Closing fees, including condominium closing costs, are the assortment of real estate transaction costs that buyers and sellers must reconcile at the time of closing. They encompass a variety of expenses such as property taxes, mortgage recording fees, and attorney fees. While the majority of these costs are non-negotiable, savvy buyers and sellers have strategies at their disposal to mitigate their overall closing expenses, like opting for a cash transaction or securing a buyer commission rebate from innovative real estate brokerages.
In the bustling real estate market of NYC, home buyers have the potential to significantly trim their condominium closing costs by partnering with a reputable and comprehensive brokerage that adopts a flat fee model for both seller and buyer representation. For instance, a company like Prevu extends a buyer commission rebate for every apartment procured through its services, providing buyers a substantial offset against their condominium closing costs in NYC.
Condominium closing costs in New York are substantially influenced by the broker fee, a prevalent closing cost for both condos and co-ops. The broker fee, traditionally set at 6 percent, is divided between the listing and buyer’s brokers, equating to approximately $30,000 on a $1 million apartment purchase. To further understand condominium closing costs, it’s imperative to consider the city and state transfer tax. This tax is seller-paid and pegged to the property’s sale price, amounting to 1% for properties under $500,000 and escalating to 1.425% for more expensive properties. Properties surpassing the $1 million mark are also subject to a mansion tax of 1%.
Diving deeper into condominium closing costs reveals additional significant expenses, such as the title insurance policy and mortgage recording fees, both potentially reaching into the thousands. Attorney fees, pivotal for navigating condo and co-op purchases, vary based on the transaction’s complexity but generally range from $3,000 to $5,000 for a standard closing.
Transitioning to the logistical aspects of moving, condos and co-ops may impose move-in/move-out fees, varying from several hundred to several thousand dollars. Co-ops might additionally necessitate board application fees and/or maintenance charges.
Despite the multitude of expenses, buyers of condos and co-ops have avenues to mitigate their condominium closing costs. Opting for a nearly new condo over a brand-new unit can result in substantial savings, and buyers should feel empowered to negotiate with lenders to cover part of their legal fees.
To ensure a seamless closing process, acquiring the services of a seasoned real estate attorney, with specialization in condos or co-ops, is paramount. This legal support guarantees efficiency, minimizes hiccups, and ensures thoroughness in all necessary steps, from home inspection to lawyer due diligence, ultimately contributing to a reduction in condominium closing costs.
When buying a condo in NYC, you’ll need to budget for both the purchase price and the condominium closing costs. These expenses will typically total 8% to 10% of the sale price. The exact amount you’ll need to pay varies depending on a number of factors, including property type (condo vs co-op), purchase price, and whether it’s new construction or a resale.
Generally speaking, condominium closing costs for condominiums are lower than for co-ops. This is because co-ops have a lot of additional fees such as flip taxes and transfer fees that are not found in condos. Closing costs for resales and new construction will vary as well, with new constructions typically having higher associated fees.
The most common fees for sellers include the real estate brokerage fee, which is paid to your broker when you sell your apartment. This is typically a percentage of the sale price and is negotiable. Then, you’ll need to pay your attorney’s fee. These fees are usually a flat rate, but they can be higher in certain situations such as when the sale is a complex transaction or requires work to prepare the property’s title. Understanding these condominium closing costs can help sellers better prepare for the financial aspect of their sale.
Mortgage-related fees also contribute to condominium closing costs and are a part of the closing cost equation, including application fees, appraisal fees, credit report charges, and bank attorney fees. These are all part of the financing process and should be disclosed by your mortgage broker upfront.
In addition to these standard fees, most co-ops and condos will charge you a move-out deposit and non-refundable transfer fee when you sell your unit. These are typically listed in the resale application or board package. Some condos will also charge you a fee to change the address on your building’s records. It's crucial to factor in these condominium closing costs when preparing for your sale.
Sellers also need to pay their share of the common charges for their building, which are based on a monthly basis and cover expenses like maintenance, utilities, and staff salaries. This can range anywhere from $200-$300 per month, and it’s often included in the resale application.
Lastly, you’ll need to pay any applicable property taxes. These are assessed annually by the city and are based on the value of your home.
Buyers closing costs for a condo in NYC also encompass a variety of fees, including the attorney’s fee, bank fees, and an appraisal. Buyers will also need to pay any mortgage recording tax that is required by the lender and a premium for title insurance, which protects purchasers and lenders against claims related to a property’s ownership. Being aware of all potential condominium closing costs is essential for a smooth transaction.
It’s important to know about these additional fees so that you can plan accordingly for when you’re ready to buy a NYC condo. With the right guidance, you can make the most of your purchase and avoid any surprises at the closing table.
Aspiring NYC homebuyers need to be aware of the condominium closing costs that are an essential part of finalizing their real estate transaction. These fees may exceed 5% of the purchase price of the property and include a variety of expenses such as attorney’s fees, mortgage recording taxes, title insurance, and the mortgage loan origination fee (also known as the underwriting fee). Fortunately, there are strategies to mitigate these costs; for example, engaging with a reputable real estate agency can result in significant savings on condominium closing costs in New York.
While the condominium closing costs for buying and selling a condo in New York share many similarities, some of the seller’s fees differ from those involved in purchasing a co-op or single-family home. A seller’s broker fees, typically around 6 percent, can be reduced if the seller agrees to share the commission with the buyer’s agent. Likewise, the transfer tax is uniform for both condos and co-ops but escalates for properties valued at or above $1 million.
Mortgage lenders typically charge an application fee and an appraisal fee, but it’s worth noting that these are often negotiable. The condominium closing costs associated with a mortgage loan may also include an underwriting fee and a courier fee. To avoid surprises, potential buyers should request a comprehensive list of all condominium closing costs from their mortgage broker prior to application.
Beyond mortgage fees, condominium closing costs for a condo also encompass real estate attorney’s fees, building application fees, and the 1% mansion tax applicable to properties priced at or above $1 million. Moreover, the lender will charge a rate lock fee to safeguard against interest rate fluctuations during the period between signing the loan documents and closing on the property.
Homeowner’s property tax is another consideration, calculated based on the market value of the home. Typically, buyers are required to pay one year’s worth of property tax at closing, with the amount collected and disbursed through an escrow account.
Navigating the purchase of your first NYC apartment can be a thrilling yet daunting endeavor, especially when unfamiliar with the associated condominium closing costs. Engaging with a reputable real estate agency, can streamline the process, minimize closing costs, and ensure a smoother transaction. Don’t hesitate to reach out to us today to embark on your journey to finding the perfect NYC apartment. We are here to assist you every step of the way!
Avenue Law Firm
99 Park Ave 10th Floor, New York, NY 10016, United States
(212) 729-4090