Both buyers and sellers pay closing costs in New York, and each side is responsible for its own set of charges. Neither party covers the other’s costs by default, though certain items can be shifted through negotiation. Closing costs are charges due at closing in addition to the purchase price, including attorney fees, transfer taxes, lender charges, title insurance, and building fees that vary by property type and financing.
A clear estimate of these fees and taxes makes it easier to plan your final budget. At Sishodia PLLC, our Manhattan real estate attorneys help buyers and sellers understand and prepare for these costs before they sign a contract. Attorney Natalia A. Sishodia guides clients through every stage of a purchase or sale.
This guide explains the main costs on each side, how cash and financed purchases differ, and why co-ops, condos, single-family homes, and new developments can change the final amount due at closing. Call Sishodia PLLC at (833) 616-4646 to schedule an appointment.
Who Pays Closing Costs in a New York Real Estate Deal?
In a New York City real estate deal, the buyer pays for financing, title charges, specific taxes, and taking ownership. The seller covers broker compensation, transfer taxes, payoff items, and the legal transfer of the property. While buyers and sellers can negotiate some of these charges, most taxes, lender fees, and building costs are fixed by the contract, loan terms, and property type.
What Closing Costs Does a Buyer Pay in New York?
NYC buyers often estimate closing costs at 2 to 5 percent of the purchase price. However, the final amount depends on the down payment, loan type, property type, and location. Charges like the mortgage recording tax, mansion tax, title fees, and building costs will shape that final number. A buyer using a mortgage will also face more fees than a cash buyer because financing adds lender and recording charges.
Common buyer closing costs in New York include:
- Lender fees tied to mortgage financing, such as prepaid interest, appraisal fees, survey costs, and tax escrow
- A prorated share of property taxes for the current year
- Mortgage recording tax when a mortgage is recorded against New York City real property
- Attorney fees
- Condo or co-op building application fees and building review fees
- Title insurance for deeded property, including lender coverage and optional owner coverage
- The New York State mansion tax on residential property with a purchase price of $1 million or more (which features a progressive rate scale that increases at thresholds starting at $2 million).
- City and state transfer taxes if the contract shifts seller transfer taxes to the buyer, such as in many sponsor or new development deals
Attorney Natalia A. Sishodia can review the contract terms, projected taxes, and building charges before signing so the buyer can identify which costs belong on their side of the closing statement.
Key Takeaway: Buyer closing costs fall into four main groups: lender and financing charges, taxes such as mortgage recording tax, mansion tax, and supplemental tax when they apply, attorney fees, and building application and title costs.
Real Estate Attorney in New York City, Sishodia PLLC
Natalia A. Sishodia, Esq., LL.M.
Natalia A. Sishodia is a New York City real estate attorney and the Managing Partner of Sishodia PLLC. She earned a Master of Laws from Temple University’s James E. Beasley School of Law and represents clients in matters spanning real estate law, business law, elder law, estate planning, and taxation. She also earned a Master in Taxation from Fordham University’s Gabelli School of Business.
Also fluent in Russian, Ms. Sishodia works with domestic and international clients, including individuals, businesses, investors, and lenders with legal needs tied to New York real estate. She has received the Award for Outstanding Achievement in International Law and the Avvo Client’s Choice Award. She has also been included in Marquis Who’s Who.
What Closing Costs Does a Seller Pay in New York?
If you are the seller, broker commission may be one of the largest closing costs. The commission is negotiated through the listing agreement and is paid from the sale proceeds at closing unless the agreement provides a different structure. A seller may also agree to a buyer’s agent compensation arrangement or seller credit, but the contract and closing statement should address that obligation clearly.
In a resale, the seller should budget for city and state transfer taxes unless the contract shifts payment. The main transfer taxes are:
| Transfer Tax | When It Applies | Rate or Amount |
|---|---|---|
| New York City Real Property Transfer Tax | NYC residential Type 1 and Type 2 transfers | 1% when the price is $500,000 or less; 1.425% when the price is more than $500,000 |
| New York State base real estate transfer tax | New York real property transfers | $2 for each $500 of consideration (0.4%) |
| New York State additional base tax | NYC residential conveyances of $3 million or more | $1.25 for each $500 of consideration (0.25%) |
Buyer taxes are separate from seller transfer taxes. The mansion tax applies to residential purchases of $1 million or more, and the New York State supplemental tax applies to certain NYC residential purchases of $2 million or more.
In Manhattan, commission and transfer taxes can significantly reduce the seller’s net proceeds. Before closing, Attorney Sishodia can review payoff figures, transfer tax treatment, and adjustments so the seller’s closing statement matches the contract.
Key Takeaway: Sellers often pay broker compensation, city and state transfer taxes, real estate tax adjustments, and their own attorney fee. Commission and transfer taxes can make up a large share of the total.
Who Pays the Attorney Fees at Closing?
In many New York real estate transactions, the buyer and seller each use their own attorney. Each side pays its own attorney fee unless the contract provides otherwise. This item appears separately on each party’s closing statement.
Attorney fees are not fixed by statute. The amount depends on the work involved, such as a condo resale, a new development purchase, or a co-op with board requirements. It is important to ask about fees before the contract process begins. To schedule a consultation and review expected costs with our experienced real estate attorney, call (833) 616-4646.
How Does Housing Type Affect Closing Costs?
