You’ve likely heard about high closing costs in Long Island and throughout out New York state, but did you know that New York has the second-highest closing costs in the country, trailing only Washington, DC? While there are many costs and fees associated with the term “closing costs” do you know everything that they include and who is responsible to pay them? Read our blog to learn what you need to know.
What Are Closing Costs Exactly in Long Island?
Closing costs refer to all of the fees that must be paid at the closing table to transfer title and sell a home in Long Island. Closing costs are split between the buyer and the seller. These are the fees and taxes you can expect to pay when purchasing or selling a home. They apply across New York State and are generally significantly higher in New York City and Long Island, NY .
While the buyer will usually pick up a number of theses, it is important to note, that the seller typically pays 100% of the realtor’s commission. This will be about 5%+ of the final sale price. Other than your possible mortgage balance, this is by far the biggest cost when it comes to costs at the closing table.
Negotiating the other costs during the sale process is becoming increasingly popular. In an effort to lure in more buyers, sellers are more frequently picking up the tab when it comes to the closing costs. As a seller, you will also need to pay your share of the year’s property tax, up until the day of closing. Any HOA fees or other community costs should be prorated and paid at this time as well.
To be more specific, the following illustrates the typical cots that a buyer and seller might see for the sale of a median priced home in Long Island:
For The Buyer
Buyer’s Attorney: $1500-$2000
Bank Fees: $750
Application Fee: $350
Administrative/Processing Fee: $330
Appraisal Fee: $700-$1,500 (depending on sales price)
Credit Report Fee: $10.10 single/$15.20 joint
Bank Attorney: $950-$1200
Tax Escrows: 2 to 6 months
Recording Fees: $250-$750
Wire Transfer Fees: $100
Municipal Search: $500-$750
Mortgage Underwriting Fees: $450
Title Insurance Fee: Approximately $450 per $100,000 of sales price under 1Mil
Loan Origination Fees (Points) – 1% -2% of mortgage amount dependent on lender.
Mortgage Title Insurance: Approx. $130 per $100,000 of mortgage amount
Mortgage Tax (If getting a mortgage): 1-3 Family Home or Condo: 0.80% of loan amount
Municipal Recording Fees: Typically $700-$800, but based on mortgage amount.
Peconic Bay Tax: Tax applies to properties in the townships of Southampton, East Hampton, Riverhead, Southold and Shelter Island. 1-3 Family Dwelling less than $1,000,000 and all other properties = 2.40% of Purchase price. There are some exclusions.
For the Seller
Real Estate Commissions: Typically 5% of sale price ( $25,000 on a $500,000 sale price)
Sellers Attorney: Typically $1500 to $2000
NYS Transfer Tax: $4 per $1,000 of price ($2000 on a $500,000 sale price)
Miscellaneous Title/Recording Fees Vary (see note below)
Pick-up / Payoff Fee to Title Closer: $200-$300
Repairs and or Pest Control: If this had previously been agreed upon at contract.
The above seller costs do not include the payment of any unpaid property taxes or municipal charges or any funds needed to clear the title for transfer. This may include liens and judgments that may need to be paid. The balance of your mortgage or loans against the home must also be paid from the proceeds of the sale.
*Note – Charges for recording documents vary. Sometimes a small, flat fee is charged; other times it is a small, flat fee plus a charge per page. The seller usually pays recording fees needed to clear all defects and furnish the purchaser with clear title. Additionally, items usually charged to the seller include the recording of satisfaction of mortgages, quitclaim deeds, affidavits, and satisfaction of mechanic’s lien claims.
What Are Seller Subsidies?
This is an amount negotiated between the buyer and seller. It is the percentage the seller agrees to pay towards the closing costs. For example, you can offer to put 3k towards closing to help relieve some of the costs for your buyer. Overall, paying these subsidies are often a small price to pay to bring buyers to the table!
Can You Avoid These Costs?
Yes! By working with a direct cash home buyer who will pick up all costs associated with the closing! A direct cash home buyer like our company will not charge you a real estate listing commission as they are not a real estate agent selling your home, but rather a buyer of your home. Our company, Comax Properties will also paying the sellers portion of the closing costs. This will save you money and hassle at the closing table.
Are Repairs Included?
This is another one that is negotiated between the buyer and the seller. If the home is in need of some obvious repairs, the seller will often take care of these before putting their home on the market. However, if an inspection shows additional repairs are needed, a buyer may make his offer contingent on repairs being made. A buyer and seller can work this out before going to closing.