NYC condo closing costs are notoriously high due to the many state and local taxes and fees charged to buyers and sellers. As a rule, buyers can expect to pay between 2 and 4 percent in closing costs, unless they’re purchasing new construction, in which case the closing costs can even be as high as 5%. Meanwhile, NYC condo sellers can expect to pay around 8-9% in closing costs, the bulk of which is due to the 5-6% real estate commissions, which are standard in the city.
NYC Condo Closing Costs for Buyers
Here is a brief overview of the different fees and taxes that you will have to pay at closing when you buy a condo in NYC.
Buyer Attorney Fees
NYC condo buyers can expect to pay between $1,500-$4,000 in attorney’s fees.
Mortgage Recording Tax
If you’re financing your condo purchase, you’ll need to pay a mortgage recording tax. The rate for this tax is 2.05% for loans below $500,000 and 2.175% for loans of $500,001 or more, but in NYC, your lender will pay 0.25% of the mortgage recording tax for you. That means that the effective mortgage recording tax rates are 1.8% and 1.925%, respectively.
To obtain a mortgage, you will have to pay various bank fees, including appraisal fees, credit check fees, and bank attorney fees. The exact amounts are typically based on the condo’s purchase price, but you can expect to pay a few thousand dollars in bank fees. You’ll also have to prepay interest up through the first month of the loan.
If you decide to hire a property inspector to check the condition of the property before you purchase, you should budget anywhere from $600-1,000 to cover this fee.
Title insurance is another fee that’s based on the purchase price of the property. Typically it’s around 0.4% of the price, so if you’re buying a condo for $1,000,000, it would be around $4,000.
Condo Board and Move-In Fees
Most condo buildings will charge board application fees that can range from a few hundred to a few thousand dollars. In addition, you may have to pay move-in fees, although not all buildings impose them.
New York City has a progressive mansion tax that starts at 1% for properties priced between $1,000,000 and $1,999,999. Condos priced above $2,000,000 are subject to increasing tax rates, ranging from 1.25% up to 3.9% for condos that sell for over $25,000,000.
In NYC, it’s not uncommon for sponsor sales in new condo developments to require the buyers to cover some of the developers closing costs. However, this is influenced by the state of the real estate market. In a hot market, where sellers have the upper hand, you’ll be expected to cover the seller’s transfer taxes and attorney’s fees. But in a buyer’s market, the sponsor might not ask you to cover any fees. As with most things in real estate, this is always negotiable.
NYC Condo Closing Costs for Sellers
Here is a brief overview of the various fees and taxes NYC condo sellers will have to pay at closing.
Real Estate Commission
NYC real estate brokerages typically charge a 5-6% commission to sell a property, which the seller pays. This fee is of course negotiable, but the wide majority of sellers in the city work with full-service brokers who will not usually budge much, if at all.
Sellers can expect to pay between $1,500 and $3,000 in attorney fees. Typically, they’re slightly lower than buyer attorney fees as the buyer’s attorney will be doing more work and looking into the building’s financials.
NYC Real Property Transfer Tax and Filing Fee
Sellers will have to pay the Real Property Transfer Tax (or RPTT) on and transfers of real property in NYC. This tax rate is 1.0% for sales of condos priced at $500,000 or less, or 1.425% for condos that sell for over $500,000.
New York State Transfer Tax
Just as NYC takes its pound of flesh, New York State does as well. The state transfer tax is equal to 0.4% of the sales price of the property.
Mortgage Payoff Fees
If you have an outstanding mortgage balance, your lender might charge a few hundred bucks to send a payoff letter.
While flip taxes are most common in NYC co-ops, a handful of condos have also instituted them. That being said, it’s quite rare for a condo to have a flip tax.
Move Out Fees
Some condo buildings will charge a move-out fee, which can range from a few hundred dollars to a couple of thousand dollars.
How can NYC Buyers and Sellers save on Condo Closing Costs?
There aren’t too many ways for NYC buyers and sellers to save on closing costs. One of the few ways sellers can save money is to try and go the for sale by owner route or to work with a discount broker, but this is risky. As for buyers, they can work with a broker that offers a commission rebate, but this works best when the buyer has already found the property they want to buy as rebate brokers don’t always offer the same level of service as traditional brokerages.