Property type plays a major role in closing costs because co-ops, condos, and single-family homes follow different legal rules. In a co-op transaction, the buyer purchases shares in a corporation and receives a proprietary lease for the apartment. Condo and single-family buyers purchase deeded real property. Because of this distinction, title charges and the mortgage recording tax can apply when financing is used.
The table below compares common closing cost factors by property type:
| Cost Factor | Co-op | Condo | Single-Family Home |
|---|---|---|---|
| Board or application fees | Common | Possible | Not common |
| Flip tax or transfer fee | Possible | Possible, if building documents require it | Not a building charge |
| Title insurance for deeded property | Not applicable | Required for mortgages; optional for cash | Required for mortgages; optional for cash |
| Mortgage recording tax | No for co-op share loans | Yes, if financed | Yes, if financed |
| Approval process | Board approval required | Building review may apply | No board approval |
Sishodia PLLC can review the board package, proprietary lease, offering plan, and closing statement to identify building charges, flip taxes, and title issues before closing.
Does Paying Cash or Financing Change Closing Costs?
Financing changes several costs at closing because a mortgage adds lender fees that a cash buyer avoids. A financed purchase often includes the mortgage recording tax, loan origination charges, appraisal costs, and a lender’s title insurance policy. Skipping these specific financing charges lowers the final total for a cash buyer. However, cash buyers still pay standard transaction expenses such as attorney fees, applicable taxes, building fees, and optional owner’s title insurance for deeded property.
How Do New Construction Purchases Affect Closing Costs?
New development purchases change how closing costs are shared compared to standard resales. In many sponsor deals, the contract shifts both the New York City and New York State transfer taxes from the seller to the buyer. Depending on the contract, financing, and building terms, the buyer may also be responsible for loan charges, title costs, building fees, attorney fees, sponsor legal fees, and working capital contributions.
Can Buyers and Sellers Negotiate Who Pays Closing Costs?
Closing costs can be negotiated between a buyer and seller, but the result depends on the loan terms, contract, and market. A seller credit can make a deal easier for the buyer to close, but it may affect the purchase price, appraisal, and loan approval.
Key points to weigh before negotiating cost credits include:
- A seller may ask for a higher purchase price to offset the credit, which can increase the buyer’s total cost
- Seller credits must be documented in the purchase agreement and closing statement
- A higher purchase price can create appraisal issues if the appraised value comes in below the agreed sale price, which may affect loan approval
- Agreeing to cover costs can reduce the room to negotiate on price, contingencies, or repairs
When a seller credit is part of the deal, Sishodia PLLC can check that the credit appears in the contract, matches the loan terms, and carries through to the closing statement.
Key Takeaway: Negotiating who pays closing costs is not automatic and depends on market conditions. A cost concession can affect the purchase price, the room left for other negotiation, and the appraisal, so both sides should weigh the trade-offs.
How Can a Closing Cost Calculator Help You Plan?
An online closing cost calculator lets you estimate your obligations before you commit to a contract. The estimate can account for purchase price, loan amount, cash or financed status, housing type, and new construction status.
Running these numbers early can help you compare properties and budget for the down payment plus closing costs. Our closing cost calculator for New York City buyers walks through each of these inputs so you can plan a Manhattan purchase with a realistic figure in mind.
Speak With a New York City Real Estate Attorney About Closing Costs
If you are buying or selling property, reviewing closing cost obligations before signing can protect your budget and legal position. Each transaction has its own mix of taxes, lender charges, and building fees, and a contract review can clarify which charges belong to you.
Attorney Natalia A. Sishodia and our experienced real estate attorneys at Sishodia PLLC work with buyers and sellers from contract to closing across New York City. We handle co-op, condo, single-family, and new development transactions with close attention to the charges that affect your final closing statement.
Call Sishodia PLLC at (833) 616-4646 or reach us through our online contact form to schedule a consultation. Our office is located at 600 3rd Ave, 2nd Floor, New York, NY 10016, serving clients throughout New York City.
Frequently Asked Questions
Do buyers or sellers pay more in closing costs in New York?
Sellers may have the larger total in many resale transactions because broker compensation and city and state transfer taxes can be substantial. Buyer costs can rise with financing, mansion tax, property type, or terms in a sponsor sale.
Is the buyer’s attorney fee considered part of closing costs?
The buyer’s attorney fee is a standard buyer closing cost and appears on the buyer’s closing statement. The seller pays a separate attorney fee for their own counsel.
Can a seller agree to cover the buyer’s closing costs?
A seller can agree to cover some of the buyer’s closing costs as a negotiation tool, but this is not automatic. In a strong seller’s market, a seller may have little reason to offer a credit, and the parties should address any credit in the contract and closing statement.
Are closing costs different for co-ops versus condos?
Co-op buyers often pay application fees, attorney review fees, and board fees, but they do not buy deeded real property. Condo buyers purchase deeded real property, so title charges and mortgage recording tax can apply when financing is used.
Does paying in cash lower a buyer’s closing costs?
Paying cash removes mortgage-related charges such as mortgage recording tax, bank fees, and lender’s title insurance. Attorney fees, applicable taxes, building charges, and optional owner’s title coverage for deeded property may still apply.
Are closing costs higher for new construction purchases?
In many new developments, the purchase agreement shifts transfer taxes that a seller would normally pay to the buyer, which raises the buyer’s total. New developments may also add sponsor legal fees and working capital contributions.
Can closing costs be estimated before signing a contract?
A closing cost calculator lets you enter the purchase price, financing amount, cash or financed status, housing type, and new construction status to produce a planning estimate before you sign.
