Understanding Seller’s Closing Costs in NYC

Understanding Seller’s Closing Costs in NYC: Example of a $1,500,000 Condo Sale

When selling real estate in New York City, whether it’s a condo, co-op, or townhouse, sellers face a range of closing costs. These costs can significantly impact the net proceeds from the sale. Using a $1,500,000 condo sale as an example, here’s a breakdown of the typical expenses and how they differ from selling co-ops and townhouses.

Estimated Seller’s Closing Costs for a Condo Sale in NYC

1. NYC Broker Commission: $90,000 (6%)

   • The largest seller expense is the real estate broker’s commission, typically 5% to 6% of the sale price. In this example, the seller would pay $90,000 in commission for the sale of a $1.5 million condo.

2. NYC Transfer Tax: $21,375 (1.425%)

   • NYC charges a transfer tax of 1.425% for properties sold over $500,000. This tax is paid by the seller and amounts to $21,375 in this case.

3. NY State Transfer Tax: $6,000 (0.4%)

   • New York State also imposes a transfer tax of 0.4%, resulting in $6,000 on a $1.5 million sale.

4. Seller’s Attorney Fee: $3,500 (0.233%)

   • Sellers in NYC typically hire an attorney to handle contract review, negotiations, and the closing process. Attorney fees range from $2,000 to $5,000, with $3,500 being a common cost.

5. Mortgage Satisfaction Recording Fee: $100 (0.007%)

   • If the seller holds a mortgage on the property, they will need to pay a $100 fee to record the satisfaction of the mortgage with the city upon sale.

6. Bank Loan Satisfaction Fees: $50 (0.003%)

   • Many banks charge a small fee, usually around $50, to close out and record the mortgage payoff with the city.

7. Seller Power of Attorney Recording Fee: $0 (0%)

   • In this example, the seller did not use a Power of Attorney, so there is no cost here. If used, it could incur a fee for recording the document.

8. Building Move-Out Fee: $500 (0.033%)

   • Most condo buildings charge a move-out fee to cover the logistics of the seller moving out. This fee is typically $500.

9. Building Managing Agent Closing Fee: $500 (0.033%)

   • Condo buildings often charge a managing agent closing fee to handle paperwork and coordinate the transfer of ownership, typically around $500.

10. Building Flip Tax: $0 (0%)

• Flip taxes are common in co-ops but rare in condos. In this example, the seller did not incur a flip tax, which can range from 1% to 3% in other cases.

Total Seller Closing Costs for the Condo:

$122,025 (8.13% of the sale price)

• After deducting the closing costs, the seller’s net proceeds would be approximately $1,377,975 (91.86% of the sale price).

Comparison: Condo vs. Co-op vs. Townhouse Selling Costs

1. Co-op Selling Costs

Co-op sales have several additional fees compared to condos, as well as some notable differences:

• Broker Commission: The same as condos, 5% to 6% of the sale price.

• NYC and NY State Transfer Taxes: Similar to condos, with 1.425% and 0.4%, respectively.

• Co-op Fees:

  • UCC-3 Termination Fee: Co-ops require a UCC-3 termination, a legal document showing the seller no longer owns the shares of the building’s corporation. The fee is typically around $100 to $200.
  • Co-op Transfer Tax Filing Fee: There’s often a filing fee for the transfer of stock ownership, usually between $50 and $100.
  • Co-op Stock Transfer Tax: This is rare but may apply in some buildings.

• Flip Tax: Co-op buildings frequently charge a flip tax, which can range from 1% to 3% of the sale price. If the flip tax in a co-op sale were 2%, it would add $30,000 to the seller’s costs for a $1.5 million sale.

• Attorney Fee: Typically the same as for condos, ranging from $2,000 to $5,000.

• Managing Agent Closing Fee: This fee, usually around $500, is common in co-ops as well as condos.

Total Co-op Closing Costs: Due to the flip tax, co-op closing costs can be higher than condo sales. For a $1.5 million co-op, the seller’s total closing costs could reach around 10% or more of the sale price, primarily due to the flip tax.

2. Townhouse Selling Costs

Townhouse sales differ because there are no building-related fees such as managing agent or move-out fees. However, townhouses typically have higher title-related expenses:

• Broker Commission: Same as for condos and co-ops, typically 5% to 6% of the sale price.

• NYC and NY State Transfer Taxes: The transfer tax rates are the same for townhouses as for condos and co-ops—1.425% for NYC and 0.4% for NY State.

• Attorney Fee: Sellers will still need legal representation, with fees in the $2,000 to $5,000 range.

• Mortgage Satisfaction Fees: If the seller has an existing mortgage, they’ll need to pay satisfaction fees similar to condos, ranging from $100 to $200.

• Title and Survey Fees: While not applicable to condos and co-ops, townhouses often require a title search and survey fees to verify property boundaries, which can add an additional $500 to $1,000 to the closing costs.

• Move-Out Fees: Townhouses generally do not have move-out fees, unlike condos and co-ops.

Total Townhouse Closing Costs: Without building-related fees and flip taxes, townhouse closing costs are typically lower than co-ops and comparable to condos, usually ranging between 7% to 8% of the sale price.

Conclusion:

When selling real estate in NYC, closing costs can vary significantly depending on the property type. In a $1.5 million condo sale, closing costs typically total around 8.13%, including broker commissions and transfer taxes. Co-op sales tend to incur higher costs due to flip taxes and additional co-op fees, often exceeding 10%. Townhouse sellers, on the other hand, generally face lower overall closing costs, similar to condos but without the added building-related fees. Understanding these differences is essential for estimating net proceeds and planning a sale efficiently.