Whether you’re buying or selling a home in New York City, you’re going to encounter a lot of fees, contracts, and negotiations. But there are additional expenses to fork over when it comes time to seal the deal on a home. These are called closing costs.

Both buyers and sellers have to pay closing costs on a home sale, which can equal up to 10% of the purchase price. Here’s everything to know about closing costs, including how much they are for buyers and sellers, and ways to lower them.

What are closing costs, and who pays them?

Closing costs are additional taxes and fees that buyers and sellers have to pay when closing on a home sale. According to Robert Niyazov, CEO of NYC-based mortgage brokerage firm R&J Capital Group, there are two types of closing costs. The first type is bank-related costs, including mortgage taxes and bank attorney fees. The second is title-related costs, such as transfer taxes, title insurance, and the NYC mansion tax (more on this here).

Both the buyer and seller of a home will pay closing costs when making a deal. Both parties are responsible for their own attorney fees (usually real estate and bank attorneys), and have their own sets of taxes and fees to cover.

What closing costs do buyers have to pay?

The closing costs buyers are responsible for depend largely on the type of property being purchased: co-op, condo, or townhouse.

If the home is a condo or townhouse, the buyer will have to pay a mortgage recording tax, which is a fee for registering a mortgage with the city and state of New York. For NYC and NY State combined, the rate is 2.05% for mortgages under $500,000 and 2.175% for mortgages of $500,000 or more. The lender typically pays a 0.25% portion, so for buyers those rates end up being 1.8% and 1.925%, respectively. You can find the latest mortgage recording tax rates on the NYS Department of Taxation and Finance website, and for NYC, the Automated City Register Information System (ACRIS) provides a calculator.

Manhattan Homes Under $1M on StreetEasy Article continues below

Carnegie Hill

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South Harlem

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Washington Heights

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Kips Bay

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Yorkville

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Lower East Side

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Sutton Place

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The buyer will also need to purchase title insurance if they buy a condo or townhouse. Title insurance protects the buyer from debt, liens, and other claims against previous owners of the property. The cost of title insurance varies, but you can expect to pay 0.5%–1% of the home’s purchase price. Premiums are regulated by the Title Insurance Rate Service Association (TIRSA).

On any property sold for $1 million or more, the buyer has to pay what’s called a mansion tax, and the rate increases as the purchase price of the home increases. The latest exact mansion tax rates can be found here.

If you’re buying in a new development, you may also be responsible for paying the transfer tax for the city and state, which transfers the title to you. Otherwise, this is a cost the seller takes on. Brian Babst, a licensed associate real estate broker with Compass, says that in his 18 years of experience, he’s “never seen a seller pass the transfer tax to the buyer, except for new development.”

Other closing costs buyers may have to pay include home appraisal fees, application and credit check fees, and move-in fees for the building. Co-op buyers will need to pay a maintenance adjustment — the first month’s maintenance fees, prorated for the month of closing — and condo buyers will need to pay the same but for common charges. See the next section for a comprehensive list of buyer closing costs.

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Bedford-Stuyvesant

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$900,000

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$649,999

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Canarsie

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$574,900

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Homecrest

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Ocean Hill

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$450,000

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Greenpoint

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$780,000

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Park Slope

333 4th Street

$749,000

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Bergen Beach

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$599,000

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Midwood

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Brighton Beach

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How much are closing costs for buyers?

How much the buyer pays in closing costs largely depends on the purchase price of the home and what type of property it is. A good rule of thumb for buyers: be prepared to spend 2-5% of the purchase price in closing costs, and expect the percentage to be on the higher end for condos, townhouses, homes over $1 million, and new developments.

Buyers purchasing a co-op will generally pay less in closing costs. Mortgage recording tax and title insurance only apply to “real” property, which excludes co-ops (where you’re actually buying shares in a cooperative that owns the building). However, the mansion tax does apply to co-ops sold for $1 million or more.

Buyer closing costs: Co-op

Buyer closing costs: Condo

Buyer closing costs: Townhouse

Mansion tax rates

Mansion taxes apply to all property types. Exact mansion tax rates are as follows:

What closing costs do sellers have to pay?

The seller is responsible for some of the same closing costs as buyers, such as attorney fees. They’re also responsible for paying the NYC and NYS transfer taxes, whether they’re selling a condo, co-op, or townhouse (but again, the buyer may pay the transfer taxes if it’s a new development). 

Some co-ops require sellers to pay a transfer fee or “flip tax” — though the latter term is a misnomer, as it’s not a tax but a fee charged by the building. Additionally, since co-op owners technically own shares in the building, they’ll need to pay a state-imposed stock transfer tax of $0.05 per share when selling their co-op unit.

