Closing Costs Simplified

When you buy or sell real estate in New York, you’ll pay closing costs, which are transaction-related fees outside of the actual sale price. Both buyers and sellers are responsible for these costs, although the type and amount can vary by lender and the type of property involved (for example, house vs. condo).

Standard New York Seller Closing Costs

If you are the seller, you may be responsible for the following closing costs, depending on what type of property is involved.

Broker commissions: In New York, real estate brokers charge an agreed upon percentage of the selling price to compensate them for the cost of listing the property in the MLS and providing marketing and support services.

Attorney fees: An experienced and qualified real estate attorney will guide you through the sale, advocate for you if problems arise, and ensure that all paperwork is completed and processed correctly. If you are selling a coop or condo, the association will engage an attorney to prepare the required paperwork and pass the fee on to you.

State transfer tax: This tax is imposed on any property transfer valued at over $500, at a rate of 0.4%. Residential property transfers in New York City that are valued at $25,000 or more are taxed at 1% unless the sale price was over $500,000, in which case you’ll pay 1.425%. With commercial properties, the rate is 1.825% for properties sold for under $500,000. If the sale price is higher, so is the tax rate: 3.025%.

County recorder fees: You will have to pay a fee to the town or county to update the property records after you sell the property.

Title closing fee: There is a fee involved for verifying the presence and amount of any outstanding mortgages or liens.

Flip tax: If you are selling a coop, the Board of Directors will assess a tax that is either a flat fee, a specific dollar amount per share you owned in the coop, a percentage of the gross sale, or a percentage of the net profit.

Waiver application fees: If you are selling a condo, the association has a right of first refusal on the unit. This fee covers the cost of processing a waiver if they choose not to purchase it.

Transferring agent fee: With coops, the Master Agent will charge you a fee to process the transfer at their end.

Moving out fees: Coops and condo associations charge a fee to sellers moving out of the building.

Pick-up fee for mortgage satisfaction: The attorney for the bank prepares a document for the coop that protects the bank if you default. This fee covers the time and expense involved in document preparation.

UCC-3 filing fee: Organizations like coops must file a Uniform Commercial Code, or UCC. This system notifies the public of a commercial transaction involving a debtor and a secured party.

Miscellaneous condo fees: Your condo association may charge you additional fees when you sell. Check the association documents or bylaws to confirm what they are and how much.

Standard New York Buyer Closing Costs

If you are the buyer, your lender will provide you with an initial loan estimate that details all closing costs. This estimate will be updated a few days before closing and be listed on the closing disclosure, so that you know what you’ll be expected to pay before everything is finalized.

Buyer closing costs include but may not be limited to:

Mortgage recording tax: If you take out a mortgage, most New York counties will charge you a mortgage recording tax based on the amount. In New York City, it comes to 1.8% on residential properties with mortgage amounts less than $500,000. If the amount is higher, the tax is 1.925%.

Mansion tax: If you pay more than $1,000,000 for a property, you will incur that so-called ‘mansion tax,’ which is 1% of the purchase price.

Title insurance fee: Title insurance protects you and your lender against future claims for title issues that were unknown at the time of sale.

Mortgage insurance fee: Mortgage insurance protects you and the lender by helping to cover your mortgage payments if you unexpectedly become seriously ill or pass away.

Attorney’s fees: A New York real estate attorney will help ensure that the transaction goes as smoothly as possible for you. Buyers are also generally expected to pay the bank’s attorney fees.

Mortgage fees: These fees include the costs of pulling your credit report, appraising the home, and processing your application.

Additional expenses: These include a flood certification fee, a UCC-1 filing fee if you are being a coop, and prepaid daily interest if closing takes place during the middle of the month.

Real estate closings can be complicated, especially in New York. The experienced real estate team at Drucker & Mattia will walk you through your responsibilities as a buyer or seller so that the transaction reaches a successful conclusion. For more information, please call 718-458-2312.