One of the first questions I am asked by most of my clients who are selling their home is: “What will I end up with after paying all of my closing costs?“. What follows is a comprehensive list of expenses typically incurred by sellers in the New York City area. It should be noted that transfer taxes and real estate brokers fees also apply to Coop and Condo sales. In fact a seller of a Coop may also incur additional fees from the Coop. such as management transfer fees, flip taxes and Coop attorney fees to facilitate the transfer.
(1) The seller typically pays the real estate broker’s fee due, if any.
(2) The seller typically pays transfer taxes. New York State has a transfer tax of .004 percent. Any property in New York City carries an additional one percent (1%) transfer tax on properties $500,000 or less. Anything above that carries an additionalÂ transfer tax of 1-1/4%. A Transfer tax on a New York City property can be substantial.
Note that the “mansion tax” of one percent (1%) on properties with purchase prices over $1,000,000 is paid by the Purchaser.
(3) If a seller in New York does not provide the statutory Property Condition Disclosure, then the purchaser shall receive a $500 credit at the closing. This cannot be couched as a reduction in the purchase price on the contract, and no credit given at closing. This does not apply to a cooperative, a commercial property, or a sale by an estate or other fiduciary.
(4) Property taxes not yet paid, but a lien, will be a credit to the purchaser prorated up until the date of the closing. For example, real estate taxes are due quarterly in NYC. Hence, if you close in August, you will be paying the full tax due in July, and will get a credit from the closing date in August through September 30th – the last day of the current quarter which runs from 7/1/14 through 9/30/14.
(5) If the contract provides that the seller is giving the purchaser a seller’s concession towards closing costs, this amount is deducted from the purchase price. The seller will receive a credit for the transfer tax attributable to the seller’s concession amount.
(6) The contract must be consulted to determine any other credits given to the purchaser by the seller for specific issues with the property.
(7) If there is a mortgage on the property, the title closer will usually charge a “pick up” fee per mortgage in the approximate amount of $175-$200. This is their compensation for confirming the pay-off amount, taking the pay-off check at the closing, and arranging for express delivery to the mortgage company.
(8) The seller will pay the recording fee for the Satisfaction of Mortgage. Lately, banks have been adding this cost to their pay-off, since they are required to forward a Satisfaction directly to the recording office of your county. Sometimes the title company will put this on their bill, but they are not allowed to charge you if the bank is charging you directly.
(9) If the sale is subject to a tenant, the seller will need to transfer the security deposit to the purchaser. Rent will be prorated to the date of closing.
(10) If the property has oil heat, the seller should obtain an oil dip from its oil company, with a receipt for the value of the oil, and the seller will get a credit for that amount from the purchaser.
(11) The seller may have to give the purchaser a credit for the prorated amount of the next water bill attributable to the seller. It is advisable to get a final reading near the closing, so the exact amount will be known.
(12) If the seller stays over beyond the closing date (in order to have time to move, or close on their purchase), which is usually limited to a five to seven day period, adjustments, including purchaser’s per diem interest on their mortgage, is calculated until the date of possession. If the seller stays beyond the agreed upon five to seven day period, there is an additional penalty of approximately $150-200 per day added to the adjustments.
(12) Seller’s attorney’s fee.
The above is a general guideline with respect to seller’s costs, deductions and credits. Your attorney should detail your specific expenses in writing at the time of your first meeting. I believe that this approach is best as most of my clients want to know these numbers prior to their focus on the terms of the contract of sale.
If you are a seller in need of legal representation, I can be reached at 718-377-8880 of by email at [email protected]
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