If the seller used a listing agent to sell the home, they’ll usually pay the agent a commission as a percentage of the sale price. That percentage is typically 6%, and it may then be split between the listing agent and the buyer’s agent. Agent commissions often make up the bulk of seller closing costs, but exact commissions and payment structures are determined between the buyer, seller, and their respective agents during negotiations.

How much are closing costs for sellers?

All that said, sellers can expect to pay closing costs equal to 8–10% of the home’s final sale price.

Seller closing costs: Co-op

Seller closing costs: Condo or townhouse

What if you need help affording closing costs?

If you get to the end of your deal and cannot afford the closing costs, you have options. There are HUD programs for both down payment and closing cost assistance in New York City. For example, the HomeFirst Down Payment Assistance Program offers up to $100,000 for closing costs or down payments for first-time home buyers meeting certain requirements, including an 80% Area Median Income (AMI). You can also read our guide to learn more about various types of home loans for NYC buyers, some of which may save you money.

Additionally, private banks also offer assistance, such as the America’s Home Grant® program by Bank of America, the Chase Homebuyer Grant, and the Lender Paid Assistance program by Citibank.

A bank will rarely allow you to include closing costs directly in your mortgage, Niyazov says. However, sometimes the seller will allow the buyer to finance their closing costs, which is called a seller concession. For example, imagine a buyer and seller negotiating a deal at $500K. The buyer has a 5% down payment, but doesn’t have much money for closing costs. If the property appraises for higher than $500K — let’s say $515K — the seller can agree to amend the purchase price to $515K, but only takes $500K. “[The buyer] is getting 95% financing,” Niyazov explains. “Now they’re going to get 95% financing of the $515K, so they’re going to get more money from the bank.” The buyer uses the extra financing to pay for the closing costs.

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Old Howard Beach

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East Flushing

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Jackson Heights

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Rego Park

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Can you avoid closing costs?

In short, it’s hard to avoid closing costs altogether. You can avoid some closing costs, like the mansion tax, by purchasing a home under $1 million. Additionally, you can avoid title insurance and mortgage recording tax by purchasing a co-op instead of a condo or townhouse.

However, there’s no way around certain closing costs. Attorney fees, for example, are necessary in NYC, where only attorneys write contracts, not brokers. “Brokers prepare transaction sheets, which we hand off to attorneys, and the attorneys convert those business terms into legal terms,” Babst says. “And they really do perform a very vital function, protecting the seller, protecting the buyer, and their interests.”

If you’re buying in a new development, the developer may pass on the transfer tax to you. However, Babst recommends negotiating with the developer to absorb the cost, as sellers traditionally would. “In recent years, with the flood of excess new development inventory, developers have been eating this cost in a way that they didn’t traditionally,” Babst says.

How can you lower your closing costs?

Besides avoiding purchasing a condo, townhouse, home listed above $1 million, or new development, there are a few ways to lower closing costs. You can pick an attorney with a lower flat rate, for instance. Niyazov also recommends working with a mortgage professional to obtain an appraisal waiver, saving buyers the cost and time of getting an appraisal.

If you’re looking for a way around the mortgage recording tax, you may consider a Purchase Consolidation Extension Modification Agreement (CEMA), Babst says. CEMAs are usually used by homeowners looking to refinance their homes, but they can also be used when purchasing a home in New York State. In this instance, the seller transfers their mortgage’s remaining balance to the buyer, who then consolidates it into a new loan. This can save money on the mortgage recording tax, as buyers will only have to pay taxes on the difference between the seller’s loan and the new consolidated loan amount.

Another way to lower your closing costs is by working with a real estate agent or team who has verified experience, like those in StreetEasy’s Experts Network. These Expert agents and teams can help buyers like you and have expertise in your desired buildings, neighborhoods, or types of homes.can use their knowledge, expertise, and negotiation power to help reduce your closing costs.

Contact the StreetEasy Concierge for buyers or sellers below and get matched with the best Expert for you.

StreetEasy is an assumed name of Zillow, Inc. which has a real estate brokerage license in all 50 states and D.C. See real estate licenses. StreetEasy Concierge team members are real estate licensees, however they are not your agents or providing real estate brokerage services on your behalf. StreetEasy does not intend to interfere with any agency agreement you may have with a real estate professional or solicit your business if you are already under contract to purchase or sell property.

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StreetEasy earns a referral fee from successful Experts’ transactions, at no cost to the buyer or seller. Experts and teams must meet StreetEasy’s standards of service and market expertise. Agents and teams in our Experts Network have closed deals on homes similar to the seller’s or similar to homes the buyer is searching for. We measure their performance to make sure buyers and sellers get top-notch service.