Closing costs in New York state

The New York real estate market offers a diverse range of opportunities, from the opulence of New York City to the affordability of cities like Buffalo and Rochester. Regardless of where you’re buying or selling, one aspect of the transaction remains unavoidable: closing costs. In this blog post, we’ll explore what you can expect when it comes to closing costs in the Empire State.

How Much are Closing Costs in New York?

Closing costs in New York average around 3.1 percent of a home’s sale price, according to CoreLogic’s ClosingCorp. To put this in perspective, neighboring states like Connecticut and New Jersey have lower average rates at 2.1 percent and 1.7 percent, respectively. For example, with a median sale price of $400,000 in July 2023, the closing costs would amount to $12,400.

It’s important to note that these figures can vary depending on local market conditions. For instance, in Westchester County, just north of New York City, with a higher median price of $770,000, closing costs would be approximately $23,870. In contrast, in Potsdam, near the Canadian border, with a median price of $175,000, closing costs would be around $5,425.

Who Covers Closing Costs in New York?

Both buyers and sellers have responsibilities when it comes to closing costs in New York.

Closing Costs for Buyers

As a buyer, the majority of your closing costs will be related to your mortgage loan. Here are some common expenses you can expect:

1. Loan-related fees: This includes application and origination fees, credit history checks, and potentially points on your mortgage.
2. Appraisal and inspection fees: These ensure that the property’s value aligns with the loan amount and alert you to any potential issues.
3. Title-related fees: This involves a title search to confirm ownership and secure title insurance.
4. Taxes: You may need to prepay a portion of the year’s property taxes, and if the home is over $1,000,000, there’s an additional mansion tax.
5. Attorney fees: New York mandates representation by an attorney for both buyers and sellers.

Closing Costs for Sellers

Sellers also incur closing costs, which include:

1. Agent commissions: This is the largest expense for sellers, typically ranging from 5 to 6 percent of the sale price.
2. Transfer taxes: Sellers are responsible for New York’s real estate transfer tax, calculated based on the home’s value.
3. Attorney fees: Representation by an attorney is required for both parties.
4. Seller concessions: Any agreed-upon concessions, like covering repairs, will be settled at closing.
5. Wire transfer fee: If there’s a remaining mortgage balance, it will be wired to the lender, potentially incurring a fee.

Strategies for Lowering Closing Costs

Many closing costs are negotiable, except for government-assessed fees. For sellers, negotiating agent commissions can yield significant savings. For example, a slightly reduced commission percentage can result in substantial savings.

Buyers can explore down payment assistance programs and shop around for the best mortgage rates and terms. Additionally, don’t hesitate to request concessions from the seller.

Conclusion

Navigating closing costs in the New York real estate market requires careful consideration and negotiation. Whether you’re buying in Long Island or selling in Lake Placid, understanding these costs can help you make informed decisions and potentially save you money in the process. Consider seeking the guidance of an experienced local real estate agent to navigate this unique and dynamic market effectively.