What are Real Estate Closing Costs in NYC?

Closing costs in NYC are between 1.5% – 6% for buyers and 8 – 10% for sellers. Your closing cost bill is based on a number of factors including property type (condo vs. co-op), purchase price, amount borrowed and whether the property is new construction (sponsor sale).

Closing costs for buyers are higher for condos, especially when if the buyer is utilizing a mortgage or purchasing new construction. Buyer closing costs are lower for co-ops primarily because coop buyers do not pay any Mortgage Recording Tax nor title insurance.

New Construction Buyer Closing Costs

Buyer Closing Costs for Resales

Seller Closing Costs

Buying new construction typically means up to 2% in additional closing costs because sponsors will try to make the buyer pay their transfer taxes and even their attorney’s fees. Combined NYS and NYC transfer taxes are 1.4% for most residential sales $500,000 and below and 1.825% for purchases above. Sponsor’s attorney fees seem to keep creeping higher, and as of this writing range from $3,000 to $5,000.

Keep in mind that most things are negotiable in NYC real estate, including the sponsor’s transfer taxes and attorney fees. You can always make an offer which stipulates that you will not be paying any closing costs on their behalf.

If you don’t mention anything, the lawyers may well assume that you’re okay with paying up to 2% in additional closing costs as is “customary” in new construction deals. This unfortunately does happen to many unwitting buyers who work with inexperienced buyers’ agents who don’t bother mention what closing costs are to their clients.

The largest closing costs in a resale transaction for buyers are the NYC Mansion Tax of 1% for purchases of $1 million and over, and the Mortgage Recording Tax and title insurance for real property transactions, which include condos and houses but not coops.

It’s important to note that the $1 million threshold for the Mansion Tax is based on normal closing costs for a re-sale. If you pay additional closing costs on behalf of the seller, such as transfer taxes on behalf of a developer, then that will get added to your purchase price for the purposes of the Mansion Tax.

The Mortgage Recording tax only applies for real property such as single and multi-family houses and condominiums. Coops are not considered to be real property, and as a result loans for coop purchases are not considered to be mortgages. As a result, coop apartment buyers luck out and do not have to pay the Mortgage Recording Tax at all.

In a similar vein, title insurance is only applicable for purchasers of real property, and again coop apartment buyers luck out and do not have to pay any title insurance premiums. Title insurance is a significant closing cost that ranges from 0.4% to 0.5% of the purchase price on average. The exact amount of title insurance varies and is calculated through a complex formula which contains variable and fixed costs.

Closing costs for sellers in NYC range from 8% to 10% of the sale price, assuming that the seller is paying a standard real estate broker commission of 6% of the sale price. The other major components of seller closing costs include NYC and NY State transfer taxes which range from 1.4% to 1.825% depending on whether you are under or over $500,000.

Coop seller closing costs are higher if the coop building levies a flip tax on sellers. Flip taxes vary by building, if the building has one, and are usually 1% to 2% of the sale price. The flip tax, like many other closing costs, is negotiable as to who pays because most coop buildings will not care whether it’s the buyer or the seller which pays it. However in practice, all parties will usually that the seller pays the flip tax as is customary.