When a home sale finishes up, or “closes”, both the buyer and seller need to pay closing costs that cover the expenses related to transfer of ownership, loan origination, inspections, and more.
Closing costs for sellers in New York typically range from 1-3% of their home's closing price, and are paid in addition to the typical 6% realtor commission fee, meaning that you should budget for 7-9% in total home selling costs.
Thankfully, there are ways to save big on realtor commission fees, lowering the total cost at closing by as much as 28% without sacrificing service.
If you want to work with a top real estate agent in your area and save up to 50% in commission fees alone, Clever can help.
Clever connects sellers with full-service agents who charge only a fraction of the typical price, drastically lowering what you'll have to pay at closing.
Get in touch to set up a free, no-obligation consultation with an experienced agent to learn how much you can save on your home sale.
In the meantime, here's everything you need to know about seller closing costs in New York.
What are closing costs?
Before we discuss closing costs, let's clarify what closing means.
At the end of your home sale, you will sign the final paperwork, receive money from the buyer, pay any applicable real estate taxes, pay off your mortgage, and transfer ownership to the buyer.
This process is referred to as closing, and it's typically facilitated by an escrow agent, attorney, and/or real estate agent.
Buyers and sellers both have to pay closing costs to cover these services, but the expenses are different for each. Buyer closing costs generally revolve around securing a loan and taking out insurance, while a seller's fees focus on paying transfer taxes, clearing the title, and paying off any outstanding balances.
How much are closing costs in New York?
Sellers will typically be on the hook for 1-3% of their home's sales price in closing costs.
But this doesn't include the realtor commissions the seller will also pay at closing. Usually, sellers will pay 6% in commissions, which covers both the listing agent's and the buyer's agent's fees.
In some cases, the seller will offer to pay some of the buyer's closing costs in an effort to entice them to make a purchase. This is referred to as seller concessions, and it raises the total amount the seller will need to pay in closing costs.
How to Calculate Your Closing Costs in New York
Let's take a look at a real world example to get a better idea of how this all plays out in practice.
As of September 2019, the median list price for New York homes is $399,000. If you sell your home for this price, you'll need to pay between $3,990 (1%) and $11,970 (3%) in closing costs.
To reiterate, this does not include realtor commission fees. You will need to pay an additional $23,490 (6%) in commission fees for a home sold at this price, bringing your total costs on closing dat to $27,930-$35,910.
Buyers will also be on the line for 2-5% in closing costs ($7,980-$19,990), but they will not need to pay any commission fees.
What's included in New York closing costs?
Let's take a closer look at each of the typical closing costs in New York. Since a buyer might ask you to cover some of their closing costs, it's crucial you understand all closing costs and how much they can affect your bottom line.
Title Search: $300-$600
Title searches check for any outstanding liens on the property being sold. This makes sure that the seller can legally sell the property. A typical title search will cost sellers $300-$600, according to realtor.com.
Title Insurance: $1,000
Title insurance works backwards, not forwards like most insurance policies. It protects buyers and lenders against title issues, such as liens, that they weren't aware of at the time of the purchase.
According to realtor.com, title insurance typically costs around $1,000 at closing time.
Home Inspection: $278-$390
Appraisal: $300-$1,500 (depending on sale price)
Lenders ask for buyers to perform an appraisal to verify whether the home is worth the amount the buyer is attempting to borrow. If an appraiser determines that the home is worth less than the desired mortgage amount, the lender will decide that it's insufficient collateral, and won't provide the buyer with the loan.
A typical appraisal in New York will cost $300-$1,500 depending on the sales price, according to finder.com.
Surveys are conducted to determine the legal boundaries of a property. A survey typically costs $350-$500.
Credit Report: $10.10-$15.20
Buyers need to pay for a credit report to prove their credit worthiness to a lender.
In New York, a single report costs $10.10 and a joint report costs $15.20.
Loan Payoff Costs: 0.5-1.5% of the closing price
When taking on a mortgage, buyers will need to pay application, loan origination, assumption, and prepaid interest fees.
These fees will typically cost 0.5-1.5% of the closing price, according to Money Crashers.
Mortgage Payoff/Prepayment Fees: Variable
Before closing on your home sale, you'll need to pay off your remaining mortgage balance. Some lenders charge a penalty for paying off your loan before the end of its term. Every lender charges a different fee, so check with mortgage lender to find out if you'll need to pay this expense.
