The typical real estate commission in NYC is 5% to 6% of the sale price. One of the main reasons why commissions remain elevated in NYC is because the vast majority of buyers work with buyer agents. The typical 5% to 6% commission paid by the seller is intended to be split equally between the listing agent and the buyer’s agent. Sellers are averse to offering less than 2.5% to 3% to a buyer’s agent because it may have an impact on how much demand the listing sees from represented buyers (who account for over 75% of the buyer base).
Sellers in NYC typically sign an exclusive listing agreement which stipulates a fixed commission rate to be paid at closing. If a buyer is unrepresented, the total commission is simply pocketed by the listing agent instead of being split with a buyer’s agent. Buyers are therefore incentivized to work with buyer agents because it’s perceived to be a free service since sellers are paying a fixed total commission no matter what. This creates a chicken and egg situation whereby sellers feel compelled to offer high commissions to buyer agents while buyers feel compelled to work with buyer brokers since it doesn’t cost them anything.
The NYC Transfer Tax is a seller closing cost of 1% for sales below $500k and 1.425% for sales of $500k or more. Higher rates apply for commercial transactions and multifamily properties with 4 or more units. In addition to the NYC Transfer Tax, sellers in NYC must also pay New York State Transfer Taxes. The combined NYC and NYS Transfer Taxes are the second largest closing cost for sellers aside from broker commissions.
The New York State Transfer Tax is 0.4% for sales below $3 million and 0.65% for sales of $3 million or more. The higher rate of 0.65% kicks-in at a lower threshold of $2 million for commercial transactions and residential properties with 4 or more units. Prior to the New York Tax Law amendments in 2019, the NYS Transfer Tax was previously a fixed 0.4% regardless of the sale price. The New York State Transfer Tax is authorized by New York Consolidated Laws, Tax Law – TAX § 1402.
The average real estate attorney fee for a sale transaction in NYC is $2,000 to $3,000. The flat fee rates you are quoted will vary based on the complexity of your real estate transaction. Lawyer fees can be as high as $5,000 for a more complex transaction and for new developments. Real estate attorney fees are typically taken at closing and will be part of the closing costs mentioned in your lawyer’s closing statement. Some lawyers may negotiate for half or some other portion of the fee to be paid upfront, with the remainder to be paid at closing.
Most condos and co-ops in NYC charge sellers a refundable move-out deposit in addition to a non-refundable move-out fee. Exact fees vary by building, and they are usually listed in the resale application (also know as board application). If you’ve already moved out and a unit is vacant, it may be possible for you to request an exception and bypass the fees. The easiest way to do this is by contacting the transfer agent of your building’s managing agent.
Your building’s managing agent may charge sellers a closing fee to compensate them for the time and effort associated with a real estate closing. While this fee is customarily paid at closing, it may be requested upon submission of the buyer’s board application package along with other fees such as the buyer’s financing fee, move-in/move-out fees and/or move-in/move-out deposits.
Most banks charge sellers a bank loan satisfaction fee which is payable at the time you pay off your outstanding principal balance. This is a relatively small closing cost, and it’s usually a fixed amount regardless of the size of the outstanding principal balance you’re paying off.
The Residential Deed Transfer Fee and ACRIS Filing Fees are relatively small seller closing costs which cover the nominal costs associated with physically recording the sale in public records.