Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.
Dear sellers, while we hope you are sitting on a big profit and lots of gains on your equity, you may be surprised at how much you will actually net after closings costs and taxes. What are the closing costs for sellers in NYC?
How much do sellers pay in average?
Closing costs for sellers can total 8% to 10% of their sale price!
Your closing cost bill is based on a number of factors including property type (condo vs. co-op), purchase price, amount borrowed and whether the property is a resale or new construction. If you have a mortgage this can mean a significantly larger percentage of your equity. In some instances, 8 to 10% of the home price in fees from closing costs can represent 40% or more of the equity in your home (if you only put 20% down when you got a mortgage for example).
There are 5 major closing costs types sellers pay:
1. Broker fees
This represents by far up the largest portion of the closing costs when selling a home. Sellers in NYC typically pay all of the broker fees (buyer’s agent commission included, hence the half-truth that it’s free to have a buyer’s agent since “the seller is paying for it”).
Typical commissions represent 5 to 6% of the apartment price in NYC. These commissions are usually split evenly between a buyer’s agent and a seller’s agent.
Despite advances in technology, broker commissions in NYC have remained unchanged around 6%. To make matters worse, it’s very difficult for a seller to negotiate commissions with a prospective listing agent and it you are lucky you can get them down to 5%. Despite all recent technology advances in technology, listing agents in NYC are still refusing to go below 6% commission.
2. New York City & New York State Transfer Taxes
Transfer taxes are paid by sellers (unless it’s a new development). The new York City Real Property Transfer Tax is
If you are selling 2 or more un-attached units to your buyer at the same time, you are required to pay the commercial RPTT rates:
Unfortunately New York State also has a transfer tax and charges an additional 0.40% transfer tax on the purchase price.
3. Real Estate Attorney
Most real estate attorney fees will generally range anywhere from $2,000-$4,000 for the transaction. Real estate attorneys in NYC typically charge you a flat fee upon the closing of the deal.
It’s important to do proper due diligence and find an experience attorney. Referrals are always a good route. Interview, call and quote before making a decision.
4. Move Out Deposit & Fees – $1,000 to $2,000
The specific amount varies by building but a general rule of thumb is to budget around $1,000 for a refundable move-out deposit and another $1,000 in potential non-refundable move out and closing related fees levied by your condo or co-op.
5. More and more fees – $1,000 to $2,000
6. Don’t forget capital gain taxes
While this isn’t technically a “closing cost”, it is certainly something you must consider. If you are selling your primary residence, you have lived there for 2 years or more (out of the last 5 years), and are married, you can typically exclude the first $500,000 in capital gains and take them tax free. If you are single, it would be only $250,000. Don’t forget all the closing costs you paid when you bought your home and also be sure to tell your accountant about all the work and improvements you made along the way.
Sellers can reduce those closing costs: transfer taxes are unavoidable but commission costs are not
At 5-6% of the home price, commissions are the largest cost that you can actually control. For example, sellers with NestApple, pay only 1.5% listing agent commission, allowing them to save up to 4.5% versus traditional brokers.
NestApple delivers the same experience as a traditional agent, handling pricing, marketing, private showings, open houses, and negotiation. If a buyer comes with a buyer’s agent, sellers typically offer an additional commission to the buyers’ agent (up to 2.5%) to incentivize them to bring their buyers. If a buyer comes without a broker, sellers pays only the 1.5% NestApple commission: a big difference of NestApple versus traditional brokers.
Our advice to you regarding seller closings costs is to control what you can. If you have specific questions relating to your home feel free to reach out to NestApple agent for advice.