overwhelmed by the complexity of calculating these various charges? Several online services can roughly calculate real estate closing costs utilizing a closing cost calculator NYC, but be aware that any NYC closing cost calculator provides a mere estimate of your closing costs to properly manage closing, you will need to hire an NYC real estate lawyer to help you negotiate down fees and ensure that you are not getting a bad bargain.
Standard closing costs in NYC include a lot of various costs and depend on the type of property. For most sales, the costs include:
For co-ops, the closing costs include:
For condos
Property Details
Estimated Closing Costs
Financing Related Costs
New Construction Related Costs
Generally, the closing will occur between 60 and 90 days after the contract is signed (things tend to move a bit slower in NYC, so assume that closing will occur closer to 90 days after signing). After the signing, the buyer must send the seller’s attorney a down payment. If the buyer walks away from the contract before closing, the buyer could lose his or her down payment unless the buyer has a justified reason, such as a mortgage contingency clause. Typically, down payments in New York state average around 10% of the purchase price, which is placed in an escrow account.
Between signing and closing, your attorney will need to complete several tasks in preparation for closing. First, your attorney will order a title report to determine if there are any issues for the sellers to resolve before closing. The most common outstanding title issues are unsatisfied liens or property violations. Discovering and resolving title defects is critical to ensuring that your purchase is legally secure. Reliance on experienced real estate attorneys is crucial at this stage because the consequence of a mistake could be losing your home without warning in the future.
Next, your attorney will work with you to complete any paperwork requested by the lender and deliver any documentation required. After that, your attorney will help you calculate the amount that you will owe to the sellers at closing. Additionally, your attorney will help you determine how much you will owe to any applicable lenders, the title company, and any other third-party entities involved in the transaction (such as co-op boards).
Finally, on the date of the closing, your attorney will represent you and ensure that all of the documents you need to sign such as the deed, transfer tax returns, and mortgage documents, are all in order and state what you had agreed to previously. You will also need to tender payment at that time.
Real estate closings are very technical procedures, especially in NYC where there are a lot of additional requirements and local real estate transaction customs. Many different aspects of the real estate transaction process will be foreign to an attorney who does not practice real estate law, which is why it is so important to hire real estate law focused professionals. The experienced real estate lawyers at the Law Office of Yuriy Moshes, P.C. will walk you through the deal and ensure that everything is correct and no issues persist.
Are you considering buying or selling property? Have you already begun the real estate transaction process and need advice on how to proceed? At the Law Office of Yuriy Moshes, we assist clients who buy or sell property in the greater New York City area including all of its boroughs (Manhattan, Brooklyn, Queens, the Bronx, and Staten Island) as well as Northern New Jersey, Long Island, and Upstate New York.