Regardless of whether you are buying or selling property, there is more to it than merely the cost of the house. In NYC, the cost of selling a home is a big deal. The costs are non-negotiable and have to be paid when the real estate transaction is finalized.
So, before you actually make an offer and identify your budget, wouldn’t you like to have some idea of the costs involved in selling a house and who pays the closing costs?
In NYC, your best bet for selling or purchasing a home is to work with a real estate agent. The NYC market is big and complex. Buyers have nothing to lose financially when it comes to agent’s fees since they’re under no obligation to pay them in a real estate transaction.
That burden falls to the seller. The only way a seller can avoid paying commission is by foregoing the use of an agent and selling the property themselves (for sale by owner, or FSBO for short).
Broker’s commission is one of the primary factors that contribute to the seller’s closing costs. There is no set limit in NY law for how much a seller should pay. But the seller typically pays the agent 5% to 6% of the sale price as a commission. The commission total is split equally between buyer’s and seller’s agents.
Sellers need to pay at least 2.5% to 3% to a buyer’s agent to keep the agent motivated to see the transaction through to completion. On the other hand, if there is no agent involved on the buyer’s end. All of the commission goes to the listing agent, which the seller is still responsible for. Therefore, buyers hardly pass on the opportunity to hire a real estate agent since they don’t have to pay them a penny.
The seller’s closing costs include the property transfer tax. After the broker’s commission, it is the second-largest contributor to closing costs. The seller is not only supposed to pay the New York City transfer tax but also the New York State property tax. The NYC transfer tax accounts for 1% of sales below $500k. For sales above $500k, the transfer tax stands at 1.425% of the property’s value.
The seller has to pay the cost of selling a house and there is no way around it.
The seller’s attorney fee is usually a minimum of $2,000 to $3,000. However, there is no guarantee that the fee won’t grow as high as $5,000 given the complexities of the deal.
The seller is supposed to pay the attorney’s fee associated with the closing costs unless there is a mutually agreed-upon arrangement between both the buyer and the seller. Attorneys will sometimes request half of the fee in advance and the remaining when the deal is finalized.
In NYC there are building laws that apply to sellers when they sell property. Sellers have to pay the move-out deposit as well as the move-out fee when selling the property. Don’t get tempted to skip out on this expense if you’ve already vacated the property.
To ensure your obligation is documented and you’re in the clear, contact the building’s managing agent and look for any concessions you may get from the agent.
There will be a lot of paperwork involved when you’re ready to execute the sale. Your building’s managing agent will be chipping in with what is expected of him. For rendering the services, a building’s managing agent may also charge you a small fee for their services. Which is calculated in the seller’s closing costs.
The residential deed transfer fee is a small fee added to the closing costs that are associated with recording the sale in public records.
The above-mentioned expenses are general expenses sellers are supposed to pay toward the cost of closing.
Brokers’ commissions and property transfer taxes make up a huge portion of the closing costs while the remaining fees are less hefty. As a whole, sellers end up paying anywhere from 7% to 10% of the total sale value of the property in closing costs.
If we consider the advice of the experts in the real estate market. There are two indicators that signal that it’s a good time to sell your property:
Selling your home can be expensive and there are some hefty costs you cannot negotiate. Even if you have decided to hire an agent. Property taxes are unavoidable.
One bold step you may take to lower your closing costs is to not hire an agent. You can sell the property yourself, which would cut out the commission fee you would have had to pay your agent. Of course, you’re still on the hook for paying the buyer’s agent commission fees.
Buyers can also offset closing costs by taking advantage of the buyer’s agent commission rebate when the buyer’s agent returns a portion of their commission to the buyer.
We believe you now know ways in which you can upset the costs associated with selling. We wish you the best of luck with your sale!