New York City Buyer Closing Costs

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Written By Alina Sokirko

You need a lot of money to buy an apartment in New York. Besides a hefty down payment, you’ll need to cover a variety of other fees associated with purchasing a home. Here’s a look at NYC buyer closing costs. 

Housing prices in NYC are exorbitant. But when shopping for a New York City home, many buyers don’t realize just how much they’re going to have to hand over at closing. This is particularly true for condos, which have very high closing costs for buyers. Here are the differences between co-op and condo closing costs in New York City.

Co-op vs. Condo Closing Costs 

New York City is riddled with condos and co-ops, each with its own advantages and disadvantages. One of the benefits of buying a co-op in NYC is that closing costs are generally lower than condos. You can expect to pay about 1% to 2% of the purchase price for a co-op in closing costs. If the co-op is more expensive than $1,000,000, which is common in NYC, the closing costs will go up to between 2 and 3%. Condos, however, come with a closing cost price tag of 2% to 4%. Some may be cheaper, but others go up to 5%, mainly if it’s a newly constructed building.

Unfortunately, condos in NYC are expensive in and of themselves, and they also have higher closing costs. With a condo, you’re buying real property, which means you will have a mortgage and all the fees associated with that mortgage. Primarily, you’re going to have to cover mortgage recording tax fees and the purchase of title insurance. You’re not purchasing any real property with a co-op, so you don’t have to pay mortgage taxes. Instead, what you are buying is a share of the entire property owned by all co-op members.

Attorney Fees

Well, you have to cover attorney fees for both condos and co-ops. These usually range between $1000 and $5000 for the entire transaction. Most NYC real estate lawyers will charge a flat fee due at closing.

Mansion Tax

If you’re looking at properties that cost over $1,000,000, you need to consider that NYC will charge a mansion tax. You probably aren’t getting a mansion for that price because it’s New York. Nevertheless, you have to pay the tax. The mansion tax is very similar to transfer tax and is charged at graduating rate that’s typically 1% if the property is on the lower end of the pricing scale and can be as much as 3.9% for properties that are pricier than $25 million.

Title Insurance

As mentioned previously, title insurance will only need to be paid if you’re purchasing a condo. You need to buy title insurance for any property that requires a mortgage. The cost of title insurance varies, but you can usually estimate to pay about 0.425%. Don’t try and skip out on title insurance. It’s costly, but it’s ultimately for your protection. You probably won’t be able to skip out on it anyway since most lenders require you to purchase it.

Mortgage Recording Tax

Once again, the mortgage recording tax only applies to condo buyers (sorry). You’re going to need to pay 1.8% to record a mortgage that’s less than $500,000 and 1.925% on mortgages over $500,000.

Transfer Taxes

This is yet another closing cost for condo owners, but only if purchasing a newly developed condo. In NYC, however, many condos are new developments, so there’s a high likelihood that this will apply to you. The NYC real property transfer tax for properties that are valued at $500,000 or less is 1%. If you’re purchasing at home over 500,000, prepare to fork over 2% to 5% in transfer taxes. But this is only city tax, and the state will charge you another 0.40% on top of what you paid to the city. 

Flip Tax

This last tax applies to some co-op purchasers, who will have to pay a flip tax at closing. This is similar to a transfer tax paid to the co-op corporation. There are differences in who pays flip tax depending on the co-op that’s being purchased. Most co-ops require the seller to pay, while others charge the buyer.

How To Offset Buyer Closing Costs in New York

You’re probably feeling a little disheartened after reading all of the costs you can incur at closing. But the good news is there are some ways to offset these costs. The simple truth is that you will have to pay some fees at closing. There’s really no way around it. But you can ask a real estate agent or do some research to find out ways that you might be able to mitigate some of the expenses. 

One way to offset closing costs is to utilize a buyer agent rebate. This is a percentage of the commission paid to the buyer’s agent that they will rebate back to the buyer upon closing. Not every buyer’s agent will offer a rebate, so you should ask around before settling on an agent to help you with your transaction.

NYC Buyer Closing Costs Bottom Line

Purchasing a home in NYC is already an expensive endeavor, mainly because property prices are so exorbitant in the Big Apple. It’s critical that you don’t forget to estimate and factor in closing costs because they can be really expensive, especially with properties that are already pricey. There are plenty of online tools available to help you estimate closing costs, or you can ask your real estate agent for assistance. Just do your research and due diligence so you don’t get a nasty surprise at closing.