How Much are Closing Costs?

When purchasing a single-family, multi-family home, or condominium you MUST account for your closing costs, in addition to your down payment and reserves. Here is a breakdown closing costs and how much they are.

How Much Are Closing Costs?

A real estate buyer should be ready to pay additional closing costs upwards of 2-5% of the purchase price. These closing costs include but are not limited to title insurance, mortgage recording tax, pre-purchased points, property tax escrow, mortgage origination fee, and attorney fees. For an approximate estimate of your closing costs, you can request a free closing cost estimate. Additionally, lenders will require a borrower to have at least six (6) months of monthly mortgage payments in your account as reserves. Some lenders require twelve (12) months.

To put this in perspective, a purchase of a $600,000 (1-2 family residential home or condominium) within the five boroughs, with a $480,000 loan, carries approximately $15,000 in closing costs. Remember, the closing costs are in addition to your down payment.

Keep in mind, there is a special tax (“Mansion Tax”) of 1% of the purchase price if the purchase price equals $1 million or more. This tax is the responsibility of the purchaser.

New Construction Condos

When purchasing a new construction condominium, buyers should expect to have higher closing costs. This is because the developer a.k.a sponsors typically will pass along the sellers closing costs onto the buyer. Normally a seller’s obligation, the purchaser will pay the New York State Real Estate Transfer Tax (“State Transfer Tax”) currently equal to $2 per $500 of the purchase price. Other taxes to consider are: the Special Additional Tax of 1 % where the purchase price equals $1 million or more; the New York City Real Property Transfer Tax (“RPT Tax”) currently equal to 1 % of the purchase price if the purchase price is $500,000 or less; and, New York City Real Property Transfer Tax (“RPT Tax”) which is 1.425% of the purchase price if the purchase price is more than $500,000.

A well-versed real estate attorney can negotiate for the sponsor to pay these closing costs. This is why it’s so important to choose the right team when it comes to New York new construction.

In addition, when buying a new construction condominium, you should also be prepared for some miscellaneous expenses such as capital contribution to the building for common charges, the first two months of common charges, and adjusted property taxes.

Closing Costs for the Seller

When selling a home or condo, unless otherwise negotiated, sellers are usually responsible for the New York State Real Estate Transfer Tax which is equal to $2 per $500 of the purchase price plus, the New York City Real Property Transfer Tax (“RPT Tax”) currently equal to 1 % of the purchase price where the purchase price is $500,000 or less and 1.425% of the purchase price where the purchase price is more than $500,000.

Closing Costs for the Purchaser of a Cooperative (Co-op)

The closing costs typically associated with co-op purchasers are less than a condo or home. This is because co-ops are not considered “Real Property” under the property laws of New York. Unlike a home or condo, a co-op doesn’t have title insurance, title fees, mortgage recording tax, and other similar fees.

However, when selling or purchasing a co-op, there could be co-op fees associated with the transaction. These fees include but are not limited to the “flip tax” (usually paid by sellers), transfer agent fees, lien, and judgment search. Have an experienced New York cooperative real estate attorney ensure the fees are put on the responsible party in your contract.

To get answers to all of your closing cost questions, you can receive a closing estimate here or you can call our office directly to have a strategy session about your upcoming deal.