Outstanding Amounts Owed on the Property: Variable
Any outstanding balances for property taxes, homeowners insurance, utility bills, or HOA fees will be prorated to the closing date, and you'll need to pay them before finishing up your home sale.
Transfer Taxes: 0.4-1.425% of the closing price
New York state has very complex real estate tax regulations. Throughout most of the state, sellers are required to pay 0.4% of their home's closing price. In New York City, the rate is 1% for homes sold for under $500,000 and 1.425% for properties that sell above this threshold.
Recording Fees: $250-$750
Recording fees cover the cost of filing the property deed with the local municipality. The fee ranges from $250-$750 in New York.
Settlement or Attorney Fee: Variable
If you have an attorney assist you with closing, you'll need to pay their fees. These vary greatly across New York. If you opt to use an escrow or title agent instead, you'll pay approximately $2 per $1,000 in sales price.
New York City Mansion Tax: 1% of purchase price
If you purchase a home for over $1,000,000 in New York City, you will need to pay the New York City Mansion Tax. Buyers will be charged 1% of the purchase price for this tax.
UCC-3 Filing Fee: $100
The UCC-3 form is filed to terminate your mortgage. The cost of filing this form in New York is $100.
New York State Equalization Fee: $75
The New York State Equalization fee is paid to assess how close a municipality's property value assessment is to the real value of the property. This costs $75.
Pickup/Payoff Fee: $250-$500
The title closer charges this fee to handle bank payoff. This fee ranges from $250-$500 in New York.
New York City Mortgage Tax
If you are taking out a mortgage in New York City, you will need to pay the New York City Mortgage Tax. Rates are currently 1.80% for mortgages under $500,000, 1.925% for mortgages on one-to-three family homes over $500,000, and 2.80% for all other mortgages over $500,000.
Other Home Selling Costs in New York
When selling a house in New York, you'll also need to pay for presale renovations, repairs that crop up during the inspection, and realtor commission fees.
Depending on the condition of your home, you may or may not need to perform any repairs or renovations. If your home is well-maintained, you may get lucky and save big on repair costs.
Commission fees in New York are 6% on average. These fees are split between the buyer's and seller's agent, but sellers typically pay the entirety of these fees to entice a buyer to make a purchase.
Who pays closing costs in New York?
Buyers and sellers each have to pay different closing costs. Here's a list of who typically pays what costs:
Typical Seller Closing Costs
Costs for sellers revolve around taxes, fees related to ownership confirmation, property transfer, and getting rid of outstanding balances. These include:
- Transfer taxes
- Title search
- Loan payoff costs
- Mortgage prepayment penalties
- Outstanding amounts owed on the property
- Attorney or settlement fees
- UCC-3 filing fee
- New York State Equalization fee
- Pickup/payoff fee
Typical Buyer Closing Costs
Most costs for buyers are focused on securing a mortgage and taking out an insurance policy. These costs include:
- Title insurance
- Home inspection
- Credit report
- Recording fees
- Settlement or attorney fees
- Mortgage origination fees
- Mortgage tax (New York City only)
- Mansion tax (New York City only)
Should you pay the buyer's closing costs?
In some markets, sellers may offer to pay some or all of the buyer's closing costs to convince the buyer to make a purchase. A seller can accept a higher final sale and use some of the money to pay the buyer's closing costs.
This allows buyers who don't have enough money for closing costs to finance the expenses as part of their mortgage and gives sellers a wider pool of buyers to draw from.
However, in a hot market like New York, this is generally not necessary. New York is currently in a seller's market, which means sellers hold all the cards and have more power at the negotiation table.
That said, every situation is different, so it's a good idea to speak with your realtor if you think it may be worthwhile to pay some of the buyer's closing costs.
Key Takeaways for New York Home Sellers
In New York, sellers must pay 1-3% of their home's sales price in closing costs. For a typical New York home, this comes to $3,990-11,970.
These costs must be paid in addition to realtor commission fees, bringing the total fees associated with closing a home sale to $27,930-$35,910 (7-9%) of the final price.
Luckily, you can save big on realtor commission fees and lower the overall amount you pay on closing day by as much as 28% if you know where to look.
Clever connects sellers with top-rated, local agents who offer their services for a fraction of the typical price.
Get in touch to schedule a free, no-obligation consultation and learn how you can save thousands and still work with a top-rated agent in your area.